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To reduce the dependency on China for APIs as about 90 per cent of APIs for domestic market is coming from China, the government and the industry should jointly conduct a study on how China is able to sell APIs in India at such a cheaper cost, says Dinesh Dua, chairman of Confederation of Indian Industry (CII).
To understand the mystery of how China is able to supply APIs to India at such a low selling price, the industry leader suggests that the government should find out how the selling price of APIs from China is lower than even the cost of production of APIs in India. The selling price of China's APIs in India is approximately 15-20 per cent less than its production cost in India, therefore it makes more viable for companies to import from China.
Dua says, “The government should initiate a discussion and investigation through WTO that how the Chinese companies are able to sell APIs at the price which is not in our variable cost. We import close to 8 billion dollar worth of APIs from China and we export 6 billion dollar worth of APIs to the regulated market. What we export is high in value, low in volume and what we import is high in volume and less in value. Over the years, we have witnessed that our variable cost of manufacturing of API is higher than the cost of selling price in China.”
The government and industry leaders are having several discussions to reduce the API dependency on China. The pharma associations are of view that the government should not only provide a barren land, but also support in seeking environmental clearance, set-up common effluent treatment plants, various subsidies and soft loan to the API manufacturers to boost API production in India.
Indian API manufacturers lost the competitive edge to manufacture APIs and fermentation technology products to countries like China, primarily due to costly power, inadequate infrastructure, government restrictions, clamping down on the volume of APIs that can be produced in the existing plants, delays in new drug approvals, lack of financial support and incentives from the governments, to match the Chinese government subsidization of exports.
Now seeing the increasing API dependency on China, the government is also taking initiatives to support the manufacturers by coming up with scheme for assisting the pharmaceutical industry in establishing common facilities in the bulk drug parks.
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