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Coronavirus in China to make drugs expensive in India: Report

New Delhi: The prices of generic drugs in India are likely to go up due to the country’s excessive dependence on the imports of active ingredients from China, which has been hit by the novel coronavirus epidemic.

While noting that Indian imports are highly dependent on China, the Confederation of Indian Industry (CII) in its report on the impact of ‘novel coronavirus in China’ has said that the supply chain disruption caused by the lockdown placed in four provinces and around 50 cities of China has “significant ramifications for Indian industry”. 43 per cent of India’s imports from the world come from China.

India sources about 65-70 per cent of active pharmaceutical ingredients and close to 90 per cent of certain mobile phone parts from China.

The world’s largest manufacturer and exporter, China also accounts for 45 per cent of India’s total electronics imports, one-third of machinery and almost two-fifths of organic chemicals and over 25 per cent of automotive parts and fertilizers.

Though the overall impact on Indian economy so far is “moderate”, the CII has said that sectors like pharmaceuticals, shipping, automobiles, mobiles and electronics have already been or likely to be impacted.

The Indian pharma industry heavily relies on imports of bulk drugs (Active Pharmaceutical Ingredient and intermediates), with 70 per cent of API coming from China. Imports from China have been on a steady rise over the years due to the low-cost advantage Chinese manufacturers have. India imported around Rs 249 billion worth of bulk drugs last year, accounting for around 40 per cent of overall domestic consumption. Last year, India imported Rs. 174 billion of API from China while exporting only Rs. 16 billion worth APIs. The value addition in India is mainly through formulation, packaging and distribution.

The coronavirus outbreak has disrupted supplies of pharmaceutical ingredients from China, resulting in shortages and potential price rise of generic drugs in India, the CII has said. “Indian pharmaceutical companies are now running close to exhausting their supply of APIs (usually have up to two months stock) and considering supply from other countries,” the report revealed, adding that the situation has not reached to any crisis yet as stocks and viable alternatives are still available.

Expressing concern about the delays in shipments between India and China, the CII has noted a sharp drop in the dry bulk cargo movement since last month.

“Realisation per day per vessel has declined by more than 75-80 per cent in dry bulk trade,” the report said.

If the shutdown in China persists, the CII predicts an eight to ten per cent contraction of Indian auto manufacturing in 2020.

“However, for the fledgling electric vehicle industry, the impact may be greater since India is dependent on Chinese battery supplies,” the CII said.

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