Why coronavirus virus could hit Indian pharma industry

Written by Prabha Raghavan
| New Delhi |

Updated: January 31, 2020 9:48:08 am

India is vulnerable also because it is heavily dependent on China for components used to make products across industries, including essential medicines.Now that a case of infection by the novel coronavirus (2019-nCoV) has been flagged in India, central and state governments will be expected to try to ensure that its response system is strong, quick, and proactive in order to prevent the infection from spreading any further. The density of population in India, low levels of public awareness, and vulnerabilities in the healthcare network present strong challenges to controlling outbreaks of communicable disease.
India is vulnerable also because it is heavily dependent on China for components used to make products across industries, including essential medicines. Its imports from China rose to $76.38 billion in 2017-18 from $60.41 billion in 2014-15 before dropping to $70.32 billion in 2018-19, but there is still a large imbalance in trade between the two countries — India imports much more from China than it exports to it.

Several products that India imports from other trading partners also have a heavy Chinese presence. For instance, a lot of the ASEAN region’s value chains are dependent on China. The lockdown in China to control the outbreak has the potential to disrupt global supply chains of various essential products and consumer goods. If the situation does not improve soon, several industries in India and, ultimately, its citizens, could be impacted.
Pharma sector key
According to government data, bulk drugs used to manufacture medicines were among the top 10 imports from China between 2015 and 2019. While an impact is expected across the board if the situation does not improve, experts feel pharmaceuticals may be among the sectors to be hit the hardest.
China supplies nearly 70% of the total bulk drugs and intermediates (raw materials) imported to make medicines in India. Some 354 drugs and drug ingredients were imported from China in 2017.
Source: Lok Sabha questions
Experts said that supplies of fermentation-based ingredients used to make most antibiotics and vitamins would be the most impacted in case a shutdown of operations in China continues, or if the infection spreads to major manufacturing hubs.
Major hubs for bulk drug exports are located far from Wuhan, but some industry executives said they were “closely” monitoring the situation as their imports from these hubs too have been impacted due to the extension of the Lunar New Year holidays.
Most companies have enough stocks of these materials to last for 1-3 months, but there are “limited” alternatives in other countries for these ingredients to make antibiotics and vitamins. However, India has enough capacity to manufacture the raw materials for most other medicines.
Read | Key drug ingredients, electronic parts may run short as coronavirus threatens supply
Impact on patients
Industry executives fear that if the situation does not improve soon, the cost of materials used to make medicines in India will rise regardless of therapeutic category. In the case of products that are under price control, the prices that customers pay should not be impacted. However, in the past, increasing prices of key therapeutic ingredients used to make drugs have led to shortages of the medicines in the country.
On those earlier occasions, industry bodies had sought an increase in the maximum retail prices of these medicines, arguing that they were unable to recover the cost of manufacturing them.
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