India Halts Some Drug Exports as Delay in China APIs Hurts Global Supply Chain
Tong Lan
DATE:  Mar 13 2020
/ SOURCE:  yicai
India Halts Some Drug Exports as Delay in China APIs Hurts Global Supply Chain India Halts Some Drug Exports as Delay in China APIs Hurts Global Supply Chain

(Yicai Global) March 13 -- The Indian government ordered drugmakers to stop exporting 26 types of medicines and active pharmaceutical ingredients last month as it faces a scarcity of the APIs needed to make them, most of which come from China.

The disruption to the supply of APIs could be a significant but temporary headwind for the Indian pharmaceutical industry, Mumbai-based SBICAP Securities said in a report last month, adding it may also affect the global drug markets, including the US.

"China's production capacity of APIs is adequate," Wu Shenglong, executive director at global strategy consulting firm Roland Berger, told Yicai Global. The main factor affecting the export of APIs to India is continuing transport restrictions due to the novel coronavirus epidemic, he added.

India is one of the world's largest makers of generic drugs, accounting for 20 percent of the global total. To do this, it relies heavily on imported APIs, according to SBICAP Securities. Some 68 percent comes from China, and about half of that is made in Hubei, the province most severely hit by the Covid-19 virus outbreak.

Antibiotics are the biggest category of imported APIs, followed by multivitamins and hormones, Kunal Dhamesha, an analyst at SBICAP Securities, told Yicai Global. Ninety percent of its antibiotics, including Penicillin, Cloxacillin, Ciprofloxacin, Tetracycline, Gentamycin and Neomycin, come from China as do half of its multivitamins and hormones.

"A lot of our pharma value chain is linked to China," Umang Vohra, chief executive officer of generic drugmaker Cipla, told investors on Feb. 5. In fact, the entire pharmaceutical industry is linked. If the coronavirus continues for more than a month or 45 days, this will cause huge disruption in the sector, he added.

Sun Pharmaceutical Industries, which exports mainly to the US, has sufficient inventory to meet short-term demand, the Mumbai-based firm said. Supply chains are complicated and the original source of material is not always clear, it added. 

Possible Shortages

"India hasn't faced shortages of finished drugs yet," Dhamesha said. "But if the supply of raw materials is not back to normal by April then both India and the nations to which it exports could certainly face shortages."

The US ran short of some medicines last month and it is closely monitoring over 20 types of drugs that could possibly also be in short supply, according to data from the US Food and Drug Administration. Some 72 percent of the APIs used in US medicines are made overseas and 13 percent of those are supplied by China.

British pharma giant GlaxoSmithKline's Indian branch, the US' Pfizer and India's Cipla are at greater risk of experiencing a shortage of raw materials, Dhamesha said.

China is unlikely to face a lack of medicine, Wu said, adding that it had adequate supply of APIs.

Over 95 percent of firms above a certain size in Hubei province are back at work, China's Ministry of Industry and Information Technology said today. Around 80 percent of their employees have returned, it added.

Major API exporter Shijiazhuang Pharma Group has been back in production since Feb. 3. But the factory is still having logistical issues due to travel restrictions, the Hubei province-based drugmaker said. This problem should soon be resolved as more firms resume operations. Then more global orders can be placed, it added.

Editor: Kim Taylor

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Keywords:   COVID-19,Pharmaceutical Supply Chain