February 8: Bulk drug prices in the country, which were already depressed, have been subjected to cheap imports from south-east asian countries and China. Prices currently are at rockbottom and are likely to continue to remain low in the near future. Apart from cheap imports, domestic players, especially from the unorganised sector, have indulged in price undercutting, further contributing to the depression.All these factors have led the National Pharmaceutical Pricing Authority (NPPA) to slash the ceiling and non-ceiling prices of 72 formulations. In other words, the depression in the bulk drug industry has finally percolated down to the formulators.
In response to the large scale dumping of one of the main bulk drugs, paracetamol, the government is planning to impose a provisional anti-dumping duty. However, other bulk drugs have also been affected badly, specially some of the older cephalosporins and semi-synthetic penicillin.
Lower prices of penicillin-G, caused by a scenario of oversupply, havealso contributed to low prices of semi-synthetic penicillin. Prices of penicillin-G are currently ruling between Rs 500 to Rs 600 per mmu as against the government's ceiling price of Rs 1,025 per mmu. This has caused ampicillin trihydrate and amoxycillin trihydrate to drop to the present price of Rs 1,850 per kg and Rs 1,950 per kg respectively. Prices of these bulk drugs were ruling at Rs 2,325 per kg and Rs 2,650 per kg respectively.
However, not all drugs are doing badly. Some of the recently launched cephalosporins are enjoying good prices, as a result of which companies like Lupin and Alembic are likely to do well. Other newer drugs like the hepatitis B vaccine are also performing well.
In short, there has been a glut in the market of older drugs as a lot capacities have been set up both in the domestic as well as in the international markets, specially the east Asian region. The depreciation in their currencies has further led to depressed prices in the international market. As for newer drugs,there is a supply side problem, which has led to reasonably good prices.
As far as exports are concerned, the Russian market is in a bad stage and most of the exporters have preferred to stop exports to this country rather than face the risk of defaults. Exports to south-east Asian countries have almost come to a standstill and this market is not likely to revive in the near future. Further, exports to the European market will also be affected if any provisional anti-subsidy duty is imposed by the European Union.
However, the Indian industry is contesting this point and is confident of a favourable judgment. As for the American market, it takes around two to three years to make a dent there and not much growth can be expected from it. To put it in a nutshell, the bulk drug industry is in for a tough time both in the domestic as well as international markets.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
