The Indian pharmaceutical industry is expecting a further drop in prices of some of the active pharmaceutical ingredients (APIs) and drug intermediates originating from China in the next two months.

Industry sources informed that the prices of the intermediates imported from China have already declined by almost 20 per cent. Now, with the expected re opening of chemical plants, shut prior to the Beijing Olympics in August this year, prices are expected to drop further. The sources feel that API prices may drop by 50 per cent in the next two months, according to Vinod Chitalia, chief executive officer of Mumbai based Lifeline Industries Ltd.

"The price of phosphate was recorded at Rs 400 per kg before Olympics 2009. The price has come down to nearly Rs100 per kg after the event. We expect that within next two months, the prices will come down by 50 to 70 per cent," said Chitalia, who runs four API plants, three intermediates manufacturing units and a formulation unit in Maharashtra and Karnataka under Lifeline.

"With the conclusion of Olympics, many of the factories closed down for violation of environmental laws in China are on the process of re-starting their operations. These companies will be able to commence supply in next two to three months and the prices will naturally come down at the time," added a source from another API manufacturing company.

In the run up to the Beijing Olympics, the prices of various intermediates and raw materials had gone up by nearly 100 to 200 per cent due to the stringent environment laws imposed by the Chinese government on the industry leading to closure of a large number of chemical manufacturing plants. The increased demand for intermediates and the short supply played an important role in the skyrocketing of prices of bulk drugs and intermediates.

However, the Indian pharma companies have stacked up the inventories prior to Olympics 2008 due to apprehension of shortage of imports at the time of the event. According to the trade sources, the sales of intermediate importers in the country have declined by 50 per cent from the middle of August even as the off take of intermediates was dramatically high in the month of April, June and July.