New Policy Looks To Grow API Manufacturing In India-Based Pharma Companies

The Indian government says it wants to “revive” the country’s active pharmaceutical ingredient (API) and bulk drug market. The Department of Pharmaceuticals (DoP) has prioritized research into potential policy to do so, including discussions with stakeholders and a white paper on the topic.

A first draft of the policy could be included within the new government’s 100-day agenda, a government official told the Business Standard. The proposed policy will “address the concerns of bulk drug manufacturing by way of incentives and creating infrastructure through bulk drug parks, etc. The proposal will also evaluate other issues related to anti-dumping duties and environmental clearances,” the Business Standard article says.

Currently, API manufacturing accounts for nearly 10 percent of India’s Rs 79,000-crore pharmaceutical market. But statistics show API sales among Indian drug makers have dropped significantly in the past 10 years. To support that number, you don’t have to look farther than India’s big players in the pharma market, such as Ranbaxy, Sun Pharma, Aurobindo Pharma, and Lupin. Each of the companies have gradually shifted from API to formulations. While most of these drug makers previously produced both APIs and finished products, now API manufacturing is largely limited to captive usage.

"Low margin in API business compared to formulations is merely one reason for Indian companies to shift their focus,” a government official said. “There are other concerns such as environmental obstacles and lack of infrastructure to dissuade domestic manufacturers from the business."

In the past, India was considered the “go-to” destination for sourcing low-cost, high-quality API for the pharmaceutical manufacturing industry. However, China has taken over the bulk drug market globally, largely due to the fact that the landed price of API from China is 15 to 20 percent less than its production cost in India.

The new policy includes providing adequate power and water supplies and logistics, as well as helping companies in capacity-building to bring down the cost of production. It could be a powerful tool to address manufacturing-related concerns in the country, as it will ensure a controlled supply chain.