The Indian ciprofloxacin manufacturers are in a dilemma as the API prices are soaring high, thanks to the closure of a number of intermediate manufacturing plants in China.
The prices of much sought after APIs namely ciproflocxacin, erythromycin, levofloxacin, gatifloxacin, doxycycline are increased drastically within 3-4 months. It is said to be the aftermath of closure of a number of Chinese units which manufacture the intermediates. The crisis has severally affected domestic producers of ciprofloxacin.
The price of ciprofloxacin, which is much demand, has increased to Rs 1800 per kg from the Rs 850 per kg in the Indian market during February this year. Acetophenone is the key raw material used in the manufacture of ciprofloxacin and DCFB (di chloro fluorobenzine) is the penultimate stage of acetophenone. Between the months of February and June, 2005, three principal DCFB manufacturing units in China closed operations on account of the enforcement of strict pollution control norms in China, subsequent to it signing the WTO agreement in 2003. This development resulted in short supply of DCFB. Out of the six principal manufacturers of DCFB in the world, four are in China and two in India-the Mumbai-based Aarti Industries and Anu's Lab. Ciprofloxacin is a major drug of the quinolone family, India's third largest anti-infective segment with a market size of Rs 5.45 bn in India and US$ 800 mn in the US. An off-patent molecule, ciprofloxacin is effective in lowering respiratory tract infections (LRTI), typhoid and urinary infections, among others. Ciprofloxacin is the segment's widely prescribed drug, contributing 57% of the total quinolones market in 2003-04.
The global demand for ciprofloxacin is at least 500 MT per month (6000MT per annum), with India and China being the biggest consumers accounting for almost 70 per cent of the total global demand. The average domestic demand for ciprofloxacin is estimated at 120 MT per month and approximately 250 MT per month in China.
The ciprofloxacin prices are expected to be on the surge for the next one year on the back on continued shortage of DCFB due to the factors include-Chinese manufacturers engaged in producing DCFB will take a year to relocate their operations.
Additional capacities for DCFB is not likely to come up for two important reasons-Chinese manufacturers will not lease out their closely guarded technology to other players having the requisite manufacturing set up. They would trade-off short term gains by waiting for a year till their production re-starts and then cater to the demand for DCFB. The possibility of greenfield capacities being set-up to manufacture DCFB is not likely to transpire because in order to produce DCFB, producers would require to source fluorobenzine, the key raw material.
Satish Nachane, managing director, Aarti Drugs said the prices of ciprofoxacin in the Indian market might increase marginally in future. "With the DPCO price threshold for ciprofloxacin pegged at Rs 4150 per kg, it provides ample room for ciprofloxacin prices to increase from its erstwhile price of Rs 850 per kg to the current levels of Rs 1800 per kg in June, the price has almost doubled and expected to further increase anywhere in the range of Rs 2000 per kg to Rs 4000 per kg over the next one year," noted Satish Nachane.
To benefit from the current scenario, Aarti Drugs has entered into a strategic agreement with Aarti Industries, wherein the latter will supply the entire acetefenone production to Aarti Drugs at pre-negotiated prices.
The major Indian API manufacturers of ciprofloxacin are Dr Reddy's Labs, Aarti Drugs, Tasc Pharma, Hiren Orgochem etc.