New Delhi: India could soon establish a separate department to boost domestic manufacture of raw materials for medicines to cut the pharma industry’s dependence on Chinese imports, ThePrint has learnt.
Despite being the leading supplier of high-quality medicines across the globe, the Indian pharmaceutical industry is heavily dependent on China for the ingredients used to make even basic drugs such as the over-the-counter painkiller, Crocin.
As a result, the supply-chain disruptions caused by the ongoing coronavirus outbreak in China have triggered fears of a drug shortage in India, which imports as much as 70 per cent of raw materials — bulk drugs or active pharmaceutical ingredients (APIs), key starting materials and intermediates — from its eastern neighbour.
To fight the challenge in the short- and long-term, the central government formed a high-level committee last month to monitor the availability of raw materials.
The committee, led by Joint Drug Controller Dr Eswara Reddy, submitted its report to the Department of Pharmaceuticals on 27 February.
One of the suggestions offered in the report, which has been accessed by ThePrint, is boosting domestic manufacture of bulk drugs. To oversee this exercise, the committee has recommended setting up a “Drug Security Authority (DSA)” under the Department of Pharmaceuticals, which is overseen by the Ministry of Chemicals and Fertilisers.
“The government should establish DSA not only to make India self-sufficient but also to become a global leader in manufacturing of APIs, key starting materials, intermediate and chemicals for domestic as well as export,” the committee stated.
“Such authority will ensure a complete ecosystem in terms of infrastructure, technology, business model etc…,” it added.
An official, who is part of the committee, told ThePrint the DSA will hold the “mandate to identify the raw materials India needs to produce to keep its three important industries — namely pharmaceuticals, medical devices and cosmetics — self-sufficient and running”.
How will the authority work?
According to government figures, the country’s drugmakers imported Chinese bulk drugs and intermediates worth $2.4 billion in 2018-19.
The committee has claimed in its report that making India self-sufficient in the sector will help save foreign exchange to the tune of Rs 30,000 crore currently spent on the imports of raw materials.
Based on its calculations, the panel has suggested a cess on imported pharma raw materials to help fund the DSA.
“One per cent cess will fetch DSA Rs 300 crore. Another Rs 300 crore could be invested by the government. With the available Rs 600 crore, the DSA will support the overall requirement of the industry including funding and research,” the official said.
The official added that the DSA will identify key raw materials and study the latest technology to zero in on the lowest cost of production and spell out viability of projects.
“For instance, producing penicillin G is only viable at 5,000 metric tonnes annually to sell at competitive prices. If anyone wants to manufacture at a plant with a capacity of 200 metric tonnes, the cost of production will be high enough to make the final medicine expensive and non-competitive in the market,” the official said.
The committee has suggested four points on which the new authority should focus — all of which concern re-establishing the fermentation industry, which churns out bulk drugs for antibiotics such as amoxicillin and penicillin, besides vitamins. China currently dominates this facet of the industry, which stands diminished in India.
To this end, the committee has suggested setting up large fermentation plants with lower land prices, continuous supply of electricity at discounted prices, streamlining the process for environmental approval, and establishing common facilities like effluent treatment plants and logistic centres.
To lend an initial impetus to the project, the committee has proposed a “special incentive” for the first five manufacturers who express interest in establishing units to churn out raw materials, according to the list of recommendations.
Since the industry requires considerable investment and infrastructure, it added, “this industry may be declared… infrastructure industry to provide facility of easy finance”.
The committee has suggested constituting a technical committee under the DSA to study models for the revival of fermentation industry, new technologies in manufacturing, and identification of strategic business models.
“This technical committee should consist of one drug regulator, minimum two research and development scientists, one expert with financial background, two experts handling such projects and manufacturing projects,” it stated.
In times of emergency, it has called for quick import permissions for certain drugs. The government, the committee stated, “may consider invoking Rule24 (2) of Drugs and Cosmetics Rules, 1945 for grant of import licence for import of specific drugs exempting the requirement of obtaining registration certificate”.