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As input costs soar, small drug units reach out to Centre for help

A steep rise in raw material prices has begun to pinch the country’s drug manufacturers to the extent that some have sought government intervention to tame the prices and a top drug maker said it may be forced to pass on the cost increase to consumers.

The prices of active pharmaceutical ingredients (APIs), excipients, glass vials and packaging material, among other inputs, have escalated over the last three months.

Executives of some leading pharmaceutical companies told ET that the situation is in large part due to factory shutdowns and production cuts in China, the main source of APIs and key starting materials for Indian companies. APIs are required to manufacture finished formulations.

Yasir Rawjee, chief executive of


Life Sciences (GLS), the maker of high-value APIs that target the chronic illness segments, said the company has so far been absorbing the increase in cost of inputs. “Now we will have to talk to our customers about passing on the input costs,” he said.


The price rise has particularly hit the micro, medium and small pharma companies. In Himachal Pradesh’s pharma hub, the 550-odd drug manufacturing units are facing a stiff challenge with raw material prices having trebled.

Rajesh Gupta, president of the Himachal Drug Manufacturers Association (HDMA), told ET that the prices of all APIs have risen by 25% to 300% over the last few months. For instance, paracetamol prices have risen to be in the ₹840-1,000 per kg range, up from around ₹300 per kg before the Covid-19 outbreak.

In this regard, HDMA has written to the prime minister, urging him to set up a task force on pharmaceutical inputs and packaging material to protect the industry and to prevent shortage of medicines in the country.

The association has also expressed concern over the increase in prices of excipients and solvents, including propylene glycol and glycerin. Glenmark Life’s Rawjee, who is also the company managing director, said prices of widely used solvents like methanol has also gone up, rising by 59% in the last six months. The cost of tetrahydrofuran (THF), another solvent, has risen by 150% in the same period.

The pharma industry uses 10-15 solvents, mainly for extraction and purification in the drug manufacturing process.

Packaging material, another key material for the pharma industry, has become expensive, too.

According to HDMA’s letter, prices of packaging material like aluminium and printed alu foils have risen by 25-30% over the last three months and are expected to increase further. The association’s letter said that prices of mono cartons and corrugated packing have risen by 25-40% and continue to increase. Even the PVC for blistering of tablets and oral liquid PET bottles are showing 25-30% jump in prices.

Govt should grant infrastructure status to API industry: IPA President Satish Reddy

As India readies its plan towards self-reliance for key bulk drugs amid the Sino-Indian border stand-off, and the coronavirus outbreak, the Indian Pharmaceutical Alliance (IPA), the lobby body of domestic research-based pharmaceutical firms, seeks a supporting regulatory environment, ease of doing business and sops to boost investments. To build self-reliance on raw material, the IPA wants the government to accord infrastructure status to the Active Pharmaceutical Ingredients (API) industry, and provide a boost to innovation through tax incentives on patent income, streamlined pathways for testing and approval of experimental therapies, its president, Satish Reddy told ET’s CR Sukumar. Edited excerpts:

What challenges does the face-off with China pose for the Indian pharmaceutical sector?
India imported around 24,900 crore worth of bulk drugs in FY19, of which 68% was from China. Over 95% of API import for key drugs such as Paracetamol and Azithromycin are from China. From the standpoint of generics manufacturers, over-dependence on any one source or market poses a risk. Over the past couple of years, we have seen some price and supply shocks in the API space on account of pollution control-related shutdowns in China, and supply chain disruptions during the initial phases of the Covid crisis. Consequently, the Indian pharma industry needs to ramp up domestic manufacturing of APIs. To aid this, the government has recently announced a PLI scheme and earmarked around 3,000 crore to set up common infrastructure facilities in bulk drug parks. In addition, we need to work on measures such as easing the process for environmental clearances, uninterrupted / low-price supply of utilities, and policy support in the form of tax incentives, favourable licence renewals, and capital subsidies.

How do you look at opportunities the face-off with China offer?
We consider this to be the ‘Year of the API’. While the pandemic has revealed the world’s dependence on a single source for imports, the current scenario has strongly reinforced it. This has created an opportunity for the Indian pharmaceutical industry. The time is ripe for the industry to shift towards self-reliance and play a larger role in securing global drug supplies to cement its position as the pharmacy of the post-Covid world.

What regulatory bottlenecks do the Indian innovation-led pharma industry face with regard to clinical trials, drug approvals, production, pricing and export of Covid drugs?
For a conducive innovation ecosystem, simplification of regulatory processes and timely approvals are vital, especially for early product introduction. For instance, multiple agencies are involved when it comes to product approvals and it takes 50-85 months in India, compared to 23-26 months in other countries. Creating a supportive regulatory environment and enabling ease of doing business helps in infusing long-term investment.

How can the Indian pharma sector capture the global market?
India is the global leader for pharmaceutical products, especially generic medicines. We account for 60% of the global vaccine production, 25% of the demand for medicines in the UK, and one in three pills consumed in the US. The Covid crisis has also underscored the need for a research-based industry that is capable of quickly devising solutions especially in pandemic situations. Innovation should be given a boost with a combination of tax incentives, rebates on patent income, access to risk capital/grants, and streamlined pathways for testing and approval of experimental therapies.

While the pandemic has revealed the world’s dependence on a single source for imports, the current scenario has strongly reinforced it. This has created an opportunity for Indian pharma industry.

To boost investments in the Indian pharma sector, we need to work on aspects such as simplification of processes and guidelines for product approvals and the regulations (e.g. for clinical studies), and on a stable pricing environment that takes into account inputs from all relevant stakeholders across the value chain. Finally, easing price controls on drugs that cost less than Rs 5 per unit in the domestic market and providing incentives for exports will spur investments on both fronts.

