Though last year the central government had declared its intention to build its own Active Pharmaceutical Ingredient (API) manufacturing capabilities to avoid over-dependence on China for importing APIs for its bulk drug sector, industry experts feel that even after completion of two years, the government is yet to come out with a clear-cut policy on APIs.
Despite the fact it had declared the year 2015 as the year of APIs and came up with encouraging slogans like ‘Make in India’ to boost the confidence of local manufacturers and investors in this segments, the API players are expecting more incentives and supporting packages to the industry to enable them to compete in the global export markets.
Strengthening the existing pharmaceutical PSUs in the country in addition to incentivizing the private sector is essential to boost the Indian API industry, opined industry experts who are expecting clear cut policy initiatives and more encouraging reforms from the government to build global manufacturing capabilities for APIs in the country.
Dependence on China
According S.V.Krishna Prasad, Chief Executive Officer and Director Cito Healthcare, majority of Indian bulk drug industry is still dependent on China for cheaper APIs. This is posing a big threat to the Indian manufacturers because the industry is finding it easier to import from china rather than procure it from within the country. “It is high time that our government came out with stringent regulations and imposed anti-dumping duty on the imported Chinese APIs . Though it may lead to some difficulties in the initial stages, it will definitely help the local manufacturers and the industry to evolve newer strategies to manufacture affordable APIs with better quality within the country than depending on Chinese imports,” opined S.V. Krishna Prasad.
The CEO further went on to add that there is no level playing ground for the traders between the two countries. While India has very few regulations and allows the import of Chinese APIs without any major hurdles , China is imposing multiple regulations against the Indian exporters to that country. While this is disadvantageous for the Indian businesses, the Chinese are doing a brisk business in India, opined Krishna Prasad.
To tackle the existing scenario, the Indian government along with the Pharmaceutical Export Promotion Council and the industry are mulling over reforms to make the regulations stringent to contain the Chinese API imports as well as means to give the required support for the local manufacturers to build a strong base for manufacturing affordable APIs within the country.
“China is important for India. At the same time it is a fact that we are too much dependent on Chinese APIs. The government along with the industry is continuously in touch with the Chinese regulators and their government to resolve the issues and create a level playing ground for players from both the countries. We are looking on developing strategies as to how to capture the Chinese API market and how best India can venture into China to supply affordable quality generics. I am hopeful that if all goes well, we will definitely able to capture the Chinese and Japanese generic markets in the coming few years,” hopes Dr Appaji, Director General of Pharmexcil.
However, with various issues still lingering in the bulk drug industry in the country, India’s goal to attain self-sufficiency in bulk drugs remains a distant dream. The major reasons being the lack of incentives from the Indian government for the bulk drug manufacturers and the stringent pollution control norms that are hindering the investors in the API segment.
But with the Narendra Modi government at the centre, the Indian pharmaceutical sector has witnessed an encouraging and positive industrial environment. Particularly the government declaration of the year 2015 as the ‘Year of APIs’ and also the plan to set up six new pharma clusters has given the much needed boost to the bulk drugs or APIs as they are the active raw materials used in a drug that gives it the therapeutic effect.
V.K. Subburaj, Secretary, Department of Pharmaceuticals, says, “We are over-dependent on China for bulk drugs as more than 75 per cent of bulk drug imports are from China. Before getting out of our dependence on China, we need to create our own base. First and foremost is to create a conducive environment for the API industry to develop in India.”
Currently India has 300 large companies and over 10,000 medium and small-scale companies in the pharmaceutical manufacturing sector. About 77 per cent of them make formulations and 23 per cent APIs. The bulk drug manufacturing policy will be based on the recommendations made by a committee under former secretary (health research) V.M. Katoch, which has suggested ways to reduce the country’s dependence on China. The panel has called for the revival of public sector units to start manufacturing select essential critical drugs like penicillin and paracetamol. It also suggested tax-free status and cluster development for revival of the industry.
During the past few decades India has established five pharma sector PSUs—Karnataka Antibiotics and Pharmaceuticals Ltd (KAPL), Rajasthan Drugs and Pharmaceuticals Ltd (RDPL), Hindustan Antibiotics Ltd (HAL), Bengal Chemicals and Pharmaceuticals Ltd (BCPL) and Indian Drugs and Pharmaceuticals Ltd (IDPL). Out of these, HAL, BCPL and IDPL have been declared sick by the Board for Industrial and Financial Reconstruction (BIFR).
Reviving PSUs
Experts opined that, if India needs to revamp its API sector, it has to revive and reboot its PSUs by upgrading them with advanced technology and increasing their capacity to meet the domestic as well as the global needs. As per the statistics of Boston Consulting Group and the Confederation of Indian Industry (CII) conducted in 2013, the total imports of APIs and advanced intermediates have risen at a compound annual growth rate (CAGR) of 18 per cent from $800 million in 2004 to $3.4 billion in 2013.
Union chemicals and fertilizers minister Ananth Kumar told the Parliament last year that India was largely dependent on China for imports of drug ingredients of 12 essential drugs which are in the National List of Essential Medicines (NLEM). The BCG-CII survey took the case of Penicillin–G (Pen–G), which noted that till early 2000s, the government of India controlled its production through licenses. As a result, the total manufacturing capacity remained below the country’s demand. By the time India decided to increase its capacity on Pen-G, China’s capacity had tripled, with Chinese producers catering to approximately 35 per cent of global Pen–G demand. This led to an overcapacity in the global supply of Pen–G, resulting in China often dumping its products in the Indian market at a price below the production cost .
Supporting indigenous industry
According to Bulk Drug Manufacturers Association, the major threat for India from China is in the form of raw materials. “Since the over-dependence may pose problems for India in the long run, the government should give necessary support to the indigenous API industry to thwart the undue dumping by Chinese. As of now resumption of anti-dumping duty is the only means if not a panacea,” opined Krishna Prasad.
In the coming days, Indian policy makers are expected to come up with some concrete plans to revive the public sector units as well as incentivizing the private sector units to develop our own APIs manufacturing establishments to cater to the domestic as well as the global needs.
“It may not happen in one day, but may take a few years to reach that level. But definitely, with the advancements taking place in the bulk drug manufacturing and with more and more quality and pollution control issues being taken care of, definitely India will emerge as the best API maker in the world supplying ingredients at affordable and competitive prices to the global markets,” observed Krishna Prasad.