Pharma industry seeks DoP intervention to address issue of increase in prices of APIs from 11% to 51% over one month

Increase in costs of APIs, excipients, packing material and transportation- costs have put severe pressure on operating margins of the pharmaceutical companies.

DoP, NPPA, API, Paracetamol, Azithromycin, Metformin, PLI
Hoarding of key APIs by traders like Paracetamol and Azithromycin is a key challenge that has also hampered the pharmaceutical industry business.

With drastic increase in prices of key Active Pharmaceutical Ingredient (API) from 11% to 51% and excipients from 11% to 61% over the past one month, pharmaceutical industry associations have sought Department of Pharmaceuticals (DoP) intervention to urgently address price hike by allowing price revision of ceiling price as per Consumer Price Index (CPI) and not Wholesale Price Index (WPI) for scheduled formulations among other recommendations.

Industry experts have also recommended to allow the prices of scheduled formulations whose retail prices are below the ceiling price, to be raised up to the ceiling price by relaxing para 13(2) of Drug Prices Control Order (DPCO)- 2013.

It has also been recommended up to 20% price rise for all non-scheduled formulations over the last 12 month period, under para 19 of DPCO -2013.

“Compounding the problem further, hoarding of key APIs like Paracetamol and Azithromycin by traders is a key challenge that has also hampered the pharmaceutical industry business. Besides this, China, which accounts for 70% of raw material supplies for drugs to India has also disrupted the supply chain of raw materials or APIs in response to India’s policy of self-reliance for domestic manufacturing of drugs and APIs,” according to an industry source.

The Government of India introduced two production linked incentive (PLI) schemes in November 2020 and approved another one in early 2021 to boost domestic manufacturing.

The increase in price will have a cascading effect on the viability of the pharmaceutical business in the country. Experts have cautioned that the unviability could lead to stockouts and shortages even for important formulations in trade and hospitals and Institutional supplies to government hospitals could be hampered.

Over the past one month, key diabetic API like Metformin alone has increased from Rs 250 per kilo gram (kg) to close to Rs 400 per kg, an increase of 51%. API like Paracetamol has seen an increase from Rs 599 per kg to Rs 925 per kg, an increase of 50%. Other those which have registered phenomenal increases include guaiphenesin which has seen a price increase from Rs 575 to Rs 850, an increase of 39%. Spironolactone has seen price increase from Rs 16750 to Rs 21225, an increase of 27%. Phenylprine HCL has seen a price increase from Rs 6500 to Rs 7900, an increase of 20% and Ramipril has seen price increase from Rs 42000 to Rs 46750, an increase of 11%.

Guaiphenesin is a key API used in medicines for allergies, common cold and flu. Spironolactone is used in drugs to treat liver disease, kidney ailments, high blood pressure and heart failure. Phenylprine HCL is used in drugs to treat breathing illnesses like sinusitis and bronchitis. Ramipril is used to treat high blood pressure (hypertension).

Key excipients like Glycerine have also seen price increase from Rs 171 per kilo gram (kg) to Rs 275 per kg, an increase of 61%, Citric Acid from Rs 125 per kg to Rs 225 per kg, an increase of 60%. Sodium Citrate from Rs 94 per kg to Rs 145per kg, an increase of 54%, Aerosil from Rs 500 per kg to Rs 780 per kg, an increase of 50%.

Increase in costs of APIs, excipients, packing material and transportation costs have put severe pressure on operating margins of the pharmaceutical companies.

Price of a key API like Paracetamol which is a price controlled formulation has increased by 143% in the last one year whereas the ceiling price was revised by only 0.54% as per the WPI in April 2021. In the last 8 years since Paracetamol is under price control, the API price has increased by more than 300%, but the corresponding ceiling price has been revised by only 3%.

Paracetamol is an essential anti-pyretic and analgesic and is the gold standard for treating fever but the surge in API prices have made production of Paracetamol unviable. Speculations are rife that the price of the API of Paracetamol per kg will soon cross Rs 1000 per kg.

 

 

 

 

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