By Mathini Ilancheran, principal analyst, and Saber Shi, China research analyst, Beroe Inc.
COVID-19 has caused an increase in demand for APIs and drugs; those used as antimalarials are seeing the highest demand, followed by bronchodilators, antibiotics, and antivirals. Another wave of shortages will be seen among sedatives, painkillers, anesthetics, and muscle relaxants required for the care of patients on ventilators. These ongoing shortages have increased the need for generics, resulting in accelerated approvals by the FDA and the lifting of existing import alerts. Around 48 percent of the world’s pharmaceutical ingredients used to make generics come from India and China.
Following its COVID-19 lockdown, China has resumed manufacturing operations, and it is working to clear the backlog of orders of pharma intermediates and ingredients to reduce supply disruptions. Overseas orders comprise over 50 percent of the materials produced. However, most of the key APIs will be in supply shortage in China until July 2020. India imports over 70 percent of its pharma ingredients from China and has suffered a massive shortage, with safety stocks lasting for just two to three months. To fill the supply gap caused by China, India has ramped up its production of critical APIs and intermediates with the support of its government. Though India has removed some of its restrictions on exports of generic drugs (fixed-dose combinations), there is still a restriction on export of the drugs’ API and raw materials. Also, as noted by Kashyap Keni, director of VerGo Group, a shortage of labor and pushback from labor unions due to health and safety issues posed by COVID-19 will slow down production. Companies such as Indoco Remedies are rewarding employees who chose to come to work from March 24 onward with monetary compensation.
The following are the drugs and API in demand globally, with assessments of their supply status in India and China, respectively.
Azithromycin – In global shortage
India imports raw materials needed for production of azithromycin largely from China. With an anticipated shortage worldwide due to COVID-19, production is being ramped up in India to meet the demand. Currently, 39.8 percent of exports are being directed to the U.S. The biggest exporters include Alembic Pharmaceutical, Wockhardt Ltd., Sandoz Srl, Lupin Limited, and Aurobindo Pharma Ltd.
China is currently facing a shortage due to an overload of orders, mainly from overseas, with almost 70 to 80 percent of that from India. Current orders are scheduled for delivery starting in June 2020. Key exporters in China include Shanghai Shyndec Pharmaceutical (Haimen) Co., Ltd., Zhejiang Yatai Pharmaceutical Co., Ltd., and Zhejiang Guobang Pharmaceutical Co., Ltd.
Hydroxychloroquine (HCQ) – In global shortage
India accounts for over 50 percent of the world’s supply of HCQ. After its government overturned the export ban based on humanitarian reasons and a sufficient domestic supply, approximately 23 million tablets were exported to the U.S., Europe, and Brazil, among other regions. The biggest exporters include Ipca Laboratories Ltd., Cadila Healthcare Ltd., Watson Pharma, and Amneal Pharmaceuticals Pvt. Ltd.
In China, some factory production of HCQ is shut down due to shortages of raw materials, with expected recovery in June 2020. Shortages are also caused by an overload of orders, with 90 percent from overseas, scheduled for July 2020. Key exporters include Chongqing Kangle Pharmaceutical Co., Ltd., Nantong Jinghua Pharmaceutical Co., Ltd., and Chongqing Southwest No.2 Pharmaceutical Factory Co., Ltd.
Fentanyl – Potential shortage
Ventilators require certain medications to immobilize and sedate patients. These, including fentanyl, have seen increased demand, with hospitals globally running low on stock. There is no active trade activity from India, since it is not the biggest manufacturer of this API, and there is no reported shortage. Similarly, China has no reported shortage of manufacturers supplying to the domestic market (~90 percent). Stringent regulations are followed in China due to the drug’s psychotropic nature.
Albuterol – In global shortage
Cipla is the biggest manufacturer of this drug and its APIs in India. It has received approval for the generic albuterol sulphate inhaler from the FDA, due to increased demand for this product to prevent asthmatic symptoms of COVID-19 patients. Also, inhalers are being used as a treatment in the place of nebulizers. There have been no reported shortages in India so far, but there is a potential for shortages if the cases in India increase. Cipla has exported 35,446 kg of albuterol to the U.S. as of March 2020. China has no reported shortages or exports, with its domestic supply for finished goods.
