Since June 2020, India and China have seen their relations sour due to skirmishes at the border. And the political situation has had a bearing on the pharmaceutical industry.
Even though India bears the tag of being the “pharmacy of the world” due to its massive production capacities of both generic drugs and vaccines, it has been hugely dependent on China for active pharmaceutical ingredients (APIs). In 2019, imports from China met half of its API needs.
However, after mounting cross-border tensions, Indian drug companies are looking to source APIs from local drugmakers, or are trying to manufacture them in-house, thereby reducing their dependence on the neighboring country.
According to a Reuters news report, executives at Indian drug companies such as Cadila Healthcare, Cipla, Sun Pharmaceutical and Biocon have said they are aggressively working on reducing their dependence on China for raw materials. One of the major reasons behind this strategic change was the disruption to supplies from China due to the pandemic. In early 2020, many Indian drugmakers had to scramble for ingredients to manufacture important drugs that were exported worldwide.
“Because of the anti-China sentiment ... most of the companies are working towards de-risking themselves in terms of making it clear that their supply chain linkages with China are limited,” Gaurav Suchak, supply head of Cadila, said during a conference.
“For the critical API molecules, the idea is to go for a backward integration where you are in control of that pie which is going to make the most impact on your business, and also to make sure that the entire value chain is secure,” the Cadila executive said.
Companies are also eyeing reliable local vendors who can promise consistency and competitive prices, he added.
Similarly, Cipla has launched an “API re-imagination” program in a bid to expand its own manufacturing capacities using recent government incentives. And a Biocon executive said that the company had a target on what percentage of revenue is “independent of China”.
“We are happy to say that by the last quarter, we were almost 50 percent completely independent of China,” the Biocon executive said. “That does not mean we will not source from China, but we are not dependent on China anymore.” [PharmaCompass]