Coronavirus Outbreak Causes Supply Problem For India’s Drugmakers

The price of many pharmaceutical ingredients has spiked for Indian drugmakers following panic buying and Chinese raw material shortages caused by the coronavirus lockdown.

The price of azithromycin and other mainstream antibiotics has risen 50 per cent since the outbreak became public in January, said Rahul Soni, chief executive of Overseas Healthcare, a drug manufacturer based in the northern Indian city of Jalandhar.

“When this virus wasn’t there, the rate we got from [importers] was Rs7,300 ($102) per kg. Today it is Rs10,500 per kg. Prices are extremely high. It’s a big problem,” said Mr Soni.

China plays a vital role in the global supply chain of pharmaceuticals. India, which is one of the world’s largest exporter of drugs, relies on China for 70 per cent of its raw pharmaceutical ingredients. For many critical antibiotics and antipyretics — medicines that reduce fever — the dependency is almost 100 per cent, experts say.

Prices have surged in recent weeks as Chinese manufacturers have run out of supplies due to traffic restrictions and staff shortages.

“We are charging our Indian clients about twice as high as we did before the outbreak. That’s in part because we are running out of raw material,” said an official at Jinan Finer Chemical Co, a Chinese maker of pharmaceutical ingredients.

The official said many chemical factories in the disease-stricken provinces of Hubei and Henan had not received approval to reopen. He estimated a return to normal production by mid-March if the coronavirus outbreak was brought under control.

Another problem is logistics. “Less than half of our truck drivers have returned to Jinan and that (has) constrained our ability to receive raw material from other parts of the country,” the official added.

Srinivasan, managing trustee of Low Cost Standard Therapeutics, a not-for-profit generic drug manufacturer in Vadodara, Gujarat, said prices of paracetamol had almost doubled since the outbreak began to Rs430 per kg. “Distributors and traders are making a killing,” he said.

Indian pharmaceutical companies usually keep a stock of ingredients to last between one and two months. Large companies with diversified drug portfolios were better placed to survive the disruption, but smaller ones were more vulnerable and might face bankruptcy, warned Mr Srinivasan.

The coronavirus outbreak has laid bare India’s dependency on China, on everything from electronic imports to machinery and organic chemicals. Indian pharmaceutical companies are “running close to exhausting their supply of raw material”, according to a February 16 report from the Confederation of Indian Industry (CII), the business lobby group.

The report found that importers were facing challenges in securing supplies of a raw material for paracetamol that is sourced from China. “India pharma companies have placed orders but are unclear on the status of delivery”, the CII said.

The uncertainty over when Chinese factories would restart production was hampering Indian companies’ plans, said Viranchi Shah, director of the Gujarat state board of the Indian Drug Manufacturers’ Association.

“We are not getting any official news,” said Mr Shah. “If it was more transparent, things would be easier.-Financial Times

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