Karnataka pharma industry is facing a dual challenge of hefty price hike and short supply of active pharmaceutical ingredients (APIs) like sucralfate, pantoprazole, ibuprofen, menthol, fluoroquinolones and vitamin C. The shortage of antibiotics, analgesics and other APIs, imported from China, is critical for formulation companies including Micro Labs, Bal Pharma and Embiotic.

The price hikes of these APIs have been going on for one year now: Sucralfate price increased from Rs.400 a kg to Rs.1,000 indicating a 150 per cent rise. Pantoprazole is up by 87.5 per cent from Rs.4,000 to Rs.7,500. Menthol is 66.6 per cent from Rs.900 to Rs.1,500. Ibuprofen is up by 29 per cent from Rs.550 to Rs.710. Ofloxacin went up by 42.8 per cent from Rs.2,100 to Rs.3,000. Levofloxacin reported 66.6 per cent increase from Rs.1,800 to Rs.3,000. Vitamin C price went up by a 40 per cent. There has been a steady increase of price of 30 to 40 per cent for fluoroquinolone which are a broad spectrum of antibiotic in one year, Harish K Jain, treasurer, KDPMA and director, Embiotic Laboratories, told Pharmabiz.

The price rise has seriously impacted Micro Labs which manufactures a wide range of formulations from antipyretics to infections and gastro intestinal conditions.

The companies also stated that there is complete dependence on China for sourcing fluoroquinolones, vitamin C among others which were earlier manufactured in India. But in the last four years most companies have discontinued production.

There is need to identify a few APIs and intermediates like penicillin G, 6APA, 6ACA, paracetamol, fluoroquinolones, vitamin C, lactose, for which India has the production know-how, to scale up and manufacture in huge capacities, said Jain.

The key factor for China to dominate the API landscape is favourable industrial environment, expediting of policies relating to taxation, banking, customs clearance, inspection, logistics and transportation. There are also liberal labour laws at its Special Economic Zones which provide economies-of-scale, he added.

From duty drawback on exports which is about 9 per cent compared to India’s 2 per cent, low bank interest rate for export credit at around 4 per cent in contrast to India’s 13 per cent give China a big edge, he said.

More over for API production, a high energy intensive activity, the Chinese government is providing power at low cost. There is easy access to industrial land at subsidized costs and presence of common effluent treatment plants. The industries do not experience any cascading effect with high taxes unlike India which has CST, entry tax, octroi for interstate purchase of pharma raw materials. Therefore, it is impossible for India to compete with the Chinese companies which are trying to eliminate the Indian API manufacturers, said Jain.

Unless the Union government provides a level playing field, protect the industry with immediate measures like anti dumping duty, strict quality monitoring of imported products, look out for violations of global trade treaty, there is no hope on the horizon, he said.

The government should move bulk drug industry from red to orange category as per pollution control norms. Funds need to be allocated for research, in process engineering and incentivize capital investment on par with R&D ventures. Utilizing various incentives from Department of Pharmaceuticals, Pharma Parks with common facilities need to be set up. Pharma associations need to take a lead in forming co-operative alliances to leverage individual strengths, he said.