API Sector Faces Double Whammy Of Supply Disruption And Price Hike

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The active pharmaceutical ingredient (API) industry is seen to have encountered a double whammy with disruptions in supply and surge in prices impacting finished formulation manufacture in 2018. Going forward, the industry is expected to strengthen its capability in new generic drug launches along with contract development and manufacturing.

According to Saurabh Gurnurkar, Executive Director, Uquifa SA, this year there was a considerable impact on APIs flowing the supply disruptions from the conventional base of China and India which affected its availability.

Uquifa which manufactures APIs had to put up with high input prices for quite a few products in its portfolio. There are several factors which have contributed to the raw materials prices to be dearer. They resulted from environmental concerns which forced the Chinese government to rationalize manufacture of APIs . The lack of access and high cost led to escalation of API prices with a spillover to the finished drugs too. We also purchase 60% of our raw materials from China and clearly the volatility in supply has been a blow with surging prices, Gurnurkar told Pharmabiz in an email.

Citing the reasons for dependence on China for critical raw materials in commonly used drugs, he said that the dragon land had certain inherent strengths in chemistry, technology and infrastructure capabilities which enabled gaining higher market shares. This made its customers dependent on the sole supply source. In addition, the closure of API plants in China to curb pollution was unexpected, he added.

Historically China has been the source of manufacture for many basic chemicals, intermediates and APIs. The country benefited over period of time in terms of garnering higher market shares given the cost competitiveness. This resulted in manufacturing certain categories of intermediates and APIs moving away from European Union and other parts of the world to China.

“As a result these companies in other parts of the world started moving to other products areas or possibly curtailed operations which led to a further concentration in the global off-take from Cllution, the move knocked the Indian pharma companies. It was akin to a domino effect given that probably these manufacturershina. Now, when China started taking measures to curb po were the ones with maximum volume supplying to market and their loss of production impacted price and supply across the value chain of pharma and chemical industry, stated Gurnurkar.

In this background the business outlook for 2019 would be an increased focus on newer drugs to market that will support growth of contract development and manufacturing. Even the generic drug market is expected to focus on specialty segments with the need to drive down healthcare costs. The growth outlook is underpinned by product launches with increased market share in CDMO. We are also working to grow ahead of the market with generic and CDMO portfolios in our business, he said.

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