The restrictions due to the Coronavirus outbreak remind us that depending on China for raw material supplies is a risk
As ‘Coronavirus’ or 2019 n-CoV spreads rapidly across the world, it has given rise to apprehensions over whether the epidemic will impact the supply of active pharmaceutical ingredients (API) from China (the largest producer of APIs) to India and other countries. India’s pharma industry is already worried. It has hinted that a rise in medicine costs cannot be ruled out even as inventories are comfortable for three months. To be sure, the 2019 n-CoV cannot travel through consignments, as the virus can survive for just four or five days in the open. However, if the lockdown in China persists, with workers staying away, it can impact the output of API units there. While US Commerce Secretary Wilbur Ross has observed, perhaps ungraciously, that the epidemic will usher a shift of jobs out of China and back to the US, his remark reminds us that the global pharma industry’s dependency on China for raw material supplies is fraught with risk. India imports 68-69 per cent of its API requirements from China, which amounts to $2.4 billion. These imports are used to manufacture key medicines such as paracetamol, metformin, ofloxacin, metronidazole, ampicillin and amoxycillin. Supply disruptions have occurred in the past — during the 2008 Beijing Olympics, for instance, these units were shut down over environmental concerns.
A similar cutback took place in 2018. It is noteworthy that these shocks, in fact, boost India’s API exports, which account for about a fourth of the country’s total pharma exports of $20 billion. Even so, the Centre has rightly acknowledged the need for self-sufficiency in APIs, setting up an ‘inter-departmental’ task force in 2018 to look into the issue. It is another matter that earlier committees have delved into the issue of boosting API output.-Hindu Business Line