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Duty cut on active pharmaceutical ingredients likely amid coronavirus outbreak

India imported APIs worth $2.5 billion in 2018-19 from China.

Published: 20th February 2020 12:09 PM  |   Last Updated: 20th February 2020 12:09 PM   |  A+A-

Coronavirus India

For representational purposes (Photo | PTI)

Express News Service

NEW DELHI:  The government is mulling duty cuts on APIs (active pharmaceutical ingredient), the raw material used to make medicines as supplies from India’s biggest source — China — have dried up after shipments from the country took a major hit on account of the Covid-19 pandemic. 

According to officials, this was one of the issues taken up by a high level inter-ministry group. “India imports nearly 67 per cent of its APIs from China. There are alternative sources but they are costly. To keep our costs competitive we have considered duty cuts,” said officials.

India also manufactures APIs and till two decades ago used to depend mainly on indigenous production for it drug industry. However, China’s scale of production and cheaper capital costs pushed down prices to such an extent that most Indian API manufacturers are making at 30-40 per cent capacity.

A meeting between top pharma companies with Niti Aayog officials decided to ramp up both production and capacity of API manufacturing in India, a goal India had set for itself several years ago but has not been able to fulfil given China’s cost competitiveness. Among those who attended the meeting was Biocon’s Kiran Majumdar Shaw.

India imported APIs worth $2.5 billion in 2018-19 from China. The raw material feeds medicine manufactured for bot the domestic market as well as India’s $19.14 billion pharma exports business. India has in the past too imported from US, Singapore and Italy among other countries whenever it has faced supply disruptions from China. 

“We have in the past imported ingredients from even Chile. Alternate sources need to be tied up as stocks imported by the industry from China are likely dwindle significantly by April as no one carries beyond two-three months inventory,” said Siddhartha Dasgupta, advisor, east India Pharmaceuticals Works Ltd.

According to a report by Hong Kong-based research firm Haitong International Securities, Indian pharma companies making HIV, cancer, epilepsy, malaria, commonly used antibiotics and anti-inflammatory drugs would be hit most by raw material shortages.

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