NEW DELHI - In a bid to limit what is seen as excessive dependence on active pharmaceutical ingredients (APIs) from China, the Indian government has announced a $394 million scheme to promote the development of three bulk drug parks.
The government would use the funds to finance infrastructure construction over the next five years at the three industrial parks focused on the manufacturing of APIs and bulk drugs. For India, the concern is that continuing to depend on China for the vast majority of APIs could impact drug manufacturing. Efforts to battle COVID-19 have brought those fears to the forefront.
The government also has plans to put in place a production-linked incentive (PLI) scheme to boost domestic manufacturing of critical key starting materials (KSMs) or drug intermediates, used to make bulk drugs, as well as APIs. That PLI could cost $911.5 million over the next eight years.
India imports 53 APIs and KSMs from China. According to the Trade Promotion Council of India (TCPI), India imports 70% of its API requirements from China, mostly antibiotics and vitamins. In 2018-19, Indian pharma companies imported bulk drugs and intermediates worth $2.4 billion from China.
TPCI said that China’s Hubei’s province, the focal point of the COVID-19 outbreak in China, is also a major supplier of APIs.
Industry experts said the potential for production stoppages in China scared India’s pharma industry.
Sudarshan Jain, secretary general of the Indian Pharmaceutical Alliance (IPA), which represents research-based Indian pharma companies, told BioWorld that Indian pharma companies planned ahead and stocked up the inventory on critical materials owing to the Chinese New Year in January.
“There is enough material to sustain the industry for the next few months,” Jain said.
The government scheme that would see three mega bulk drug parks in India in partnership with states was approved on March 21. The parks will have common facilities such as a solvent recovery plant, distillation plant, power and steam units and a common effluent treatment plant.
“In the long run, this move will help the sector regain the dominance it lost over the years,” said Jain. The scheme will also help build a self-reliant supply chain security and will aid the overall development of the Indian pharma Industry.
“India has the capability and competence to manufacture all APIs,” said Satish Reddy, IPA president and chairman of Dr. Reddy’s Laboratories Ltd. in Hyderabad. “The announcement by the government will help revive the API industry in the country and will help the sector regain the dominance that was lost over the years.
“The investment in creating bulk drug parks is an important step in the right direction for the development of the industry.”
The new schemes could prove to be a shot in the arm to the API industry in India, “and create (an) ecosystem for strong Indian API industry,” said Dilip Shanghvi, managing director at Sun Pharma Advanced Research Co. Ltd.
One of the main reasons behind China’s dominance in the API sector is its mastery over the fermentation-based technologies needed for their production.
“China has gained importance in fermentation-based APIs, namely antibiotics and vitamins,” said Pankaj Patel, chairman of drugmaker Zydus Cadila Ltd. “The government policy to encourage a fermentation-based industry will help build self-reliance.”
The Indian government’s announcement was preceded by a Feb. 19 meeting of India’s government-funded think-tank, National Institution for Transforming India (NITI) Aayog, held in New Delhi to discuss options available for India to emerge as a “powerhouse” for KSMs and APIs.
The most recent moves were welcomed by Globaldata, a leading data and analytics company, which called them “part of a turnaround strategy to reduce India’s dependence on China,” and said the efforts “will help boost the capabilities of domestic API manufacturers.” Globaldata said the timing of the announcement was crucial as Indian pharma companies are facing potential supply disruptions due to COVID-19 outbreak.
“China is a key supplier of both chemical API and chemical intermediates for the global pharmaceutical industry,” according to Globaldata. It noted that the COVID-19 outbreak has the potential to disrupt the global supply chain for chemical APIs and has impacted pharmaceutical companies globally. It “is important for the Indian pharma industry to protect itself and prepare to improve its intermediate and API manufacturing capabilities and supplies.”
Globaldata said India has the largest number of dedicated contract manufacturing organizations (CMOs) with small-molecule API manufacturing facilities approved by the U.S. FDA or the EMA. Government support would go a long way to protect India’s pharma supply chains.
The Indian pharmaceutical market should grow from nearly $34.3 billion in 2020 to more than $45 billion by 2025 million, Globaldata predicted.
TPCI cited a study commissioned by the Indian embassy in Beijing, which shows that there is little cost differential between India and China in manufacturing of APIs, except for a bare labor cost difference of 3%. However, Chinese firms’ key advantage is efficient management of manufacturing setups established by the government; low-interest loans; and more lax regulations on pollution norms and affluent treatment. Also, while India clears imports from China faster, China’s clearance of Indian imports can take years, said TPCI.