India’s dependence on the imports of bulk drugs from China for the manufacturing of pharmaceutical formulations continues to rise, despite several policy steps aimed at resolving this issue.
As per government data, growth of pharma imports from China has risen in both value and volume terms over the past five years. In terms of value, India’s pharma industry imported 72% of the bulk drugs and intermediates from China in FY24. This is significantly higher than 66% imports in FY21.
Experts said that the dependence of imports is growing despite the concerted efforts by the government and the industry to reduce the reliance on China.
“The rise in imports is a result of both cost arbitrage and availability. It’s still cheaper to import from China than to manufacture in India. Indian drugmakers are still looking at few APIs but they have plan to expand their portfolio over a period of time,” said Anay Shukla, founding partner at Arogya Legal.
India’s total pharma imports touched nearly $8 billion in FY23, recording a 8% CAGR (compounded annual growth rate) between FY2017 and FY2023. Within the overall imports, bulk drugs have the largest share (nearly 60%).
A report by Rubix Data Sciences said that while India’s import of other pharmaceutical products is diversified across various countries, when it comes to bulk drug imports, India is heavily reliant on China.
“India faces significant vulnerability due to its heavy reliance on China for active pharmaceutical ingredients (APIs). For instance, a prominent Indian pharmaceutical company, which is a major supplier of generic drugs to the US, sources over 55% of its raw materials from China. This dependence exposes the Indian pharma industry to supply chain risks and also renders it vulnerable to price fluctuations,” the report said.
To become self-reliant, in 2020, the department of pharmaceutical (DoP) introduced the PLI (performance-linked incentive) scheme for promotion of domestic manufacturing of critical key starting materials (KSMs) or drug intermediates and APIs. The PLI scheme has outlined setting up of greenfield plants in four different segments (segments 1 and 2 are fermentation based and segments 3 and 4 are chemical synthesis based). In addition, the PLI scheme envisaged manufacturing of 41 bulk drugs with a total outlay of Rs 6,940 crore during the tenure of the scheme from FY21 to FY30.
Till April 2024, 30 projects have been commissioned for bulk drugs with an actual investment of Rs 3,715 crore.