What do expect the government should do to help industry consolidate India’s position and emerge the pharmacy of the post-Covid world?
The government needs to look at making the ease of doing business much better. Thus, the top four things would be: incentives, access to low-cost capital, ease of doing business, especially in environmental clearances and reforms in price control.

What should the industry focus on?
It is important that the pharma industry moves up the value chain by focusing on innovation and quality. The government has taken cognizance of the need to revive the domestic bulk drugs industry to address import dependence on a single source – this is a great first step. In the short term, formulation players in India must work to de-risk its single source/country dependency through the qualification of multiple, viable sources of API. Additionally, the industry must move from branded generic drugs to discovering and developing new drugs. For that, creating an enabling research system is a must.

What bottlenecks should the government resolve in manufacturing and distribution?
The industry has seen a strong recovery. However, it is important to map out, and be cognizant of the logistics challenges faced in the early stages of the lockdown so that we can avoid such a situation in the future. The industry and the government must work together to define clear guidelines for potential bottlenecks/challenges such as the inter-state movement of goods, operation of airports /ports, operation of ancillary industries that support the pharma industry and availability of manpower.

What key benefits do you see with the infrastructure status for the API sector?
The industry needs better access to capital for capital intensive sectors such as fermentation APIs. Loans available to the API industry are typically at higher interest rates and with short tenures. Granting infrastructure status to the industry will enable it to borrow money from insurance companies and other funds on longer 10-15-year tenures at very attractive interest rates. Gain access to foreign currency funding through the external commercial borrowing route. This would enable the industry to easily raise capital for investment in increasing capacity/infrastructure.

What incentives are you seeking for research?
While India is a leader in the generics space, a significant portion of the value in the pharma industry lies in innovative products/new molecular entities. Consequently, it is very important for us to think about how to incentivise innovation in the country. Along these lines, some key incentives for companies that IPA is seeking are: tax incentives on R&D spends to be restored; favourable tax rates for patent income; increased and more streamlined government funding for innovation, across the entire innovation lifecycle and creating a vibrant innovation ecosystem to incentivise VC investments in early-stage pharma projects.

Chief of Asia’s largest pharmaceutical company urges transparency in virus vaccine rollout

TOKYO: Pharmaceutical firms must be “very transparent” about the risks and benefits of vaccines in efforts to end the coronavirus pandemic, the head of Asia‘s largest drugmaker has told AFP.

Takeda, one of the world’s biggest pharmaceutical companies, is not developing its own vaccine but has contracts with several firms to distribute their jabs in Japan and is also testing a virus treatment.

“We have to manage the situation well, be very transparent and extremely educative in the way we introduce products,” chief executive Christophe Weber told AFP in an interview.

“Medicines or vaccines are never perfect… there are always some side effects,” said Weber, who joined Takeda in 2014 and took the top job a year later after nearly two decades at Britain’s GlaxoSmithKline.

But he is optimistic the industry can explain the risks and benefits properly.

The Frenchman even sees a chance that the inoculation could help push back the growing tide of uncertainty and outright opposition to vaccination worldwide.

“It will be interesting to see. Vaccine hesitancy is strong, especially in some countries, but many vaccines are protecting against diseases that people never see,” he said.

“Here it’s different, everybody is seeing the impact of the coronavirus… so it could actually re-demonstrate the value of vaccines.”

Takeda inked a deal with the Japanese government and US firm Moderna Therapeutics in October to import and distribute 50 million doses of its vaccine in Japan from the first part of 2021.

The US Food and Drug Administration on Friday granted emergency authorisation for the Moderna jab — the same permission already granted to the Pfizer/BioNTech version.

Takeda has also signed a deal with US biotech firm Novavax to produce and deliver its vaccine in Japan, if ongoing clinical trials prove successful.

But the firm — which became one of the world’s largest pharma companies after its 2019 purchase of Ireland’s Shire — has decided not to develop its own coronavirus jab.

“When we assessed the situation and the technology that we have in-house, we felt we did not have the best technology to develop a vaccine,” Weber said.

– Covid-19 treatment – Japan’s pharmaceutical sector has moved comparatively slowly in the race to end the pandemic, and while companies including AnGes, Shionogi and Daiichi Sankyo are now developing vaccines, they are not expected to be available before 2022 at the earliest.

The country has however secured doses from players abroad, including Pfizer and AstraZeneca.

“There is no leading vaccine player in Japan,” said Weber, adding that Takeda hopes to develop in that direction, including with plans for a dengue vaccine.

He believes Japan’s biotech sector is less developed than that in the US because the country lacks the “vibrant spin-off mechanism” to help scientific research groups grow into successful start-ups.

“In Japan, scientific research and academia is strong, but there is much less in the way of spin-offs and venture capital,” he said.

“We need to make more efforts to generate this ecosystem in Japan,” he added, pointing to an open innovation research facility Takeda founded in 2018 that houses 70 companies, including young biotech firms.

And while it has shied away from coronavirus vaccines, Takeda has been working on a plasma therapy to treat the new respiratory disease in collaboration with an international alliance of drug manufacturers.

Called CoVIg-19, the treatment uses concentrated and purified antibodies taken from patients who have battled the coronavirus.

Weber expects clinical trial results for the treatment to be published early next year and says a timeframe for it to hit the market “will all depend on the data”.

He’s not concerned that the arrival of multiple vaccines renders the treatment irrelevant, warning “we shouldn’t drop the ball and assume vaccines will solve everything”.

“The vaccines don’t have 100 percent efficacy,” he said, adding that how long they protect for remains unclear and that some patients suffer conditions which prevent them from getting inoculated.

Vaccinating the entire world is also going to be a lengthy process, Weber stressed.

“There is still a great need for efficient treatments.”