Cisatracurium – Potential shortage
This API has seen an order increase of more than 200 percent globally, especially in the U.S. India has not yet reported shortages of this neuromuscular blocker needed for patients on ventilators. There has been no trade activity from India yet. In China, some suppliers, such as Lianyungang Guike Pharmaceutical, are facing tight production due to an overload of overseas orders, mainly from Europe, scheduled for May 2020. Suzhou Hong Sen Pharmaceutical Co., Ltd. is facing tight production for domestic supply.
Propofol – In global shortage
There is an increased demand for propofol due to its use as an anesthetic for infected patients. The biggest manufacturer, Dr. Reddy's Laboratories, has said it is unable to source the API, with an expected resupply not available until October 2020. Currently, there is only limited supply and there will be a shortage if domestic infections increase. Recent trade activity was seen to the U.S. by Aspiro Pharma.
There is no shortage in China, and no exports reported as well. There is limited production for domestic use, with stringent regulations in place due to its psychotropic nature. Due to current limited demand, some suppliers have halted production, with the next scheduled manufacturing in mid-2021 and exports to Europe, India, and the U.S.
Midazolam – In global shortage
Used as a sedative for infected patients, this API is seeing increased demand. Even though there is a shortage globally, no shortages have been reported in India, with resupply scheduled for October 2020. In China, where there is limited production for domestic use, with stringent regulations in place due to its psychotropic nature, there is no export activity reported. Some suppliers, such as Jiangsu Jiuxu Group, are facing potential shortages due to limited availability of intermediates, while others, such as Jiangsu Nhwa Pharmaceutical Co., Ltd., have no shortage issues.
Norepinephrine – No reported shortage
Hospitals globally have seen increased use of norepinephrine to improve circulation among patients. So far, no shortages have been reported; however, supplies are being reduced, which may lead to a crunch. No trade activity or production increases have occurred in India or China.
Rocuronium – Potential shortage
A need for paralytics for patients on ventilators is driving demand for this drug. Over 13,000 kg of rocuronium for injection was exported from India to the U.S. last month. In China, some suppliers, such as Zhejiang Xianju Pharmaceutical Co., Ltd., are facing tight production due to an overload of overseas orders, scheduled for May 2020.
Cefazolin – Potential shortage
India is facing manufacturing delays due to unavailability of key ingredients imported from China. However, there is no reported domestic shortage. China has no reported shortages as well, and it has had limited overseas orders so far.
Cefepime – Potential shortage
Cefepime injections are in short supply globally, and production has ramped up in India with no reported domestic shortage. Recent exports of cefepime for injection to the U.S. by Astral Steritech have occurred. China has no reported shortage, with limited overseas orders so far. Major exporters include Qilu Antibiotics Pharmaceutical Co., Ltd. and Cspc Zhongnuo Pharmaceutical (Shijiazhuang) Co., Ltd.
Ribavirin – No reported shortage
Demand for antivirals like ribavirin has tripled since March 2020, with clinical trials in progress using ribavirin in combination with other therapies. There are no reported shortages and exports in India. China has no reported shortages, with limited production to address domestic demand and exports, which are largely to the U.S. and Europe. Key exporters include Zhejiang Cheng Yi Pharmaceutical and Star Lake Bioscience Co., Inc., the latter of which has its next production scheduled for Q4 of 2020.
Acyclovir and valacyclovir – No reported shortage
India has upped production of antivirals (acyclovir) in anticipation of an increase in global demand. There is no reported domestic shortage, with active trading in March 2020 by suppliers such as Hetero Labs, Geno Pharmaceuticals, and Mylan Laboratories. China has no shortages or large overseas orders reported yet.
