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

  • IASbaba
  • March 26, 2020
  • 0
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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
  1. 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

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