Coronavirus outbreak: Govt restricts export of key bulk drugs, formulations to prevent medicine shortage

The government on March 3 imposed export restrictions on certain essential active pharmaceutical ingredients (APIs) and formulations, in view of shortages arising in the market owing to supply disruptions in China caused by coronavirus outbreak.

The APIs put under restriction include paracetamol, tinidazole, metronidazole, acyclovir, Vitamin B1, B6, B12, progesterone, chloramphenicol, erythromycin salts, neomycin, clindamycin salts, and ornidazole.

The formulations based on APIs such as chroramphenicol, erythromycin salts, progesterone and vitamin B1 have also been put on the restricted list.

A notification released by Director General of Foreign Trade (DGFT) stated that the government made the amendment, with immediate effect, to Chapter 29 (Organic Chemicals) and Chapter 30 (Pharmaceutical) of Schedule 2 of ITC (HS) Export Policy 2018, by the inclusion of items.

India relies heavily on China for drug raw materials such as APIs, intermediates and key starting materials (KSMs).

India imported $2.65 billion worth of APIs and intermediates in the nine months ended December 31 of FY20, and China accounted for more than two-thirds of those imported raw materials.

In the case of certain APIs like penicillin, hormones and vitamins, the import dependence is as high as 80 to 90 percent.

Indian pharmaceutical companies have been saying that they have inventories for about 1.5 to 2 months to fulfill the input requirements that are met from China.

But with most factories in China yet to resume production in full scale due to the tough quarantine measures put in place by the Chinese government, the Indian government is fearing a shortage of drugs.

Already, prices of paracetamol active ingredients have jumped 40 percent.

The drug companies have spoken against export bans, and have assured the government that the supplies would resume soon.

“This is likely to keep their problems at bay latest till early April 2020 and Indian pharma supplies to the domestic and export market are thus expected to remain unaffected in the last quarter of FY20,” said Care Ratings in its latest report.

“The situation, however, will be different for those pharma companies that have failed to maintain the stock levels,” the report observed.

The report says the impact of coronavirus on the Indian pharma industry will be felt from the first quarter of FY21 as companies are expected to face a shortage and witness price rise of intermediates or bulk drugs.

This shortage and increase in price may extend to the second quarter of FY21 depending on how coronavirus is contained in China.

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