Around 21 API projects come up under the PLI scheme, shows data

These units have an installed capacity of 33,895 tonnes

Around 21 projects to make key active pharmaceutical ingredients (APIs) have already come up in the country under the production-linked incentive (PLI) scheme, data from the department of pharmaceuticals shows. These units have a total installed capacity of 33,895 tonnes.

Some key bulk drugs like Para Amino Phenol (used to make paracetamol), Atorvastatin (to make cholesterol drug), common antibiotic APIs like Sulfadiazine, Levofloxacin, Norfloxacin and Ofloxacin, vitamin APIs, common hypertension drugs like valsartan and antivirals like lopinavir (for HIV positive patients) are among medicines these companies are making.

Companies like Meghmani LLP and Sadhana Nitro Chem have set up installed capacities of 13,500 tonnes and 12,000 tonnes for paracetamol API Para Amino Phenol. Hetero has set up capacities to make four APIs.

Hindy’s Lab has put in place a 3,000-tonne capacity to make 1,1 Cyclohexane Diacetic Acid (CDA) — an intermediate for antidepressant drug gabapentin.

Indian formulation makers are dependent on China for import of key APIs and intermediates for drugs like paracetamol, antibiotics and vitamins. Indian bulk drug players have focused on producing high-end APIs. They lost out on price competitiveness in common APIs.

Typically, Indian APIs are more expensive than Chinese imports by 20-25 per cent.

The department of pharmaceuticals rolled out a PLI scheme for bulk drugs with an outlay of Rs 6,940 crore. As of November 2022, around Rs 620 crore was invested under the scheme. 

The incentive rates that are being offered under the PLI scheme are 20 per cent for the first year, 15 per cent for the fifth year and 5 per cent for the sixth year. The idea is to reduce dependence on Chinese imports.

However, industry sources claim that while Indian API makers are investing in creating capacity, they are not finding takers. This is because formulation makers continue to import from China.

Industry representatives met department of pharma officials and the Union health minister to apprise them about the issue.

“Recently, several industry players met government officials to discuss their issue around not finding buyers for common APIs like paracetamol. The local industry is not placing bulk orders within India as of now. The department of pharmaceuticals has now published the list of APIs that are now available in India,” the source, who was part of one such meeting, said.

Meanwhile, where export markets are concerned, Indian API players are seeing green shoots as several multinationals pursue a ‘China +1’ strategy to de-risk dependency on China.

Chinese costs have been increasing, claims the local industry here. 

“Chinese costs have been increasing over the last few years and players have steadily been raising prices of APIs and intermediates. A typical example is Penicillin G, which is imported by India and supplied exclusively by China. In the last few years, the price has shot up from about $14 to $34 per kg,” Manish Dhanuka, managing director (MD), Orchid Pharma, said.

Therefore, with increasing Chinese prices, Indian manufacturers should become competitive internationally.

“However, it is more important to note that due to the monopoly of Chinese manufacturers, they are now dictating the worldwide supply and prices. Hence, it is essential for India to have a fully backward integrated supply chain for life-saving drugs,” he added.

Indian players have, in fact, started supplying to China as well. “Chinese drug regulator NMPA has uplifted the drug standards of China to the level of western countries.

Many Chinese players are unable to meet these standards, opening a door for companies like Orchid, which has been selling to the US market for decades. It would supply its products to China as well,” Dhanuka said.