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Looks like we’re looking at another massive disruption of the active pharma ingredients (API) supply chain due to a surge in COVID-19 and the strict shutdown of businesses in China, similar to the beginning of 2020. China leads in global exports of Tetracycline/Doxycycline, accounting for 86 per cent and that of Vitamin B1 at 63 per cent. By one estimate China produces little less than half of the total APIs in the world. This reveals China’s crucial role in the pharma supply chain. The pandemic has exposed the over dependence on China for APIs.

On the flip side, India is known as the pharmacy of the world due to its $42 billion worth pharma sector, with 20 per cent of the total generic drugs being exported. But its huge production depends on almost 70 per cent of APIs imported from China, as over 65 types of pharma ingredients are sourced from China. For the produced by India, the key starting material comes from China. About 90 per cent of the antibiotics requirement of India is fulfilled by China. Not only India, even American and Japanese drug producers are dependent on China for raw materials.

Learning a hard lesson, India began reducing its dependence on China by promoting domestic production of APIs, key starting materials and other raw materials. The government had launched a production linked incentive (PLI) scheme to that end.

At the same time, a huge infrastructure is also being created. A vast pharma city, measuring 14,000 football grounds in area, is being set up by the State Government of Telangana to attract $8.4 billion investment with a potential to create 560,000 jobs. The Union Government has also drawn out plans to allot land for three major bulk drug parks, with and plans to provide more than $1 billion funding so companies may manufacture ingredients domestically. All these efforts are to minimise the dependence on China. But, till the projects are completed and companies start setting up their plants, the situation remains unchanged.

Until then, not a major headway can be made in doing away with dependence on China. Moreover, the difference in prices between Indian and Chinese APIs poses a major challenge and the dependence on China continues. Thus, in the current situation, the Himachal Drug Manufacturers Association (HDMA), representing the Rs 40,000-crore drug industry in Himachal Pradesh, comprising 650 pharma units, has urged the Government of India to set up an API-monitoring cell for regulating prices of bulk drugs.

Naturally, with disruption in supplies due to lockdown in China, the prices have gone up in India in just a month’s time. Prices have doubled from March to April. For instance, the price of a Paracetamol has increased from Rs 300 per kg in March to Rs 700 in April, while Cefixime trihydrate’s price increased from Rs 8,500 per kg to Rs13,000 at present. As if the Chinese lockdown was not enough, the RussiaUkraine war broke out which also affected prices in India. Industry estimates reveal that drug exports to Russia and Ukraine have plummeted by half as the payments are not coming in. This seems to have also affected production cycles.

The very first casualty of the war was sales in the war zone. Sales are affected due to two reasons. Economy suffers and people’s purchasing power shrinks. Second is challenges caused by the war in uninterrupted supply of goods. It is applicable to medicines also. Ensuring smooth supply of drugs becomes problematic at times. With reduction in purchasing power, people focus on buying only the most essential drugs. Sanctions over Russia and non-receipt of payment for the drugs already supplied are also some hinderances caused by impacts of the war.

While efforts are ongoing to bring normalcy to the world on two fronts, the battle against the pandemic and the ‘new war’ in Ukraine, only a united global consensus and scientific approach can end both crises once and for all.