India's pharmaceutical industry is grappling with escalating bulk drug prices from China and potential supply chain disruptions for key solvents and feedstocks, exacerbated by the ongoing West Asia crisis, despite current inventory buffers.
Key Points
- Bulk drug prices from China, including paracetamol and azithromycin APIs, have significantly increased since the West Asia crisis escalated in March, with some categories seeing 30-40% hikes.
- India currently holds about two months of API stock and four to five months of formulation inventory, providing a temporary buffer against immediate shortages.
- Concerns are rising over the availability of critical solvents like ammonia solution, acetone, and propylene glycol, as well as feedstocks such as methanol, propylene, and ammonia, which could disrupt drug manufacturing.
- The Department of Pharmaceuticals (DoP) is actively assessing feedstock requirements and coordinating with the Ministry of Petroleum and Natural Gas to ensure supply continuity.
- Smaller pharmaceutical firms may face greater challenges due to potentially lower inventory buffers compared to larger companies that pre-emptively stocked up.
Bulk drug prices from China have risen since the West Asia crisis escalated in March, according to pharma industry insiders, tightening cost pressures even as domestic inventories provide a temporary buffer.
India currently holds about two months of API stock and four to five months of formulation inventory across the supply chain.
However, concerns over the availability of key solvents such as ammonia solution, acetone, and propylene glycol are raising the risk of near-term manufacturing disruptions.
Rising API Prices and Inventory Status
“While supply security for essential drugs is not under threat — with four to five months of stock across the chain from factory to retailer — shortages could emerge in specific SKUs, such as particular strengths of a drug,” said an industry veteran.
“Prices of key APIs from China, including paracetamol, have risen since the crisis began.
"Paracetamol prices, for instance, have nearly doubled in recent months, while azithromycin API has also surged.
"Some categories have seen price increases of 30–40 per cent,” he added, noting that India currently has about two months of API stock.
The price spike is expected to improve demand for locally manufactured APIs.
India has already built capacity of 56,800 tonnes per annum across 28 APIs, drug intermediates, and key starting materials (KSM) as of December under the PLI scheme.
A senior official in the Department of Pharmaceuticals (DoP) told Business Standard that larger companies had pre-emptively stocked up on cheaper imports, particularly beta-lactams, when the government introduced a minimum import price (MIP) in December last year.
"Most of the companies had then kept at least six months of API stock ready when the MIP regime came into force," he said.
Smaller firms, however, may not have similar inventory buffers.
Feedstock Disruptions and Government Response
Beyond APIs, feedstock disruptions are also emerging. Methanol, propylene, and ammonia—critical inputs in drug manufacturing—have been impacted by the West Asia conflict.
"Methanol may not be much of a problem as we have recently received 2–3 shipments from the West Asia side," an official said, adding that Indian drugmakers require around 15,000 tonnes per month.
The bigger concern lies in supply continuity of other inputs.
Shortages of key feedstocks could translate into physical shortages of medicines.
For instance, insufficient propylene supply can halt ibuprofen production entirely, affecting pain and fever medication at scale.
"We have worked to ensure that there is sufficient supply of propylene," the official added.
Sudarshan Jain, secretary general of the Indian Pharmaceutical Alliance (IPA), said India is managing the situation so far without major disruption.
“We are a major supplier to the world, and have learnt from the Covid-19 crisis when supply chains were significantly disrupted,” he said.
Viranchi Shah, national spokesperson and immediate past president of the Indian Drug Manufacturers Association (IDMA), said the situation remains under control despite some pressure points.
"There are some supply concerns around solvents.
"The industry has spoken with the government, and steps are being taken to address the issue," he said.
The DoP has conducted a detailed assessment of feedstock requirements through consultations with industry stakeholders.
"Assessment for other feedstocks like toluene and dichloromethane (DCM) is being made at a granular level, in coordination with the Ministry of Petroleum and Natural Gas," the official said.
Impact on Specific Therapies
Industry executives note that the impact is uneven across therapies.
A Himachal Pradesh-based MSME pharma player said antibiotics such as amoxicillin, azithromycin, and rifampicin are particularly exposed due to their dependence on solvents like acetone and methylene dichloride.
"This also applies to high-volume chronic medicines such as metformin and atorvastatin, where even a small increase per kilogram multiplies into major monthly cost escalation," he added.
