Drug Security: COVID-19’ s impact on API Industry

GOVERNANCE/ HEALTH ISSUE

Topic: General Studies 2:

• Government policies and interventions for development in various sectors and issues arising out of their design and implementation.  

Drug Security: COVID-19’ s impact on API Industry

Do you know?

• All drugs are made up of two core components: API & Excipients
• Indian pharmaceutical industry is the 3rd largest in the world by volume but is largely dependent on China
• India imports 80% of the APIs used for drug manufacturing from China

What is Active Pharmaceutical Ingredient (API)? 

• Part of any drug that produces its effects. 
• Intended to furnish pharmacological activity or other direct effect in the diagnosis, cure, mitigation, treatment, or prevention of disease

What are Excipients?

• Substances other than the drug that helps deliver the medication to your system. 
• Excipients are chemically inactive substances, such as lactose or mineral oil. 
• Example: for headache, acetaminophen is the API, while the liquid in the gel-capsule or the bulk of a pill is the excipient. 

Why India is poor in APIs?

• Weak Domestic Manufacturing sector

• Inadequate government support

• Lack of Central-State cooperation in effective policy making

Impact on COVID-19 on India’s API sector

• Hostage to Supply Side disruption due to high dependence on China on APIs thus endangering the drug security in India
• Price Rise of pharmaceutical drugs
• Impacts the affordable healthcare services
• Disproportionately impacts the poor 

Measures taken by the government (on 21st March 2020) 

1. Production Linked Incentive Scheme 

• Objective: To encourage domestic manufacture of key starting materials (raw material used in manufacture of APIs), drug intermediates, and APIs.
• Financial incentive will be given to eligible manufacturers of identified 53 critical bulk drugs on their incremental sales over the base year (2019-20) for a period of 6 years.
• A sum of Rs. 6,940 crore has been approved for this scheme

2. Promotion of Bulk Drug Parks

• 3 mega Bulk Drug parks will be developed in India in partnership with States.
• Parks will have common facilities such as solvent recovery plant, distillation plant, power & steam units, common effluent treatment plant etc.
• A sum of Rs. 3,000 crore has been approved for this scheme for next 5 years.

Impact of the above two initiatives:

• Reduces manufacturing cost of bulk drugs in the country 
• Reduces dependency on other countries for bulk drugs
• Attracts private sector and foreign investment into the sector
• Creates additional employment

Challenges ahead

• Issues with Government’s price-capping policy – so less private player participation
• Drug makers are forced to cut costs to maximise profits – favour cheap Chinese APIs with basic minimum quality, Indian made APIs
• Also capping prices doesn’t really succeed (study from different countries)

• Drug price control Order (DPCO) needs reforms and amendments

Connecting the dots

• Medical Devices Amendment Rules
• How India can attain self-sufficiency in manufacturing drugs