High input costs continue taking a toll on drug manufacturers

Mumbai, June 27, 2022:

A spurt in prices of raw materials imported from China along with a significant rise in freight, packaging material and transportation costs, in the wake of the Covid-19 pandemic, derailed the Indian pharmaceutical industry’s cost-effectiveness and expansion plans.

The industry which accounts for more than 70 per cent of import dependency has witnessed around 140 per cent to 150 per cent rise in prices of raw materials viz. active pharmaceutical ingredients (APIs) since the pandemic started. Moreover, API prices of certain basic fever and pain relief drugs doubled as high to 130 per cent and major life-saving drugs have seemed to rise by 120 per cent recently. This price rise has further proved total dependency on imports from China, said Gaurav Kaushik. managing director, Meteoric Biopharmaceuticals Pvt Ltd.
 
Besides this, there is a more than 100 per cent price rise in packing material. This rise has been seen in pharmaceutical packaging in strips, bottles etc and manufacturers are forced to absorb this cost, stated Kaushik.
 
In addition to increase in prices of raw materials and packing materials, sea freight rates have gone up to 300 per cent with freight costs from China shooting up 250 per cent from pre-pandemic level, he said.
 
“The fundamentals behind the price rise of raw materials (APIs) and packing material are completely beyond any conceptual understanding which seems to be created by the Chinese industry. It seems that the strategy of the unrealistic and unreasonable price rise by the neighbouring country is a direct hit to India’s generic market prospect which is famous for generic monopolies with cheaper cost advantage globally. De-linking from China with an objective of making Atmanirbhar Bharat by various schemes for promoting indigenous products being seen as a hard hit on China which is arm-twisting to industry by all means of price rise, they can. This seems to be a temporary and short-term phase. However, this has already derailed Indian pharmaceutical industry cost-effectiveness and various expansion plans of Indian INCs to a little extent,” opined managing director of Meteoric Biopharmaceuticals.
 
Chiming in with Kaushik, Raheel Shah, director, BDR Pharmaceuticals said, “Although the pharmaceutical industry has risen and delivered to the challenges posed by Covid and has come to be known as the sunrise sector, inflation has bitten pharmaceuticals the hardest. Raw material, energy, operating, and transportation expenses have skyrocketed around the world. This has been a ripple effect of the geo-political crisis around the world, the fuel price hike, peaked inflation rates, increased demand for steel, sourcing raw materials at very high rates and reduced dependency on China. The Indian pharmaceutical industry is battling rising input costs from China, freight, packaging material, and transportation costs, as a result of the pandemic.”
 
“Approximately 70 per cent of the bulk drug raw materials are imported from China. China's supply cuts have resulted in significant cost pressures on the business. The price hike of commodities like steel and chemicals has a direct influence on pharmaceutical companies, affecting their operational costs, transportation costs, and raising product prices for end-users. Since the cost of production is so high, pharmaceutical companies are bound to increase drug prices thereby affecting the customer’s pocket,” added Shah. Pharmabiz