In February, the Indian commerce secretary had written to around 200 missions asking them to look at companies in those countries that could be an alternative source of procurement for the Indian industry.
With tension growing at the India-China border, the government is actively looking for alternative sources for bulk drugs, which are used to make medicines, to avoid any crisis in the domestic market for its reliance on the hostile neighbour. Price and capacity constraints, however, would be big impediments.
The Covid-19 lockdown experience is proving useful. When Covid-19 had struck China and imports from that country dwindled, the Union government carried out an exercise that could now become a fallback for the Indian pharmaceutical industry in the case of any disturbance in the bilateral trade. In February, the Indian commerce secretary had written to around 200 missions asking them to look at companies in those countries that could be an alternative source of procurement for the Indian industry.
Fifteen-sixteen missions wrote back with details of possible sources for items across around 100 trade categories, covering around 550 harmonised system codes (HSC) or the numbers given to items of trade. The United States, Italy, and some other European countries were identified as prospective sources for imports of active pharmaceutical ingredients (APIs), but the further enquiry found that these countries did not have much spare capacity to feed the Indian market, said a senior official. “Brazil is also developing as an alternative source, though the emphasis continues to be on upping the domestic capacity,” said the official. One of the key obstacles is the price since the Chinese imports are cheap.
The local pharma industry, however, claimed some Chinese APIs have become expensive over the last one month. “The prices of the APIs for paracetamol, vitamin C, etc, have gone up in the last one month. There has been a price rise in the range of 20-25 per cent across the board,” said Daara B Patel, secretary-general, Indian Drug Manufacturers’ Association (IDMA).
Sudarshan Jain, secretary-general of Indian Pharmaceutical Alliance (IPA), which represents the big drug companies in the country, said there was three to four months of inventory in the country. “We have also reassured the government that if need be we will source from more expensive suppliers, but ensure that medicines are available in the domestic market,” he said. The government is keeping a close watch on the inventory situation. After Covid-19 supply disruptions, local players have picked up stock for three to four months, say firms.