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After the sharp fall in the prices of Active Pharmaceutical Ingredients (API) in China, medicines may soon become cheaper in India. Experts believe that due to cheaper API, the manufacturing costs of generic drug manufacturing companies are likely to reduce, which will reduce the prices of medicines. According to industry people, API prices have fallen by at least 35-40 per cent and are expected to fall further in the coming months. Let us also tell you what kind of details have come to light regarding API and cheap medicines.
How cheap did China’s API become?
There has been a big decline in the prices of raw materials coming from China for making generic medicines in India. Let us try to understand this with an example. The prices of Paracetamol API have come down from Rs 900 per kg during the pandemic to Rs 250 per kg now. Amoxicillin, which was earlier Rs 3,200 per kg, is now Rs 1,800 per kg. Similarly, clavulanate was at Rs 21,000 per kg and is currently at Rs 14,500 per kg. Mehul Shah, who keeps an eye on the Chinese pharmaceutical industry, said that we are seeing a decline in the prices of API and hopefully it will benefit the common patients. Due to strategic investment after Covid, large-scale expansion of API factories in China has seen an increase in production. We are expecting further decline in the near future.
India depends on China for API
The falling prices of API in China is expected to reduce the production cost of Indian companies. India is heavily dependent on China for API imports, about 70 percent of APIs come from China. Dinesh Dua, former chairman of the Pharmaceutical Export Promotion Council, said this dependence makes Indian manufacturers vulnerable to price fluctuations and supply chain disruptions. Shah said the prices are expected to fall further, and hopefully this will bring down drug prices in India. Another expert said that NPPA will keep an eye on this and issue notification regarding reduction in prices.
the story is something else
However, Namit Joshi, Chairman of Pharmaceutical Export Promotion Council of India (Pharmexil) said that the situation is not completely correct. He said that the sudden increase in domestic demand in China has created an imbalance in demand and supply, due to which the normal pricing behavior is deteriorating. He said this led to an unexpected and sharp decline in global prices, and Chinese API prices fell well below sustainable production levels. Such aggressively low pricing clearly harmed many Indian API makers, who suddenly found themselves operating in an environment where prices were distorted rather than market-based. The situation got so bad that an investigation had to be initiated in China itself, as prices had fallen below cost, attracting the attention of regulators.
Low prices increasing challenges
He said that the reality is that the PLI system has come under a lot of pressure. The main reason for which is China’s setting low prices in many PLI-notified product categories. This has reduced the competitiveness which was supposed to be promoted under the incentive scheme. Dua said that although fluctuations in raw material prices in China pose challenges, India’s initiatives like PLI, bulk drug parks and R&D incentives are aimed at strengthening its API sector and boosting export competitiveness on a long-term basis.