SPIKE IN RAW MATERIAL PRICES HITS PHARMA

  • A steep price increase of over 100% from prepandemic levels of certain raw materials for essential drugs — called active pharmaceutical ingredients (API) — has raised eyebrows in the industry.
  • Interestingly, the sharp hike — which should have corrected by now with the improvement in supply chain and logistics — has been witnessed in high-volume key antibiotics including azithromycin and amoxicillin imported from China.
  • These are also the products where India has near or complete dependence on China, industry experts told TOI.
  • As against this, prices of most vitamins, including vitamin B and D, also imported from China, are at an all-time low.
  • Besides APIs for key antibiotics, anti-TB rifampicin and anti-diabetes metformin have also doubled from the pre-pandemic level, Antibiotics including Azithro, Clav and Amoxicillin are high-volume products, the production of which is dependent on imports from the neighbouring country.
  • The dramatic increase is being attributed to multiple reasons like inflation, increase in prices of key starting materials and solvents due to crude, and the freight cost, experts added.
  • Further, few agents have been controlling the imports of certain products, which has led to a cartelisation of sorts.
  • The government should break the monopoly and prevent sole agents from controlling the market.
  • “It’s more about Chinese fleecing as we are dependent on them, coupled with some registration agents pushing them to form unholy cartels for their own benefits. ”
  • It may be noted that cost has gone up for only those drugs for which raw materials are imported from China.
  • Once the pandemic spread, API prices of certain drugs like fever and pain relief medication, paracetamol, life-saving antibiotic Meropenem (also used for Covid), and antidiabetic metformin, jumped by over 200%, putting the spotlight back on India’s near total-dependence on China.
  • Since 2020, prices have been increasing due to the pandemicinduced supply disruption and logistics challenges, pinching the industry hard.
  • API prices have remained inflated due to the lockdown in China for the past two three years, logistics and high energy prices.
  • So far, companies have been managing API prices by being efficient with operations.
  • Also, the government had allowed some price revisions a couple of years ago.
  • According to pharma policy, for essential drugs, prices undergo a change — either increase or decrease — in line with the annual wholesale price index (WPI) in April each year.
  • Non-scheduled drugs (those outside price control) are allowed an annual increase of 10% every year. 

SOURCE: THE HINDU, THE ECONOMIC TIMES, PIB

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