India imported raw materials rose 30%

According to the Indian pharmaceutical industry, in the first half of this year, the average price of raw materials imported by India from China rose by 20% to 30%, resulting in a 4% to 5% decline in the profit margin of domestic pharmaceutical companies. Affected by the rising prices of China's imported raw materials and intermediates, the Indian pharmaceutical industry is facing a headwind.


Epidemic increases logistics costs

In the Indian import market from January to April this year, anti-infective APIs, such as tinidazole, amoxicillin, ceftriaxone, and clav avicel ), diclofenac sodium, ofloxacin, clav syloid, clotrimazole, ciprofloxacin and hormonal raw materials The prices of dexamethasone and other items increased by 24%~38% respectively. Erythromycin thiocyanate is the raw material for the preparation of erythromycin derivatives, such as azithromycin, clarithromycin and roxithromycin. Its price has been from before the COVID-19 epidemic to the present It has risen by 20%.

In addition, the prices of four APIs, paracetamol, ornidazole, azithromycin and nimesulide, have increased by 62% to 189%, respectively. The price of paracetamol rose from 262 rupees/kg in January to 425 rupees/kg in April. The price of p-aminophenol (PAP), the key starting material (KSMs) for the production of paracetamol, also rose by 27%.

Ashok Kumar Madan, Executive Chairman of the Indian Pharmaceutical Manufacturers Association (IDMA) pointed out: "Since the outbreak, the global demand for the antipyretic and analgesic paracetamol has been on the rise. Supply shortage coupled with demand The increase has led to a sharp increase in the price of paracetamol and its key starting material PAP. During the pandemic, European demand for paracetamol has a huge supply shortage.” The Indian pharmaceutical industry is also highly dependent on PAP supplied by China, although there are several in India. PAP manufacturers, but due to capacity constraints, it is difficult to meet downstream production needs in the short term.

In addition to raw materials, the prices of isopropyl alcohol (IPA) used in hand sanitizers and solvents used in pharmaceutical production have also risen significantly. For example, the price of IPA imported from China has risen by 10% to 15%. The increasing demand for disinfectants has become one of the main reasons for the increase in IPA prices. It is estimated that the monthly amount of IPA required by the Indian pharmaceutical industry is 20,000 to 30,000 tons.

Due to the implementation of strict social distancing, public and personal hygiene requirements, China's logistics costs and production costs have risen sharply, pushing the prices of raw materials to continuously increase. During the epidemic, air freight increased from US$2 per kilogram to US$5-6 per kilogram, and the average shipping cost of containers from China to India increased from US$750 to US$1200-1300. IDMA Secretary-General Dara Patel said: "In the first half of this year, the production costs of Chinese manufacturers increased due to the implementation of safety and health measures after the blockade, and the import prices of certain APIs increased by 20%~ 30%."


Complementary cooperation is the general trend

On January 23 this year, in order to prevent the spread of the new crown virus, China imposed a lockdown on Wuhan and other cities in Hubei. After nearly three months of "anti-epidemic battle", China's economic activities have basically returned to normal. Starting in early March, China's exported APIs and KSMs have successively arrived in India.

After a period of continued confrontation at the border between India and China, Indian pharmaceutical companies also ruled out the possibility of interruption in the supply of Chinese raw materials. Although India relies on China for APIs, China also relies on pharmaceutical preparations provided by India.

Sudarshan Jain, secretary-general of the Indian Pharmaceutical Federation, believes that rising prices of Chinese raw materials are affecting the profitability of pharmaceutical companies. Due to the shortage of manpower and raw materials, many pharmaceutical companies cannot operate at full capacity, so the supply of raw materials is correspondingly small. Despite the unfavorable factors of rising prices of raw materials, the pharmaceutical industry still strives to provide consumers with stable drugs.

China and India, as the world’s two major producers and exporters of raw materials and generic drugs, maintain a relatively balanced pharmaceutical trade, which plays a decisive role in the stable supply of the global pharmaceutical market. Especially in the special stage of the spread of the world epidemic, various uncertain factors affecting normal production and market circulation appear or increase at any time, leading to increased costs, price increases, and supply shortages, which test the international pharmaceutical market industry chain The rational game.

Pharmaceutical trade is a special economy involving the national economy and the people's livelihood, and has a significant social welfare nature. Under the tense situation of the world facing the anti-epidemic problem, the international market price fluctuations of pharmaceutical products should not be excessively intense, and the contradiction between upstream and downstream competition in the pharmaceutical industry should not be too intense. At the same time, the market attributes of most pharmaceutical products are also objective. The complementary cooperation of R&D, production and market resources in the global pharmaceutical industry is the general trend. Facts have proved that firming the strategic cooperation business philosophy of mutual benefit and win-win sharing is the only way for the international health and sustainable development of the pharmaceutical health industry.