Within a span of two months prices of paracetamol have gone up from Rs 130 per kg to Rs 195 per kg. Manufacturers of the bulk drug had not long ago appealed for an anti-dumping duty to be imposed on the product which was being dumped in the country from China. Traders have pointed out that imports from China has tricked down substantially.

Two reasons have been cited for reduction in imports, the main reason being the quality of products dumped were not up to the mark. Formulators of paracetamol have said that companies manufacturing branded products have stopped importing from China because the quality was not consistent as well as below IP norms. However, they say that generic formulators are still importing the bulk drug.

A drop in imports has given the local players a chance to jack up their prices. Apart from this continuance of low prices formore than a year has resulted in a number of domestic players closing shop. Most of the major players like Ashok Organics and Saboo Medicon had to stop production because it was uneconomical to manufacture the product. The smaller players have virtually been wiped out.

An increase in water charges by five times, high cost of funds, a 50 per cent rise in power cost coupled with depressed prices due to cheap imports has resulted in a substantial number of companies closing down. Production currently is restricted to Hyderabad, Ankeleshwar and some other parts of Gujarat.

Apart from the above cited reasons, paracetamol prices have been increasing due to high costs of raw material. Prices of acetic anhydride, the solvent used in the manufacture of paracetamol has increased by Rs 8-10 per kg.

Prices of the other raw material para nitro chloro benzene (PNCB) has also increased substantially by around Rs 14 per kg. PNCB prices have increased mainly due to a shut down by two of the main supplier. Further,Hindustan Organic Chemicals (HOC), had also closed down its plant for a short period, but this has been commissioned.

Traders say that prices has more or less peaked and is likely to remain at the same level as some of the units that had shut down due to low prices will restart production. However, a small scale manufacturer who had closed shop pointed out that even at the current price of Rs 195 per kg, his cost of manufacturing works out to be costlier and it is unlikely that he would restart his plant.

Other traders pointed out that monsoon is the peak season for sales of paracetamol as well as anti-biotic drugs. Exports as well as domestic demand during this period is well over the average demand throughout the year. Once the season is over prices will again start to fall down.