Pharma companies trying to reduce dependence on China for raw materials, are looking for local suppliers or are trying to become manufacturers

Indian pharmaceutical companies are looking for local suppliers for Active Pharma Ingredients (APIs) or are trying to make their own. These companies have been trying to end their dependence on neighboring countries since the Chinese border became tense in June last year.

Though India is called the world’s largest pharmacy due to the huge production capacity of generic drugs and vaccines, but according to industry data, in 2019 it had sourced half of the API from China. Three decades ago there was absolutely no import of APIs from China.

API supply from China stopped due to Covid-19

The top executives of Cadila Healthcare, Cipla, Sun Pharma and Biocon said on Tuesday that efforts are on to reduce dependence on China for raw materials. They said that this step is being taken due to the stoppage of API supply from China due to Covid-19. Last year, there was a competition between Indian pharma companies to buy raw materials to make important medicines sold worldwide.

Indian pharma companies want to secure the entire value chain

“Due to the anti-China sentiment, most companies are trying to limit dependence on this neighbor for raw materials,” said Gaurav Sunder, supply head of Cadila at a BioAsia conference.

He said, “As far as important API molecules are concerned, we want backward integration on this front, that is, we want to build them ourselves. With this, we will be able to control this factor which will have a big impact on our business and will secure the entire value chain.”

Finding reliable local vendors for regular supply at better rates

The indicator said that companies are looking for reliable local vendors who can supply them regularly at a better rate than China. Cipla’s supply chain head Swapan Malpani said that his company has started an ‘API Reimagination’ program to increase its manufacturing capacity through incentive programs such as production subsidies, working with local suppliers.

Infrastructure has to be improved to match China

Biocon’s supply head Prasad Deshpande said, “The company has set a target to reduce sourcing from China.” According to Deshpande, “We reduced sourcing from China to 50% by the last quarter. This does not mean that we have stopped taking goods from China, just that our dependence on China has decreased.” He also said that the infrastructure in the country would have to be improved in order to match China in size and speed and speed up the approval process.