The medical bills for consumers are all set to rise as India’s pharma industry continues to bear the brunt of high prices of raw materials.

The industry has witnessed a steep price increase of over 100 per cent from pre-pandemic levels of certain raw materials for essential drugs — called active pharmaceutical ingredients (API), reported TOI.

Earlier, the pharma industry was considering the hike to be a transitory phenomenon. However, the increasing price of raw materials, even after improvement in supply chain and logistics, has created a troublesome situation in the industry.

The sharp increase 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. As against this, prices of most vitamins, including vitamin B and D, also imported from China, are at an all-time low,” stated the TOI report.

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

Reasons for the hike
The sharp hike can be attributed to increase in prices of key constituents, materials and solvents used for making these drugs. The supply-chain disruptions caused by Russia-Ukraine war led also contributed to the price rise as it led to surge in the freight cost.

Another significant reason could be inflation. “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,” said an executive with a firm manufacturing APIs.

According to the TOI report, 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 per cent, 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.

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 per cent every year, according to pharma policy.

(With inputs from TOI)