Coronavirus pandemic threatens to cut pharmaceutical industry’s lifeline

NEW DELHI: China’s coronavirus pandemic is threatening to disrupt India’s $39-billion drug production by halting or severely affecting the flow of imports of bulk drugs and intermediates from the country. India, the world’s third-largest drug producer by volume, imports 70% of its raw materials from the Middle Kingdom. This may slow down to a trickle, according to industry executives, if the restrictions in the neighbouring country continue for a few more weeks.

“We cover ourselves with extra inventory,” said Arjun Juneja, director, Mankind Pharma. “So, there is no fear till mid-February. However, if it goes beyond that, 70% of industry will get impacted,” he said. Some other firms said they had buffer stock for next few months.

China’s decision to extend the Lunar New Year holidays and the quarantine of more than 45 million could make imports of key raw materials difficult, experts added.

Most units near epicentre of outbreak
“The spread is likely to threaten pharma’s ingredient sourcing,” said BR Sikri, chairman, Federation of Pharmaceutical Entrepreneurs (FOPE). “The Chinese government has extended holidays and due to delay in shipments from the country, India is likely to face shortages of essential drugs.”

Raw materials from China are used in making antibiotics, paracetamol, and diabetes and cardiovascular drugs, among others. Companies including Lupin, Sun Pharmaceuticals, Glenmark, Mankind, Dr Reddy’s, Torrent, Aurobindo Pharma and Abbott are hugely dependent on Chinese imports. “About 90% of the needs of antibiotic makers in India is fulfilled by China. The entire spectrum of the industry — small, medium and large-scale — is going to get impacted if the situation continues,” said an expert from a pharma advocacy group, requesting anonymity.
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The problem for the Indian industry has been compounded by the fact that much of Chinese drug raw material production is concentrated in Hubei, whose capital is Wuhan, the epicentre of the coronavirus outbreak. There are approximately 30-40 units of basic chemicals, API and intermediates in Hubei which supply products to India. Zhejiang and Jiangsu are the other two main centres of production and they are also located close to Wuhan.

Bulk drugs, or active pharmaceutical ingredients (APIs), are the raw materials used for making formulations or medicines. Intermediates, on the other hand, are chemical compounds that are used in producing APIs.

Mehul Shah, a pharma expert familiar with the Chinese pharmaceutical industry, said there is going to be more panic in the days to come. “There is going to be serious scarcity as the inventory levels are dropping.” He added that the supplies became erratic from January 10 and it may become a bigger problem if the situation continues in February.

“The factories (in China) were earlier supposed to remain shut till January 31. However, a new notice by the government says the factories cannot start operations till February 9. If this continues, (there’s going to be a) serious scarcity of intermediates,” said Shah.

However, some pharma lobby experts feel this is a blessing in disguise. According to India’s drug regulatory body, the country has 1,500 plants that manufacture APIs and are running at 40% of their capacity. “If the situation demands, a large number of medium enterprises in Baddi (in Himachal), Hyderabad and Maharashtra may have to gear up to fulfil the demand,” an expert said.
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