Raw Material Cost Rise Hits Pharma Companies


MUMBAI : A steep price increase of over 100% from pre-pandemic levels of certain raw materials for essential drugs – called active pharmaceutical ingredients (API) – has raised eyebrows in the industry.

Interestingly, the sharp hike – which should have corrected by now with the improvement in supply chain and logistics – has been witnessed in high-volume key antibiotics including azithromycin and amoxicillin imported from China. These are also the products where India has near or complete dependence on China, industry experts told TOI. As against this, prices of most vitamins, including vitamin B and D, also imported from China, are at an all-time low.

Besides APIs for key antibiotics, anti-TB rifampicin and anti-diabetes metformin have also doubled from the pre-pandemic level, they added. Antibiotics including Azithro, Clav and Amoxicillin are high-volume products, the production of which is dependent on imports from the neighbouring country.

The dramatic increase is being attributed to multiple reasons like inflation, increase in prices of key starting materials and solvents due to crude, and the freight cost, experts added. Further, few agents have been controlling the imports of certain products, which has led to a cartelisation of sorts. The government should break the monopoly and prevent sole agents from controlling the market, an executive with a firm manufacturing APIs said. A Mumbai-based trader stated, “It’s more about Chinese fleecing as we are dependent on them, coupled with some registration agents pushing them to form unholy cartels for their own benefits.”

It may be noted that cost has gone up for only those drugs for which raw materials are imported from China. Once the pandemic spread, API prices of certain drugs like fever and pain relief medication, paracetamol, life-saving antibiotic Meropenem (also used for Covid), and anti-diabetic metformin, jumped by over 200%, putting the spotlight back on India’s near total-dependence on China. Since 2020, prices have been increasing due to the pandemic-induced supply disruption and logistics challenges, pinching the industry hard.

“API prices have remained inflated due to the lockdown in China for the past two-three years, logistics and high energy prices. So far, companies have been managing API prices by being efficient with operations. Also, the government had allowed some price revisions a couple of years ago,” said Sujay Shetty, global health industries advisory leader at PwC India.

According to pharma policy, for essential drugs, prices undergo a change – either increase or decrease – in line with the annual wholesale price index (WPI) in April each year. Non-scheduled drugs (those outside price control) are allowed an annual increase of 10% every year.


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