New Delhi: Every “single” Indian pharma company will be impacted by shortage of raw materials if coronavirus-hit China fails to resume drug production soon, according to a new report by Hong Kong-based equity research firm Haitong International Securities Group.
With the Indian pharmaceutical industry highly dependent on China for supply of raw materials, the report highlights that firms producing drugs for HIV, cancer, epilepsy, malaria, commonly-used antibiotics and anti-inflammatory drugs are likely to be affected the most.
“Indian industry is so intertwined that it is impossible in our view to find a single player that would not be impacted by Chinese API [active pharmaceutical ingredients]/ intermediate shortages, should these materialise from post-mid-March,” the paper titled ‘India Pharmaceuticals: Coronavirus Impact’ notes.
Amid rising concerns over shortage of drugs in India, top honchos of the Indian pharmaceutical industry — including Kiran Mazumdar Shaw of Biocon, Sudhir Mehta of Torrent Pharmaceuticals, Pankaj Patel of Cadila Healthcare, Dilip Shanghvi of Sun Pharma and Satish Reddy of Dr Reddy’s Laboratories — are slated to meet government officials Wednesday for a meeting called by Amitabh Kant, CEO, NITI Aayog.
Pharmaceutical imports from China close to $10 billion
The report notes that India imports close to $10 billion worth of pharmaceutical and organic imports from China, of which bulk drug (raw materials for the manufacture of drugs) or API imports are more than $2.5 billion.
“This number becomes important when we understand that the total value of pharmaceutical production in India is more than $30 billion (for exports and consumption in India),” the report says.
Indian drug makers import around 70 per cent of their total bulk drugs requirements from China. In the 2018-19 fiscal, the government had informed the Lok Sabha that the country’s drug makers had imported bulk drugs and intermediates worth $2.4 billion from China.
Supplies likely to be exhausted by mid-March
The most impact, notes the report, would be on those Indian industries producing anti-HIV and non-steroids based anti-inflammatory drugs.
“In our view, companies such as Laurus, Granules India, Solara Active Pharma are likely to have significant exposure. This is largely attributed to the anti-AIDS, non-steroid based anti-inflammatory drugs, and central nervous system (CNS) APIs that these companies produce,” wrote analyst Amey Chalke.
The report also states that Aurobindo Pharmaceuticals — one of India’s top pharma companies — which produces antibiotics and anti-HIV drugs has one of the highest exposures to Chinese imports.
Other pharma firms such as Alembic, IPCA, and Natco are heavily dependent on Chinese suppliers for macrolides (antibiotics), antimalarial and anti-cancer products respectively.
“Fortunately, this healthcare crisis coincided with the Chinese New Year, due to which most API companies were well stocked in India. However, after speaking with industry experts, we believe that these supplies are likely to be exhausted by mid-March,” Chalke wrote.
Government, top pharma heads to meet today
An office memorandum issued by the Department of Pharmaceuticals last week had stated that industry leaders will meet government officials Wednesday to discuss the “various options for domestic manufacturer of critical APIs in which India is critically dependent on imports”.
The government has invited 16 top drug makers of the country for a meeting with Dr S. Eswara Reddy, joint drug controller of India, Dr Balram Bhargava, secretary, Department of Health Research and other secretaries from the Ministry of Environment, Forest and Climate Change, Department for Promotion of Industry and Internal Trade, Department of Expenditure and Ministry of Commerce and Industry.