Suppliers Hiking Prices Of Chinese Raw Materials After Galwan Clash

Dehradun, 20 June 2020:

Amid calls of ‘Boycott China’ after the killing of 20 Indian Army soldiers in Galwan Valley near Line of Actual Control (LAC) on June 15, price of raw material for the pharmaceutical industry has increased by upto 30% in the last four days, which could eventually result in costlier medicines, claimed pharmaceutical sector industry owners in Uttarakhand.

Uttarakhand and Himachal Pradesh have hundreds of pharmaceutical companies and the two states account for almost half of the total medicines produced in India, which, in turn, accounts for 20% of the world’s pharma supplies by volume. According to Central government estimate, the pharma business in India is expected to grow to $ 0 billion by 2022 from about $22 billion in 2019.

But, that can happen only if cheaper raw material from China comes without any hindrance, say industry leaders. Most of the raw material for the pharmaceutical industry is imported from China because of the lower cost than locally available salts, they said

There are over 100 pharmaceutical manufacturers in Uttarakhand with majority of them operating from State Industrial Development Corporation of Uttarakhand Limited (SIDCUL) units of Haridwar and Rudrapur, US Naga district. Himachal has about 300 pharmaceutical factories, mostly situated in the Baddi Industrial town, close to Punjab-Haryana border.

A leading pharmaceutical industrialists from Haridwar, on the condition of anonymity, said, “Since the episode in Galwan Valley in Ladakh and ensuing China boycott, the handful of big suppliers of the raw material, imported from China, have now increased its price by upto 30%. They are citing the ongoing situation behind it. But, it seems they are just trying to exploit the situation to earn undue profit.”

“These suppliers are a group of 10-12 major players in the country who import the essential raw material and salts for the essential drugs from China and then supply to manufacturers across the country. They have total control over the supply and we are helpless before them. We have to buy the raw material at increased prices, no option. This will ultimately increase the prices for medicines for common man in market,” he said.

The industrialist quoted above also said that the suppliers were seeking advance payment for supply the raw material. “Many of them are hoarding it and now asking for advanced payment. It is possible that they will come up with any other condition in next few days to benefit from the situation.”

Another industrialist hailing from the sector in Haridwar, corroborated the claim, and said, “Right now we don’t have any other source (for raw material) other than China.”

“About 80% of the raw material is imported from China which makes this boycott call totally impractical for us. We can’t import the material from Europe or US which is almost double the price of that from China,” he said.

He said that even a basic drug like Paracetamol is based on raw materials from China.

“Not only Paracetamol, raw material for all major antibiotics like Augmentin and vitamins come from China at lower prices which enables us to manufacture the drugs at economical prices. We have no option but to continue to import them from China as we have very few Active Pharmaceutical Ingredient (API) units in India, which can supply the raw material at comparable rates with China,” he said.

Another pharmaceutical industrialist from Rudrapur in Uttarakhand said, “The ground reality is totally different than what people think while giving such (boycott China) calls.”

“I have received the quotation of Paracetamol’s raw material at Rs 395/kg now which was Rs 200/kg two years ago. Everything needed for manufacturing Paracetamol from salt to wrapping sheets comes from China,” he said, claiming that if boycott China is implemented the country would face “severe” shortage of drugs, including live saving ones. “Our pharmaceutical industry is still about 10 years behind China’s.”

Confirming the higher prices of material citing the tension between India and China, Anil Sharma, president of Pharmaceutical Manufacturers Association said, “There is some disruption in supply of raw material along with a rise in its price over last few days.”

On the call to boycott Chinese products, Sharma said, “We are fully with the country’s sentiments but the ground reality is totally different. Doing so will affect us badly. The government should help in developing the APIs and alternative source of raw material to prevent us from relying on China.”

Sunil Kumar, owner of Gujarat based Gaurang International, a major suppliers of raw material for pharma industries, confirmed that the prices of raw material has increased in the past few days because of the boycott call. “It is because we have now reduced the import from there in support of the country’s sentiments to boycott China. It is not that China has increased the prices but we have decreased the import resulting in its hike,” he said.

Kumar, however, said that right now there is no alternative source country for raw material. “At present there is no other source of the raw material. But, it’s not like we can’t survive without it. We can put a stop to the import from China by developing APIs in India but that would take time. It can’t be done immediately,” he said. Hindustan Times