Large domestic producers of Penicillin G are heading for a serious financial crisis due to excessive dumping of the product from China. The price of Pen G has come down drastically to $5 per kg as against $12, which existed few years ago, according to pharmaceutical traders based in Mumbai.

Companies facing declining margins as a result of dumping include JK Pharma, Tamil Nadu based Spic, Gujarat-based Torrent and Alembic. The combined installed capacity of these four units is estimated at 6000 MMU. Torrent and Alembic have already cut down their Pen G production by 20-30 per cent and are limiting their production for in house manufacture of derivatives and higher end antibiotics like amoxycillin, ampicillin and cloxacillin, said sources. Pune-based HMGB closed down its unit recently.

There are a large number of medium scale Indian companies, who regularly import Pen G from China for the manufacture of ampicillin, amoxycillin and cloxacillin for exporting to unregulated markets of Africa and South East Asia. The lower Chinese Pen G price has benefited these Indian players.

Earlier Penicillin G was in the negative list and invited anti dumping duty from the Union government. However, intense lobbying from these mid-size players made the government to lift the anti-dumping duty on Penicillin, benefiting the Chinese companies.

Import registration was however imposed for Penicillin from China, which again resulted in limited Chinese imports. However, on account of domestic lobbying from the Indian industry, government partially removed the import registration requirement.

Penicillin is produced more cost effectively in China compared to India. Moreover, the quality of Penicillin produced in cooler climatic conditions of China is superior to that, manufactured in India.

The prices of ampicillin, amoxycillin and cloxacillin have come down by 50 per cent over the last few years. Cloxacillin, amoxycillin and ampicillin prices have reduced to Rs.1,150, Rs.1,250 and Rs.1,200 per kg from the earlier price of Rs.2,700. The current international prices of these antibiotics are $25 per kg.