Home HEALTH china: As input costs soar, small drug units reach out to Centre...

china: As input costs soar, small drug units reach out to Centre for help

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A steep rise in raw material prices has begun to pinch the country’s drug manufacturers to the extent that some have sought government intervention to tame the prices and a top drug maker said it may be forced to pass on the cost increase to consumers.

The prices of active pharmaceutical ingredients (APIs), excipients, glass vials and packaging material, among other inputs, have escalated over the last three months.

Executives of some leading pharmaceutical companies told ET that the situation is in large part due to factory shutdowns and production cuts in China, the main source of APIs and key starting materials for Indian companies. APIs are required to manufacture finished formulations.

Yasir Rawjee, chief executive of Life Sciences (GLS), the maker of high-value APIs that target the chronic illness segments, said the company has so far been absorbing the increase in cost of inputs. “Now we will have to talk to our customers about passing on the input costs,” he said.

The price rise has particularly hit the micro, medium and small pharma companies. In Himachal Pradesh’s pharma hub, the 550-odd drug manufacturing units are facing a stiff challenge with raw material prices having trebled.

Rajesh Gupta, president of the Himachal Drug Manufacturers Association (HDMA), told ET that the prices of all APIs have risen by 25% to 300% over the last few months. For instance, paracetamol prices have risen to be in the ₹840-1,000 per kg range, up from around ₹300 per kg before the Covid-19 outbreak.

In this regard, HDMA has written to the prime minister, urging him to set up a task force on pharmaceutical inputs and packaging material to protect the industry and to prevent shortage of medicines in the country.

The association has also expressed concern over the increase in prices of excipients and solvents, including propylene glycol and glycerin. Glenmark Life’s Rawjee, who is also the company managing director, said prices of widely used solvents like methanol has also gone up, rising by 59% in the last six months. The cost of tetrahydrofuran (THF), another solvent, has risen by 150% in the same period.

The pharma industry uses 10-15 solvents, mainly for extraction and purification in the drug manufacturing process.

Packaging material, another key material for the pharma industry, has become expensive, too.

According to HDMA’s letter, prices of packaging material like aluminium and printed alu foils have risen by 25-30% over the last three months and are expected to increase further. The association’s letter said that prices of mono cartons and corrugated packing have risen by 25-40% and continue to increase. Even the PVC for blistering of tablets and oral liquid PET bottles are showing 25-30% jump in prices.

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