India is importing less pharmaceutical raw materials from China, but the Chinese challenge is far from over.
ON January 29, 2016, the Narendra Modi government decided to withdraw the customs duty exemption on import of 73 bulk drugs. It was a tough call as import of these low-cost key active pharmaceutical ingredients (APIs), or raw materials – almost entirely from China – was helping Indian formulation companies, or entities that make syrups, tablets, injections, etc, remain competitive. An increase in medicine prices due to rise in input costs would have been unpopular as imports included raw materials used to make life-saving medicines for critical illnesses such as cancer and HIV/AIDS.
But the government bit the bullet because of a bigger threat. The import of low-cost bulk drugs from China, which touched almost $2 billion in 2014/15, was severely impacting domestic bulk drug production. India had become too dependent on raw materials from China for making several life-saving drugs and there were apprehensions that any abrupt end to this flow could trigger a public health crisis, as the domestic industry didn’t have the capacity to fill the gap. The fact that bulk drug and other key drug intermediate imports from China touched a record $2.14 billion in 2015/16, justified the fear.
Two years later, the government has a reason to rejoice, as the value of drug imports from China dropped one-third to $1.41 billion in 2016/17. The escalation in retail prices has not been steep. And there are signs of revival of bulk drug manufacturing hubs in states such as Gujarat and Telangana.
Has this been possible because of the withdrawal of the customs duty exemption? And, is there a visible change in the drug industry’s dependence on China? It is too early to say.
The Dependence
This story is from the December 31, 2017 edition of Business Today.
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This story is from the December 31, 2017 edition of Business Today.
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