India has emerged as a key player in the global pharmaceutical scene in the mid nineties with its focus on cheap generics. Two major pharmaceutical markets, the North America and Europe, have been depending on Indian supply of generic medicines for their healthcare systems since then. India's two most prominent companies, Ranbaxy and Dr. Reddy's, have been manufacturing and supplying formulations belonging to most therapeutic categories to these regulated markets. The position as a key supplier of quality generics to world markets has also immensely benefited the leading Indian pharmaceutical companies by way of high profit margins in the initial years. And it is this lure of huge margins from generic exports that had attracted more and more large and medium scale pharma companies to get set for an export intensive growth. A rush to capture some share of the generics market followed during this period and the pharma companies started investing heavily on better formulation manufacturing facilities and practices. India thus having nearly 100 US FDA approved manufacturing facilities today is a testimony to this ambitious growth strategy. The folly of over dependence on generic exports to the developed markets is being realized by the Indian pharmaceutical companies now as fierce competition broke out in these markets during the last two years. Those huge margins are no more there and most of the Indian generic exporters are facing the pressure of shrinking margins.

What has been neglected by Indian pharmaceutical industry during last ten years is the production of APIs and drug intermediates. India had the reputation of being the key supplier of quality APIs to the international market in the eighties. But, after the generic success, manufacturing of several basic drugs have been discontinued by the Indian pharmaceutical industry as the margins from them were not good enough. Of course, they had been hit by the low prices of APIs and intermediates coming from Chinese suppliers. In fact, China has been dumping a large number of APIs into the Indian market at very low prices during last ten years. Even after the government imposing anti dumping duty on several APIs and intermediates as a protective measure, Chinese suppliers have been successful in exporting bulk drugs and intermediates much cheaper than Indian producers. Today, the scene has changed dramatically and the Indian pharmaceutical industry desperately depend on China for most of the APIs, intermediates and solvents. Production of basic drugs like penicillin G, ampicillin, amoxicillin, chloramphenicol, ciprofloxacin, norfloxacin, erythromycin, vitamins have been already discontinued by India for some years on the hope of their continued supplies at low prices. Now, prices of these products have been jacked up by more than 100 per cent by Chinese suppliers with no immediate option left to the Indian formulation industry. Some of these drugs were not even available at any price as the Chinese producers have also stopped their production. It is time for the leaders of this industry to realize that without a core API base, no pharmaceutical industry can survive for long and claim the mantle of a global player.