Supply chain disruptions, quality issues and sharp price increases are some of the problems resulting from over-reliance on a single source of supply of life-saving medicines and other raw materials. essential. The current need is to empower and promote the domestic pharmaceutical manufacturing industry in order to mitigate the risks associated with overdependence on other countries.
Covid-19 has exposed the over-reliance of the global pharmaceutical industry on China for raw materials, drugs and other manufactured goods. China is a major producer and exporter of low-cost, high-volume ingredients, with the country accounting for around 40% of all active pharmaceutical ingredients (APIs) used globally.
China’s dominance in the pharmaceutical sector has been seen as a source of concern by many governments around the world, especially in the United States. The US Congressional Research Service drew attention in April 2020 to the country’s dependence on China-based manufacturing and supply chains. Health researchers Rosemary Gibson and Janardhan Prasad Singh also pointed out in their book that it is inherently risky to become dependent on a single country as a source of life-saving medicines, especially as a result of geopolitical uncertainties and other serious security concerns. standards and quality control.
India also sources most of its APIs (around 70%) from its eastern neighbor, despite being a major producer of generic APIs – 66% of global API production is made in India and China, India accounting for 20% of the world’s generic drug production in terms of volume. Until 2010, India maintained its position as the world’s leading supplier of APIs and intermediaries. However, as China began to boost its API industry through economic incentives and large-scale capacity expansions, this made it an inherent cost advantage over Indian manufacturers, who switched to finished formulations. This, along with other factors, has held back the growth of the domestic API industry, so that in recent years India has become more and more dependent on China for API imports. (API imports from China grew at a compound annual growth rate of 8.3% between 2012 and 2019). Data shows that for drugs like paracetamol, metformin, ampicillin and ciprofloxacin, the country is completely dependent on India.
Over-reliance on a single source of supply has raised many concerns, particularly in the wake of the ongoing Covid-19 pandemic. These include repeated supply chain disruptions, sharp price hikes and quality issues. Supply chains across the world have been repeatedly disrupted due to increasing scrutiny from Chinese environmental regulators. Quality issues are also very important given the country’s history of counterfeit drugs. In addition, in the past year, prices of APIs from China have increased by around 20-35%, which has been a source of concern for the domestic pharmaceutical industry.
India, like many other countries, has always been keen to boost its domestic pharmaceutical industry. The ongoing pandemic has only underscored the urgent need to strengthen the country’s capacity to locally develop APIs, key raw materials (KSMs) and other intermediates to reduce single-source dependency.
While India’s pharmaceutical industry is home to nearly 3,000 manufacturers and around 10,500 manufacturing units and aptly dubbed the “Pharmacy of the World”, it continues to be plagued by many loopholes. The industry is highly fragmented with only a handful of pharmaceutical giants operating in the organized segment. Lack of infrastructure and appropriate incentives has also had a deterrent effect on local manufacturing and has invariably increased reliance on imports of basic bulk medicines, vitamins and nutraceuticals in huge quantities. Other inhibiting factors include complex regulatory compliance, high costs of financing and other resources, delays in acquiring land and other environmental permits, cumbersome registration and permit processes, and more.
The Indian government has announced a 6,940 crore program to boost domestic API manufacturing and reduce reliance on API imports, covering 53 core APIs and KSMs. The government has also allocated 3,000 crore to build three bulk drug yards over the next five years. Experts, however, believe more needs to be done in this space. The country should formulate strategic policies in the form of incentives related to sustainable production, development of infrastructure, improved research and development facilities, capital subsidies, tax incentives and measures to facilitate business. to encourage the manufacture of low-cost bulk drugs in the country.
Essentially, India needs to create a favorable ecosystem by developing strategic partnerships and collaboration to drive the growth of the domestic bulk drug industry to become a global leader in API production.
Gaurav Kaushik, Managing Director and CEO, Meteoric Biopharmaceuticals
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