With the Indian government relaxing lockdown restrictions on pharma manufacturing, the capacity utilization is at approximately 60 to 70 percent. Top pharma companies of the Indian Pharmaceutical Alliance are operating at 80 percent capacity or higher and are working together to solve logistics problems, obtain regulatory approvals, etc. APIs and drugs seeing increased capacity in India are azithromycin and HCQ.1
China is currently recovering from the impact of the COVID-19 lockdown, with planned production to address backlogged orders. No plans to increase capacity are in place among manufacturers due to tight supplies of raw materials and increased costs. Manufacturers of rocuronium saw increased overseas demand, acyclovir is expected to see a demand of 30 to 40 tons per year, and valacyclovir will see 80 tons per year, with a current 60 percent capacity utilization.
India is ramping up production of the bronchodilators, antibiotics, and antivirals needed to meet domestic and global demand. The trade relationship between India and the U.S. during these times is effective, with India already exporting critical drugs and APIs to the U.S. In return, the Trump administration has allowed pharmaceutical companies to engage in bulk supply contracts with India for testing kits and ventilators.2 Due to a rise in cases within the European Union, there are restrictions on exports of pharmaceutical products to non-EEA countries to protect the availability of supply.
Despite the pandemic, China exported a total of 10.2 billion yuan’s worth of supplies, including 3.86 billion masks, 37.52 million protective gowns, and 16,000 ventilators to India, the U.S., and Europe between March 1 and April 4, 2020.3 Suppliers of APIs are currently working on the backlogged orders, with a free flow of trade expected from the end of May or beginning of June 2020.4 With the U.S. government and certain EU countries raising concern over the quality of medical supplies, China has responded by imposing new certification and inspection requirements on surgical face masks, testing kits, and thermometers. It has also banned export of the above products not licensed to sell domestically as of April 2020.5 With COVID-19 increasing demand for critical drugs and APIs, pharma companies should consider talking to existing suppliers on supply maintenance, with a fair and equitable allocation of stock to avoid shortages or implementing dual/multi-sourcing with alternate suppliers.
- S. Das, “Covid-19 impact: Pharma players join hands to ensure smooth production,” Business Standard, 12 April 2020. [Online]. Available: https://www.business-standard.com/article/economy-policy/covid-19-impact-pharma-players-come-together-for-smooth-production-120041201080_1.html. [Accessed 20 April 2020].
- India Inc. Group, “India, US bolster engagement on COVID-19,” India Inc. Group, 10 April 2020. [Online]. Available: https://indiaincgroup.com/india-us-bolster-engagement-on-covid-19/. [Accessed 18 April 2020].
- W. Cong, “US trade war, COVID-19 impact – What China’s Q1 trade data tells us?,” Global Times, 14 April 2020. [Online]. Available: https://www.globaltimes.cn/content/1185599.shtml. [Accessed 18 April 2020].
- News18, “US Appeals to China to Revise Export Rules on Coronavirus Medical Gear,” News18 World, 18 April 2020. [Online]. Available: https://www.news18.com/news/world/us-appeals-to-china-to-revise-export-rules-on-coronavirus-medical-gear-2582573.html. [Accessed 18 April 2020].
- International Trade Centre, “COVID-19 Temporary Trade Measures,” 17 April 2020. [Online]. Available: https://www.macmap.org/covid19. [Accessed 18 April 2020].
About The Authors:
Mathini Ilancheran is the principal analyst of R&D for Beroe Inc. She specializes in understanding market scenarios and industry dynamics across the globe in the outsourcing arena. Her analysis has assisted global Fortune 500+ companies in their strategic decisions on service outsourcing contracts, category management, and efficient sourcing. She has written for several publications related to R&D procurement opportunities and has published 30+ articles in leading journals, co-authored with industry experts. She has a master's in management from University College London (UCL) and has worked as a consultant in the U.K. You can contact her at firstname.lastname@example.org and connect with her on LinkedIn.
Saber Shi is the China research analyst for Beroe Inc. Her analysis has provided stakeholders with real-time market findings and supplier intelligence from China, across various industry categories. With years of practical work experience in procurement and sales, she provides insights into relationships between Chinese suppliers and global clients, as well as purchasing best practices. She has an MBA from Guangdong University of Foreign Studies (GDUFS) and specializes in international trade and global supply chain management.