Last Updated on December 31, 2023 by The Health Master
Chinese Bulk Drug
According to a recent report by Care Ratings, the pharmaceutical industry in Mumbai has increasingly relied on bulk drug imports from China over the past decade, despite the commissioning of domestic manufacturing projects under the government’s production-linked incentive (PLI) scheme.
This heavy dependence on Chinese shipments for critical key starting materials (KSMs) has raised concerns about the industry’s vulnerability and the supply of life-saving medicines.
1. Rising Dependency on Chinese Bulk Drug Imports
The report reveals a significant increase in bulk drug imports from China over the past nine years, rising from 62% to 75%.
Both the value and volume of imports have seen a compounded annual growth rate of about 7% during this period.
Notably, in FY14, the country imported USD 5.2 billion of pharmaceuticals, with USD 2.1 billion coming from China.
These numbers escalated to USD 6.4 billion and USD 2.6 billion, respectively, in FY19 and further to USD 7 billion and USD 2.9 billion in FY21.
Although inbound shipments marginally declined to USD 7.9 billion in FY23, the Chinese share surged to USD 3.4 billion during that period.
2. Dominance of Bulk Drugs in Imports
Bulk drugs have emerged as the dominant component of imports, contributing 55–60% of India’s total pharma imports over the past decade.
This steady annualized growth of around 7% in bulk drug imports reflects the industry’s growing reliance on foreign shipments.
3. Impact of PLI Scheme and Domestic Manufacturing Projects
The Indian government introduced the PLI scheme and encouraged domestic pharmaceutical companies to undertake backward integration to reduce their dependence on Chinese imports.
Despite launching various bulk drug projects under the PLI scheme, the industry’s reliance on China has persisted at around 65%.
Even in FY24, with projects worth USD 516 million expected to be commissioned, the dependence on Chinese bulk drug imports is projected to remain high.
4. Pharma Industry Growth and Global Supply
The domestic pharmaceutical industry has experienced impressive growth, achieving an annual growth rate of around 7% during FY14-FY23.
As of FY23, the industry’s market size had reached approximately USD 49.8 billion. India’s contribution to the global supply of generic drugs stands at about 20%.
5. Challenges Faced by Domestic Manufacturers
Although there are over 3,000 bulk drug manufacturers in India, a significant portion of them are small, unorganized players.
These players contribute 50–60% of the total share, while China remains the primary source of bulk drugs for the industry.
The competitive pricing offered by Chinese players has made it challenging for the domestic industry to combat the pricing war.
6. Concerns and Implications
The heavy reliance on Chinese bulk drug imports raises legitimate concerns about the availability, cost, and uninterrupted supply of crucial medicines, especially life-saving drugs.
As the dependency on key starting materials exceeds 50%, the industry faces potential risks during supply disruptions.
Conclusion
Despite efforts to reduce dependency through the PLI scheme and domestic manufacturing projects, the Mumbai pharmaceutical industry continues to heavily rely on bulk drug imports from China.
As the industry grows, incremental requirements for APIs are expected, which are likely to be met through enhanced capacity additions under the PLI schemes.
However, combating the pricing war with Chinese players remains a significant challenge for domestic manufacturers.
Ensuring a secure and diversified supply chain for critical pharmaceutical ingredients remains a top priority to safeguard the country’s healthcare needs.
Disclaimer: This article contains information derived from the source mentioned below. Our team utilized an AI language model, to rewrite and present the news / article in a unique format.
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