India to reduce over-dependence on Chinese pharmaceutical raw materials

India is considering importing certain active pharmaceutical ingredients (APIs) and intermediaries from alternative sources such as the United States, Italy, Singapore and Hong Kong, leading to ramping up domestic capacity in a bid to reduce dependence on China, two officials aware of development said.

Over 63 per cent of India’s pharmaceutical imports are API and intermediates, and almost 70 per cent of it comes from China. Dependence on a single country for such crucial thing is not prudent in India’s national interest, hence there is a need to diversify its sourcing and develop domestic capacity, the officials said requesting anonymity.

Intermediaries and APIs are crucial chemical compounds (raw materials) required to manufacture formulations or medicines. According to the experts, while India is one of the leading exporters of formulations or generic medicines, for raw materials — intermediaries and APIs — China enjoys the number one position in the world. India imports about five dozens APIs and intermediaries from China.

India’s pharmaceutical import in 2018-19 was Rs 76,303.53 crore and exports were at Rs 1,40,961.31 crore, the official statistics point out.

The government has also decided to set up three bulk drug parks for Rs 3,000 crore and approved a Rs 6,940 crore production-linked incentive (PLI) package for promotion of domestic manufacturing of critical intermediates and APIs, one of the officials said.

“However, the two schemes would take five to eight years to show the results. Meanwhile, we must take some contingency measures. Sourcing of raw materials for key medicines was one of our key concerns when Covid-19 pandemic gripped China that led to complete halt of imports from that country,” the official said.

A second official said deteriorating relations with China is another reason to find alternatives quickly as availability of medicines is a matter of national interest. Sino-Indian tensions shot up in June this year after a violent brawl between Chinese and Indian soldiers along the Line of Actual Control in the Galwan Valley in eastern Ladakh in which 20 Indian army personnel and unspecified number of Chinese were killed.

Experts said both the government and the industry should de-risk themselves immediately to the extent possible while implementing their medium to long-term plans. “It will take time to reduce dependence on China, it can’t happen overnight,” said Atul Sharma, founder of pharmaceutical consulting firm Healthscape Business Solutions.

Indian Pharmaceutical Alliance (IPA) secretary general Sudarshan Jain said, “All countries are trying to diversify imports [of Chinese APIs and intermediaries]. We have already initiated a study to find alternative sources.”

“It is not in the national interest to depend on one single source for something as crucial as medicines. India has adopted a right approach – to find alternative sources in the immediate term and to develop domestic capabilities in the medium to long term,” he said.

Indian Drug Manufacturers’ Association (IDMA) executive director Ashok Madan said right policies and incentives could help strengthen about 1,500-1,600 domestic API units. “It is a low-hanging fruit. A three-pronged strategy can to revive these units – financial support, technological assistance and help in meeting environmental norms,” he said.

Madan said India can reduce API imports from China considerably within short span of time by strengthening existing domestic units that are facing unequal competition from China.

“Support is required in terms of cost of utilities like power, water, steam and finance. Land cost is also a matter of concern. There is need for simplifying the environmental approvals… [The regulator] should be concerned only with pollution load compliance and allow companies to produce the specified priority APIs and KSMs [key starting materials],” he said. KSMs are raw materials for manufacturing APIs and largely procured from China.

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