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Chinese threat looms large on Indian bulk drug industry

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According to Pharmexcil, the export revenues from bulk drugs in 2012-13 stood at Rs 24,698 crore which has come down to Rs 21,753 crore in 2014-15

The Indian bulk drug or active pharmaceutical ingredient (APIs) manufacturers are facing a health security risk due to increased dependence on import of bulk drugs from China. A recent KPMG痴 India analysis of import data of nine strategically important intermediates suggests that by having a majority share in imports, China has achieved a near-monopoly in the Indian import basket of critical intermediates and APIs. This has created a huge loss for bulk drug manufacturers resulting in either becoming sick or on the verge of closure. There are approximately 300 large companies and over 10,000 medium and small scale companies in the sector, of which 77 per cent units manufacture formulations and 23 per cent of units manufacture APIs.

In the wake of increasing imports from China, the bulk drug manufacturers, especially the small and mid-sized, have approached the Department of Pharmaceuticals under Ministry of Commerce seeking revival measures due to Chinese competition.

“Bulk drugs constitute nearly 25 per cent of the pharma exports from the country. Exports from India are Rs 98,000 crore and bulk drugs and intermediates account for nearly 25 per cent. However, there has been an increasing competition from China which has led to a stagnated growth in bulk drug exports,” Dr PV Appaji, Director General, Pharmaceutical Export Promotion Council of India ( Pharmexcil ) said during the inaugural of ‘2015-The Year of Active Pharmaceutical Ingredients’ seminar in Hyderabad.

The pharma sector has a significant presence of small and medium companies with revenues of around Rs 60,000 crore which contribute to 40 per cent of volume and value and the balance is contributed by large companies with revenue more than Rs 90,000 crore. These API manufacturers not only export 50 per cent of their production to various countries, but also meet majority requirements of the domestic formulations units.

According to Pharmexcil, the export revenues from bulk drugs in 2012-13 stood at Rs 24,698 crore which has come down to Rs 21,753 crore in 2014-15. Currently, India is highly dependent on Chinese imports for at least 12 essential drugs listed within the 2011 National List of Essential Medicines. This has led to closure of many API units in the country, members of Bulk Drug Manufacturers Association (BDMA) opined. Incidentally, API exports are stagnated this year. APIs constitute $150 billion of the total $1060 billion export revenues globally, says Jayant Tagore, President, BDMA.

“There is a security issue of quality and affordable medicines for common man, which could pose a threat arising out of the dependence on China,” he said. BDMA has sought financial support and incentives from the government to match the Chinese government subsidisation of their exports.

“This imbalance is expected to be detrimental to our national health interests, should China refrain from selling these bulk drugs or raise their prices in the future. Given the critical nature of these bulk drugs, any adverse circumstances between the two countries could potentially lead to a crisis for public health in India,” Tagore adds.

Besides, there has been fall in the bulk drug prices in the international market, further eroding the value of exports. On an average, there has been a 10 per cent fall in prices of different bulk drugs in the international market, Appaji added. India’s exports stands at $ 3.6 billion during FY-15 with no growth and it is estimated that India produces $9.5 to $10 billion worth of APIs and intermediates. The patent cliff has affected the prices of APIs between FY-12 and FY-13 prices have stabilised thereafter during FY-14 and FY-15.

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The recent ban on GVK Bio by the European Union (EU) for 700 generic drug products is expected to hit exports from India to the tune of $1.23 billion, according to Dr PV Appaji, Director General, Pharmaceutical Export Promotion Council of India ( Pharmexcil ). This is for the first time that exports to EU is showing a negative growth. The EU has banned marketing of around 700 generic medicines for alleged manipulation of clinical trials conducted by GVK Bio. GVK Bio has been conducting human trials of generic drugs on behalf of globally-operating companies. It also has been conducting tests of new medicines as well. Appaji said that the ministry of commerce is in talks with the French drug regulator.

“We are working with the ministry and will be reviewing the decision made by the French drug regulator,” he said adding that the commerce ministry has asked Pharmexcil for its feedback. The commission’s decision is in response to a recommendation by the EU drug regulator European Medicines Agency (EMA) in January that marketing authorisation of these drugs should be suspended as they were based on clinical trial data allegedly manipulated by the Hyderabad- based company. EMA’s Committee for Medicinal Products for Human Use (CHMP) had examined the marketing authorisation given to over 1,000 generic drugs from EU member nations on the basis of bio-equivalence studies conducted by GVK Bio during the period between 2004 and 2014 after an inspection of the company’s facility in Hyderabad by the French Medicines Agency (ANSM) in May, last year showed systematic manipulation of clinical trial data.

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