Developments in China have been impacting bulk-drugs players in India. Recently,quality issues with Chinese active pharmaceutical ingredients in hypertension drugs had prompted a global recall.
That prompted multinationals to look at alternative sources such as India. Further, the recent clampdown on polluting industries in China had led to a shutdown of several bulk-drug factories.
This has impacted China’s supply of bulk drugs, providing Indian players with a short-term opportunity.
We expect a gradual uptick in the margins for SMEs,aided by easing raw material pressures and increasing demand.
Raw material pressure would recede with a revival in supply from China owing to some Chinese factories moving inland and capacities coming back on-stream. In a bid to reduce dependence on China for bulk drugs, the Indian government is also looking at steps to boost domestic production.
It has recently given in-principle approval for a proposal to set up a bulk- drugs park in Himachal Pradesh. Also, companies have been allotted land at the MIHAN bulk drugs park in Nagpur.