Monday, February 27, 2023

A rise in raw material costs affects pharmaceutical businesses

Spike in raw material prices hits pharma companies

 MUMBAI: The pharmaceutical industry has been puzzled by a steep price increase of over 100 percent from pre-pandemic levels for some essential drug raw materials, known as active pharmaceutical ingredients (API).

It's interesting to note that high-volume imports of key antibiotics like azithromycin and amoxicillin from China have been affected by the sharp increase, which should have subsided by now given improvements in logistics and the supply chain. According to industry professionals interviewed by TOI, these are also the products for which India is nearly or completely dependent on China. Contrarily, prices for the majority of vitamins, such as vitamin B and vitamin D, which are also imported from China, are at an all-time low.

They added that APIs for important antibiotics, such as rifampicin for TB and metformin for diabetes, have also doubled since the pandemic began. Azithro, Clav, and Amoxicillin are examples of high-volume products for which imports from the neighboring nation are necessary for production.

Experts added that a number of factors are to blame for the dramatic increase, including inflation, an increase in the price of essential starting materials and solvents due to crude, and the freight cost. In addition, a cartelization of some kind has developed as a result of the fact that fewer agents have been in charge of regulating the imports of particular goods. An executive from a company that makes APIs stated that the government should break the monopoly and prevent sole agents from controlling the market. "It's more about Chinese fleecing because we are dependent on them, combined with some registration agents pushing them to form unholy cartels for their own benefits," a Mumbai-based trader stated.

It should be noted that the only drugs whose raw materials are imported from China have seen an increase in price. Paracetamol, a fever and pain reliever, and the life-saving antibiotic Meropenem (also used for Covid) saw their API prices rise by more than 210 percent as the pandemic spread, highlighting India's near-total reliance on China. Prices have been rising since 2020 as a result of supply disruptions brought on by the pandemic and logistical difficulties, severely affecting the sector.

"The lockdown that has been in place in China for the past two to three years, as well as high energy costs and logistics costs, have kept API prices high." Companies have managed API prices thus far by being effective in their operations. Additionally, the government had previously permitted price adjustments, as stated by Sujay Shetty, global health industries advisory leader at PwC India.

In accordance with pharmaceutical policy, essential drug prices fluctuate in accordance with the annual wholesale price index (WPI) in April of each year. The annual increase for non-scheduled drugs—those that are not subject to price control—is permitted to be 10%.

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