India’s main worry today should be the danger China can pose to the domestic pharmaceutical production as the trouble in the Indo-China border is only escalating. Dependence of country’s pharmaceutical sector on China for most of its active pharmaceutical ingredients (APIs) and intermediates has only increased over the years with no serious efforts from the government or industry to step up production of APIs. Currently, India is importing about $3 billion worth of APIs, intermediates and other chemicals from China. This is more than 80 per cent of the country’s annual requirements of APIs. Any action by China to stop export of APIs and other raw materials to India on account of border conflict would be disastrous as the industry does not have any alternate sources to procure these basic raw materials. This would mean that production of several essential and life saving drugs required within the country will be in trouble. Currently, India is importing even many common drugs such as aspirin, paracetamol, first-line diabetes drug metformin and antibiotics such as erythromycin. Already China started dictating prices of most of the APIs with no consideration of actual production costs. The uncertainty on the API front is happening at a time when the country is facing a serious health problem with the return of many infectious diseases and explosive growth of lifestyle diseases.

India has been producing most of the APIs required in the country and even exporting a major part of the same to Europe and the US just 20 years ago. But, the cost of production of APIs used to be quite high because of low scale of operations and high power and labour costs. Low returns and stringent environmental regulations had also discouraged API producers in the country. It is at this time, China emerged as a producer of APIs with huge capacities and lower cost of production. This situation motivated Indian pharma industry to import APIs from China and that led to the gradual decline of API sector in the country. The Central government realized the danger of total dependence on China for all the country’s requirements of APIs for some time. The Katoch Committee, set up by the Department of Pharmaceuticals to formulate a long term policy for reviving the domestic manufacture of APIs, had submitted its report in February, 2015. The committee had made a number of recommendations for the revival of API manufacturing in the country. One such proposal was cluster development model 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. After almost three years no clusters or major API production facilities have come up anywhere in the country. Now, Pharmexcil has decided to set up an innovation desk with the objective to promote import substitution and help the pharmaceutical industry to avoid excess dependence on API imports. All these are critical initiatives by the government and Pharmexcil but may take some time to bring results. What is extremely urgent is to explore sources of essential APIs in other parts of the world to meet any emergency situation.