Pharma Industry Warns Of Covid Drug Shortages As Raw Materials Prices Surge 200%

New Delhi : As India struggles with the worst surge in Covid cases since the beginning of the pandemic last year, the price of raw materials used to manufacture key Covid drugs has jumped by up to 200 per cent in the past one month. Drug makers have voiced their concern about the price hike to the government, and many have also talked about the possibility of shortage of key medicines in the coming months, owing to the price rise and unavailability of raw materials in the market.

According to data accessed by ThePrint from the pharmaceuticals industry, the prices of many active pharmaceutical ingredients (APIs), such as ivermectin, methylprednisolone, doxycycline, enoxaparin, paracetamol, azithromycin, meropenem and pipratazo, needed for the production of key Covid medicines, have gone up by approximately 30-200 per cent in the past one month, between March to April 2021.

Drug-makers are struggling with the frequent fluctuations in prices and termed the situation as “alarming”.

“Traders and manufacturers of these raw materials are quoting different prices, sometimes within a span of four hours. The situation is very bad. If there is no intervention [from the government], there is a high probability of shortages of medicines in the coming months,” said Sandeep Arora, chief executive officer of the Baddi-based, Ultra Drugs.

Baddi, in Himachal Pradesh, is the hub of medicine production in India.

The suspension of Chinese cargo services to India, impacting the import of pharmaceutical raw materials, has added to the industry’s worries.

India imports 70 per cent of its pharmaceutical raw materials from China. On 26 April, China suspended for 15 days cargo flights by Sichuan Airlines that had been transporting medical supplies to India. This, according to industry insiders, has led to a hoarding of important pharmaceutical raw materials.

In a letter written to Minister of External Affairs Dr S. Jaishankar on 29 April, the IDMA termed China’s move as “worrisome” and expressed concern that it would have “cascading effects on its entire supply chain leading to shortage of essential medicines for the nation’s population as well as severe impact on exports”.

Arora too said that “with China suspending cargoes to India, there is going to be a huge shortage [of vital drugs], especially in June and July. Even simple products such as azithromycin, paracetamol, and montelukast [needed for manufacturing medicines] might be in short supply.”

ThePrint reached S. Aparna, secretary, Department of Pharmaceuticals (DoP) and Shubhra Singh, chairman of drug availability watchdog National Pharmaceutical Pricing Authority (NPPA) for comment over text messages, but there was no response till the publication of this report.

The shortage of oxygen needed in manufacturing APIs — India is currently facing a huge shortage of medical oxygen owing to the demands of Covid patients — and shortage in manpower for production, because of the pandemic, are other reasons being forwarded for the short supply of pharmaceutical raw materials.

The pharmaceuticals industry had already presented their concerns to the government about the “unprecedented” hike in raw material prices on 5 April.

Raising an alarm

The Indian Drug Manufacturers Association (IDMA) — the country’s biggest lobby of drug-makers — in a presentation to the Centre on 5 April, raised the issue of “unprecedented” increase in prices of raw materials needed for the production of key drugs.

The presentation, accessed by ThePrint, also mentioned that “the gyrating prices of many raw materials are a cause of serious concern”.

“The huge escalation in input and transportation cost and their cascading effect on the pharmaceutical value chain throws up severe challenges in maintaining the viability of the pharma business for many of our members,” Ashok Madan, executive director, IDMA told ThePrint.

The association represents over 1,000 pharma companies. Its members include Torrent Pharmaceuticals, Lupin, Cipla, Sun Pharma and Jubilant Life Sciences.

A senior official at one of the country’s leading pharmaceutical companies told ThePrint, on condition of anonymity, that the “pricing situation is very bad. Prices have increased drastically and availability [of raw materials] is also a big issue.”

The official also warned of possible shortage of critical medicines in the near future.

“Of course, if raw materials are not available or are highly expensive, many drug-makers will stop the production. This will lead to a shortage. The situation is very alarming,” he said.

Why the price surge?

The main reason behind the surge in prices, according to industry insiders, is a huge demand for drugs, followed by anticipated shortages of raw material (owing to the suspension of cargo services by China), resulting in the hoarding of stocks here.

“The news of cargoes to India being suspended by China led to the stocking up of raw materials and escalation of prices. In fact, artificial shortages were created by some traders,” said Arora of Ultra Drugs.

Another reason is the reduced supply of oxygen for raw material manufacturing within the country.

“The production of many APIs and intermediates — needed for manufacturing drugs — require oxygen supply. But there is limited oxygen supply now,” said an executive at a Mumbai-based listed pharma company, on the condition of anonymity.

The other big problem, according to him, “is none of the manufacturing plants are working on full manpower capacity, because either the employees or their family members are infected with Covid.”

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