HP pharma takes coronavirus hit

Ambika Sharma in Baddi

Himachal Pradesh has 650 pharmaceutical units, with 350 housed in the pharma hub of Baddi-Barotiwala-Nalagarh alone. The Rs40,000-crore pharmaceutical industry in the state accounts for every third drug in the domestic market. The outbreak of the new coronavirus has forced it to put on hold the import of Active Pharmaceutical Ingredients (APIs) from China since mid-January.

The Indian pharma companies import more than 65 per cent APIs from China owing to cheap availability. There are 67 such ingredients that are sourced from places like Wuhan, the epicentre of the coronavirus. These mainly include B12, B1, B6 and vitamin E ingredients and fermentation process-based APIs.

While the large units in Himachal usually manufacture APIs for captive use and also have an inventory for at least three months, it is the small manufacturers who have been hit hard. Their plight has worsened with the domestic market witnessing an exponential rise in the price of APIs by 30 to 40 per cent.

“The sudden price hike of APIs has considerably increased the manufacturing cost of medicines enlisted in the National List of Essential Medicines, the ceiling price of which is already fixed by the government,” says SL Singla, adviser, Himachal Drug Manufacturers Association.

With the lack of liquidity already plaguing the markets, the API shortage has crippled the small manufacturers, who opine that they are on the verge of exhausting their inventory if the situation does not improve.

A small manufacturer does not have a stock of more than Rs5 crore and secures APIs as per the orders received. With availability declining in the market, not only has the tendency of hoarding set in, it has aggravated the shortage too.

Singla wants the Union government to step in and ensure that the API stock sellers do not indulge in undue price hike to make the most of this volatile situation. “If the situation doesn’t improve, the manufacturers will be forced to stop manufacturing of essential medicines and these could go off the shelf. The menace of price rise can be curbed by examining the custom duty paid by API stockists as they were selling the old stock at higher cost in view of the shortage,” he adds.

Alternative options like buying APIs from Europe is not only a costly proposition but is fraught with cumbersome time-consuming formalities, including registration at the all-India level.

“A three-month period is usually required to complete an order and unavailability of certain APIs like montelukast and paracetamol and 30 to 40 per cent hike in the price of other APIs are taking a toll on manufacturing. If the situation doesn’t ease out soon, the survival of small manufacturers will be difficult as they will have no money to pay salaries to sustain the highly-skilled labour,” says Arun Kumar, a small-scale pharma manufacturer who is worried over the delay in fulfilling previous orders.

Keeping prices in check

The National Pharmaceutical Pricing Authority, which regulates the prices of drugs, has issued directions to all state governments to monitor the production and availability of APIs and act against black-marketing and hoarding. Curbs on exports have also been imposed on the domestic API manufacturers as an added measure.

State Drugs Controller Navneet Marwaha says these directions are being adhered to in letter and spirit and all Assistant Drug Controllers, Deputy Drug Controllers and Drug Inspectors have been directed to keep a vigil on the API traders and also submit weekly reports showing compliance.

Morepen Labs, which has been exporting as many as five APIs to China, including montelukast and loratadine, has put exports on hold for over a month. As many as 9,425 kg of APIs worth Rs22.34 crore have been exported this financial year by the company, according to general manager Pramod Chandra.

BR Sikri, president, Federation of Pharmaceutical Entrepreneurs, says air-lifting of APIs from places other than Wuhan has begun and the sea route could be opened soon. “The situation is likely to improve as manufacturing activities have begun in places other than Wuhan and manufacturing the fermentation-based APIs will fall in place in the next four weeks,” he feels.

He says while the bigger pharmaceutical companies have in-house API production or have an inventory of at least three months, the small pharmaceutical units are facing problems in securing APIs as they barely have a month’s stock. “Prices have shot up in the domestic market as there is panic buying too, apart from the price hike by the API traders, who should understand that national interest is paramount.”

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What is API and inactive ingredient

Both active and inactive ingredients come together to form any medication. The Active Pharmaceutical Ingredient (API) is the portion of a drug that has therapeutic effects on the body — the chemical compound that makes one feel better. Inactive ingredients (or excipients) are the non-medicinal, but important and necessary, components of the drug.

About pharmaceutical manufacturing

It comprises a series of processes depending on the physical and chemical characteristics of the APIs used. This includes compaction of low-density powder to a granule, blending of an excipient to manufacture the solid dosage form, process of densification to improve flowability and content uniformity, fluidised bed drying and hot melt extrusion to enable delivery of drugs, including dispersing APIs in a matrix at the molecular level to form solid solutions. This is followed by drying, where the moisture content of the powder is controlled and further compression of powder or granules into tablets is done.

Certain excipients, which are added to a drug to provide consistencies, like xanthan gum, are not available in the market. The pellets of pantoprazole, used in common gastro-resistant capsules, have also registered a hike of 30 to 40 per cent while other common excipients like hydroxypropyl methylcellulose used in various capsules and tablets have seen a price rise from Rs550 to more than Rs1,000.