Imports of bulk drugs grew by 13.06% in April-May as prices cooled

Industry insiders say pharma players are taking advantage and stocking up on APIs

Imports of bulk drugs in the first two months of 2024-25 grew by 13.06 per cent because prices of active pharmaceutical ingredients (or bulk drugs) are low now.

Industry insiders say Indian pharma players are stocking up active pharmaceutical ingredients (APIs) while prices stay low.

The data culled from the Pharmaceutical Exports Promotion Council (Pharmexcil) shows in April and May India imported bulk drugs worth $1.44 billion, up from the $1.27 billion in the same months last year.

In May alone India imported bulk drugs and intermediates worth $763.43 million, up 8.67 per cent.

Uday Bhaskar, director general, Pharmexcil, told Business Standard: “Benefits of a production linked-incentive (PLI) scheme take time to kick in, but it is a move in the right direction. Not just for APIs but Indian companies depend on China for key starting materials, chemicals, solvents, etc. Therefore, one thing or the other gets imported.”

 

API prices have cooled in the last two-three months. Prices of paracetamol API have come down to Rs 250 per kg from Rs 600. During the pandemic these prices were Rs 900 per kg. Prices of APIs of some antibiotics like meropenem are down to Rs 45,000-50,000 a kg from Rs 75,000-80,000 a few months ago.

A Gujarat-based mid-sized formulation maker told Business Standard with the rise in the local production of APIs thanks to the PLI, the demand for some APIs from China had reduced. This led to a price fall.

“However, if there is a rise in imports now, it may be a result of that as local formulation players are stocking up,” he said.

Industry insiders agree China tends to slash prices of certain chemicals and key starting materials whenever there is growth in production in India.

India recently started making key starting materials for penicillin G and clavulanic acid after their production stopped about three decades ago. These are used for making antibiotics and combination drugs. Aurobindo Pharma and Kinvan are coming up with key starting materials for them.

India is highly dependent on China for bulk drugs. According to the data from Pharmexcil, China had the highest share in imports of pharmaceutical products (which include bulk drugs, formulations, surgicals, and vaccines) in 2023-24 at 43.45 per cent.

The US had a 9.12 per cent share of pharma imports, followed by Germany at 5.06 per cent. India imported pharma products worth $3.6 billion in 2023-24 from China.

While imports from China grew 2.57 per cent, those from the US fell 7.8 per cent. Imports from Germany, however, saw a sharp rise of 27.21 per cent.

As for bulk drugs PLI, the target for investment in FY24 was Rs 809 crore. Instead, around Rs 1,195 crore was invested till December 2023, showed the government data. Cumulatively, till December last year, Rs 3,586 crore was invested under the PLI scheme for bulk drugs, which has an outlay of Rs 8,500 crore.

Production or sales of bulk drugs under PLI in FY24 (up to December) were Rs 309 crore, and cumulatively around Rs 844 crore of sales has happened for bulk drugs produced under the scheme.

The Centre targets sales of Rs 46,400 crore of bulk drugs under PLI.

As of November, under the PLI scheme for bulk drugs, there were no takers for eight of the 41 products. That had resulted in an unallocated incentive outlay of Rs 1,655 crore of the allocation of Rs 8,500 crore.

Some companies were not able to claim incentives in time due to delay in commissioning projects. It is learnt that the Department of Chemicals and Fertilisers had noticed dumping with respect to certain drugs manufactured under the PLI scheme.