Indian Active Pharmaceutical Ingredient (or API) Industry – An Overview


According to the World Health Organization, an active pharmaceutical ingredient (or API) is any substance or combination of substances used in a finished pharmaceutical product (or FPP) intended to provide pharmacological activity or to have a direct effect on the diagnosis, the cure, alleviation, treatment or prevention of a disease, or to have an immediate impact on the restoration, correction or modification of physiological functions in humans.

At present, India imports around 68% of API by value from China, the world’s largest player. The latter is also a single seller for many intermediaries and critical APIs. These include cardiovascular disease (Digoxin and Losartan), diabetes (Metformin and Glimepiride), and tuberculosis (Isoniazid and Streptomycin). The heavy reliance on intermediaries and APIs on China is a source of concern from a health security perspective in India. The Covid-19 pandemic disrupted the supply of key raw materials (or KSMs), intermediates and APIs, leading to supply chain disruptions and ultimately increasing the cost of Indian imports. As a result, the Indian government intends to revive the inactive API manufacturing industry in order to reduce the overdependence on China.

Indian API industry

Although India’s API industry has developed well in the past, it needs to come out of its shell. The industry’s growth trajectory has been reasonably good over the past few years. It has satisfied 20% of the global generic market demand in terms of volume, making India the largest supplier of generic drugs in the world. Today, our country has the highest number of USFDA approved factories outside of the United States and 44% of the Global Abbreviated New Drug Applications (ANDA). India’s bulk drug industry’s 9% CAGR (2016-20) placed it third in the world. The industry’s projected CAGR between 2021 and 2026 is 9.6%. It highlights future potential and growing global importance.

However, you should also note that in the period 2010-2020 our country experienced increased dependence on imports of several KSMs, APIs and intermediaries. Import of APIs grew at a CAGR of 8.3% from 2012 to 2019. Import of bulk drugs also reached 249 billion rupees ($ 3.43 billion) in 2019. The abundant supply Low-cost API imports from outside India has led to greater dependence on imports. This is indeed a matter of concern as we have witnessed disruptions on the supply side during the implementation of China’s “Blue Sky” policy in 2018 and the Covid-19 pandemic in 2020. .

Competitive Advantages of Indian API Industry

We have a robust domestic API market, with many Indian companies having multiple advantages over our Western competitors. Our country is on a par with Western countries on parameters such as process efficiency and technological capabilities. An advanced chemical industry and a skilled workforce coupled with strict quality and manufacturing standards are an added advantage. Manufacturing costs are only 2 / 5ths of setting up and running a modern factory in the West. You should be aware that in China wages have increased considerably higher than in India since 2007. The wage costs in our country are lower than in China at present. The trend is expected to continue. Labor costs in China more than doubled, while they fell from 6.1% to 5% in India.

Supply chain disruptions in China have led several major pharmaceutical countries to reshuffle their sources of importing APIs. Countries in the Middle East, Latin America and Africa are inclined to local formulations and generics. We have a tremendous opportunity to position ourselves as one of the largest API providers in the world in this context.

Indian government initiative

In mid-2020, the Union Cabinet approved the Production Incentive Program (or PLI) of up to Rs 6,940 crore ($ 955 million). The plan covers the promotion of domestic manufacture of KSMs, drug intermediates and APIs. It offered financial incentives to eligible manufacturers of 41 identified eligible products covering 53 APIs over six years, taking 2019-2020 as a base. Apart from this, the government measures for the pharmaceutical industry included increasing the FDI limit and formulating a new intellectual property rights strategy to spur innovation.

In March 2020, the government announced a rupee 9,940 crore ($ 1.4 billion) package for the bulk drug industry. In an effort to encourage domestic production and exports, the Cabinet also approved spending Rs 3,000 crore ($ 413 million) over the next five years to boost bulk drug parks and fund infrastructure. standard. These steps should lead to the development of a required ecosystem and to the improvement of the competitiveness of domestic manufacturers.

API Market Competition Scenario

The main companies in the global API market are Midas Pharma, TAPI, Centrient, AMRI, Lonza, Livnoz Pharma, Zhejiang Jiuzhou Pharma, Wuxi Apptec, Huadong, Nanjing King-friend and others. In comparison, notable players in the Indian API market include Neuland, Solara Active Pharma Sciences, Granules India, Aarti Drugs, Divi’s Labs, Suven, Dishman, Jubilant, Laurus Labs, Shilpa Medicare, and others. The Indian API market is highly fragmented, with around 1,500 API manufacturing plants. The top 14-16 API companies only accounted for 16-17% of the total market share at the end of fiscal 2017.


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