Coronavirus outbreak: Indian drug makers may see disruption of drug supply chain in coming weeks

Indian pharmaceutical companies who rely heavily on imported active pharmaceutical ingredients (APIs) and key starting materials (KSM) from China have expressed concerns about the 2019 novel coronavirus outbreak.“Wuhan is one of the largest cities in China and it does have a fairly good sprinkle of intermediates and API manufacturers,” said Dinesh Dua, Chairman of Pharmaceuticals Export Promotion Council (Pharmexcil) – the agency under the Department of Commerce for promotion of pharmaceutical exports, and the CEO of Nectar Lifesciences.“Some impact is definitely going to be there. Particularly for the units which are located in and around Wuhan,” Dua said.India imports about $4.5 billion worth of APIs and KSMs from China. These include antibiotics, hormones, vitamins, anti-hypertension, and anti-diabetes drugs.Indian drug makers import KSMs and API, and formulate them into finished dosages before exporting them to other countries. A large proportion of the drugs are consumed in India as well. China is crucial in the drug supply chain.Dua said there are already issues of logistics due to Chinese Lunar New Year.On January 30, the holiday season for the Hubei Province, where Wuhan is located, was extended to February 13 due to the outbreak of coronavirus.The coronavirus, which causes pneumonia, has so far claimed 170 lives and infected about 7,711 people, most of these cases were in Hubei Province, in Wuhan is located. The world came to know about the outbreak in the last week of December.“We’ll have to see the intensity of the spread of the outbreak to other provinces. If they are protected, then there is no need to panic,” Dua added.But the industry fears that if the containment measures are spread across China, including the regions Guangzhou and Shanghai, where there is huge concentration of pharmaceutical companies, there is a high possibility of disruption in the production and supply chain.In 2018, Indian drug companies faced shortages, and a steep rise in the prices of raw materials, with China cracking down on API and KSM manufacturers who were violating environmental norms.Sudarshan Jain, Secretary General of Indian Pharmaceutical Alliance said that it is too little early to be concerned about.“Indian companies maintain 2-3 months of inventory. At the moment it is holiday season, so there no shipments,” said Jain.“If China is able to contain the outbreak in next two weeks, there wouldn’t be any problem,” Jain said.The IPA is an industry body that represents large Indian drug makers. Get access to India’s fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.

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