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THE API CHALLENGE

P A Francis
Wednesday, April 19, 2017, 08:00 Hrs  [IST]

Indian pharmaceutical industry, a highly export oriented sector of the country, is facing a serious challenge to its survival in the coming years if its current state of affairs remains unchanged. Pharmaceutical export is currently stagnant and the domestic production of active pharmaceutical ingredients that support the industry, is virtually non existent with country’s total dependence on China for most of the ingredients. According to Pharmaceutical Export Promotion Council of India, pharmaceutical exports have fallen marginally from $16.8 billion to $16.4 billion in 2016-17 due to price erosion and rupee appreciation. At the same time the country is importing about $3 billion worth of APIs, intermediates and other chemicals from China. This is an alarming signal for an industry which has been producing most of the APIs required for it and solely depending on exports for its profit and growth until a few years ago. The scope for better returns from exports from the country appears to be grim in the context of continuing US FDA action against Indian pharmaceutical facilities. Prospects of producing APIs within the country also do not seem possible in the near future.

Perhaps, what is most urgent for India and the domestic pharmaceutical sector is to end total dependence of APIs and other ingredients from China and Europe. If not, even production of several essential and life saving drugs required within the country will be in trouble. Already China is dictating prices of most of the APIs with no consideration of actual production costs. Currently, India is importing many common drugs such as painkillers like aspirin, paracetamol, first-line diabetes drug metformin and antibiotics such as erythromycin. The Central government has been talking about the need for boosting domestic bulk drug manufacturing for the last three years. The Katoch Committee, set up by the Department of Pharmaceuticals to formulate a long term policy for reviving the domestic manufacture of APIs in the country, had submitted its report in February, 2015. The committee had made a number of sweeping recommendations for the revival of API manufacturing in the country. One such proposal was cluster development model for the pharmaceutical sector with tax free status to cluster developers and participants for 15 years. All central and state duties, taxes and levies in creating the entire cluster infrastructure and individual unit infrastructure will be made nil. Now, after two years no clusters or major API production facilities have come up anywhere in the country. Recently, the commerce ministry, through Pharmexcil, has formed a committee to identify those drugs which are being imported in huge volumes from other countries. Appointing expert panels and committees have no meaning unless the government start acting on their recommendations without delay. Two key issues that are discouraging big private investments in the API sector is highly stringent environment rules in some of the states and lower returns on investments. There has to be some serious thinking on the part of the government on these fronts to create huge production capacities in the API sector.

 

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