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How Atmanirbhar is India's pharma sector?

How Atmanirbhar is India's pharma sector?

How Atmanirbhar is India's pharma sector?
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By Sonal Bhutra  Jul 8, 2020 4:15:48 PM IST (Updated)

Since 2020, imports from China have witnessed disruption, first for COVID-19 and then due to India- China standoff. Total size of pharma market in the country is nearly $35 billion (exports $15 billion and domestic $20 billion) and the sector is heavily dependent on API imports.

Since 2020, imports from China have witnessed disruption, first for COVID-19 and then due to India- China standoff. Total size of pharma market in the country is nearly $35 billion (exports $15 billion and domestic $20 billion) and the sector is heavily dependent on API imports.

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According to a CFA India Society research, 70 percent of India's imports totalling $2.4 billion of APIs comes from China and the country currently has a significant edge over India in API manufacturing in terms of taxation, low utility cost, low interest loans etc. Indian drugs account for nearly 30 percent (by volume) and about 10 percent (by value) in the $70-80 billion US generics market, according to the research.
Disruption will impact drug makers and Indian API suppliers, which rely on Chinese imports and could also lead to a sharp increase in raw material prices.
While majority of the imports come in for the sector, there are certain companies which are heavily dependent on China. The following excerpts are taken from management interaction, annual reports and conference calls:
IOL Chemicals:
Nearly 35-40 percent APIs and intermediates come from Wuhan province.
Cipla:
A big chunk of its pharma value chain is linked to China.
China has a significant value chain linkage for all pharma companies.
Granules:
The company will be impacted if China import hold-up goes on for a few weeks.
30-35 percent of sales will be impacted if paracetamol imports are impacted.
Solara:
Dependence on China is about 30 percent in terms of raw material.
The company says it will try to bring down dependence.
There are domestic suppliers for one of those key raw materials which it buys.
IPCA:
A lot of key starting materials come from China.
Focus is on building these all 7, 8 intermediates which they have high dependence on China.
The company says it will reduce those kind of dependence in time to come.
Alembic:
Dependence on China is 15 percent of the overall imports.
Aurobindo: annual report:
A major portion of the Company’s raw material sourcing comes from China, and it is a concern for the company.
While the government has introduced policies to reduce dependence on China by allocating 7,000 crore worth of funds to provide production linked incentives, it remains to be seen how quick the execution happens and how Atmanirbhar India becomes a reality in times to come.
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