Russia’s Ukraine invasion could lead to higher prices for medicines. Solvents that are used to manufacture active pharmaceutical ingredients or APIs are seeing a rise in prices.
APIs are the key raw material for all drugs and any supply disruption could have a detrimental impact.
Also Read: Expect margin to be lower by 2-3% due to pressure on raw material: Glenmark Life Sciences
Watch the accompanying video of CNBC-TV18’s Ekta Batra for more details.
Ami Organics had an impressive run post its initial public offering (IPO) and it fits into the theme of derisking the pharma supply chain as far as intermediate and key starting materials are concerned.
The company is one of the major manufacturers of pharma intermediates for certain key active pharmaceutical ingredients (APIs) related to therapeutic areas such as antiretroviral, psychotic, and oncologic. It supplies a few molecules to innovators for drugs that should help in better realisations going forward.
The PLI scheme for promotion of domestic manufacturing of medical devices has led to various capex announcements in the API space, which in turn has led to higher demand for intermediates and so we like this space on a long-term basis.
Ami Organics recently acquired a business Gujarat Organics that primarily deals with preservatives and salicylic acid. This represents a key near-term challenge as for this business, operating margins are mediocre.
As far as valuations are concerned, post its strong listing, multiples are close to some of the larger peers in chemicals having the end market of pharma. So, investors should book some profits now and wait for the granular details on a products diversification strategy, says moneycontrol.com’s Anubhav Sahu.
For more details, watch the video.
Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
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As India aims to shift API dependence from China to country-made ingredients, the Department of pharmaceuticals (DoP) will increase this list by including APIs for essential drug — Heparin.
As India aims to shift API dependence from China to country-made ingredients, the Department of pharmaceuticals (DoP) will increase this list by including APIs for essential drug — Heparin.
According to sources, the ministry is in talks with department of commerce and animal husbandry to ensure that India can import waste raw materials which can then be processed to make APIs for Heparin.
Heparin is an essential anti-blood coagulant drug used in thinning of blood or to avoid blood clotting. Heparin is listed under the national list of essential medicines (NLEM) and WHO’s essential drug list. Heparin is also being widely used in COVID-19 treatment.
The Department of Pharmaceuticals has already announced a production-linked incentive scheme to manufacture 53 critical API/KSM/Intermediates in India and to reduce the dependence on imports of such products from countries like China. But, it could not include 5 other APIs as the government realised that it can’t manufacture these 5 in the country.
Working on this task now, DoP first identified APIs for Heparin and its related derivative to see whether indigenous manufacturing can be done.
“Heparin and its related derivative, the low molecular weight heparin also known as — Enoxaparin is an age-old anticoagulant that has demonstrated its effectiveness even in treatment of patients infected with COVID-19 virus. Heparin is derived from porcine intestinal mucosa and is considered as an essential drug by the WHO. China accounts for nearly 60% of the pig production in the World. Given the size of the production of China any challenge to the production can affect the availability of this product globally and the same has been expressed by multiple sources,” sources said.
“However, some developed Countries around the World have established alternative sources for porcine mucosa. In general, especially in various South American countries, the porcine mucosa that lines the porcine intestine is discarded or converted into very inexpensive pet food due to the lack of collection and processing plants closer to the site of pig production,” they added.
Currently, since India is entirely dependent on China for supply of this porcine derived mucosal for manufacturing of Heparin, but now, India has initiated a smooth import process for porcine intestinal mucosa from Ukraine, Brazil, USA, etc, sources added.
“Department of Pharmaceuticals believes that by allowing the import of this raw material the pharmaceutical industry within India with extensive expertise for processing such raw materials can convert the porcine extract into active pharmaceutical ingredients like Heparin and Enoxaparin and help India realise the goal of ‘atmanirbhar Bharat’.”
According to government data, the annual market for Heparin is about Rs 50 crore for almost 63 lakh units and Rs 504 crores for Enoxaparin, which is for about 150 lakh units.
These estimates are of the product imported into India, which is about 2,500-3,000 kilos for Heparin from which about 1,000 Kgs of Enoxaparin is processed in India. This doesn’t account for the product that is imported directly as the finished product.
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| index | Price | Change |
|---|---|---|
| nifty 50 | ₹16,986.00 | -72.15 |
| sensex | ₹1,882.60 | +28.30 |
| nifty IT | ₹2,206.80 | +30.85 |
| nifty bank | ₹1,318.95 | -14.95 |
| index | Price | Change |
|---|---|---|
| nifty 50 | ₹16,986.00 | -7.15 |
| sensex | ₹1,882.60 | +8.30 |
| nifty IT | ₹2,206.80 | +3.85 |
| nifty bank | ₹1,318.95 | -1.95 |
| index | Price | Change |
|---|---|---|
| nifty 50 | ₹16,986.00 | -72.15 |
| sensex | ₹1,882.60 | +28.30 |
| nifty IT | ₹2,206.80 | +30.85 |
| nifty bank | ₹1,318.95 | -14.95 |
| index | Price | Change |
|---|---|---|
| nifty 50 | ₹16,986.00 | -7.15 |
| sensex | ₹1,882.60 | +8.30 |
| nifty IT | ₹2,206.80 | +3.85 |
| nifty bank | ₹1,318.95 | -1.95 |
| index | Price | Change |
|---|---|---|
| nifty 50 | ₹16,986.00 | -7.15 |
| sensex | ₹1,882.60 | +8.30 |
| nifty IT | ₹2,206.80 | +3.85 |
| nifty bank | ₹1,318.95 | -1.95 |
| Company | Price | Chng | %Chng |
|---|---|---|---|
| Dollar-Rupee | 73.3500 | 0.0000 | 0.00 |
| Euro-Rupee | 89.0980 | 0.0100 | 0.01 |
| Pound-Rupee | 103.6360 | -0.0750 | -0.07 |
| Rupee-100 Yen | 0.6734 | -0.0003 | -0.05 |
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Going forward we need to focus on producing many of our requirements at scale and we need to regain our lost position in terms of the active pharmaceutical ingredients (APIs) and even intermediate production,” said Biocon’s Kiran Mazumdar Shaw.
Various stakeholders of the pharmaceutical industry along with Kiran Mazumdar Shaw, CMD, Biocon met government officials yesterday to discuss the supply concerns if any due to coronavirus outbreak.
“We had a very useful meeting yesterday chaired by Amitabh Kant. We had all the various stakeholders from industry and government involved and we did a fairly good assessment of what the state of preparedness should be,” said Mazumdar Shaw in an interview with CNBC-TV18.
“At this point in time, I do believe that we are quite safe for the next several months but we all realise that we have to basically make sure that we take some immediate steps to start addressing possible shortages if this coronavirus crisis extends beyond six months,” she said, adding that the government said they would do everything to free up the hurdles faced either by closed plants or existing plants, which wish to produce certain products that they don’t currently produce in case the crisis extends.
“Going forward we need to focus on producing many of our requirements at scale and we need to regain our lost position in terms of the active pharmaceutical ingredients (APIs) and even intermediate production,” said Mazumdar Shaw.
Sudarshan Jain, secretary general of Indian Pharmaceutical Alliance had told CNBC-TV18 that as of now there was no supply disruption and they were good at least for the next four-five months, so there won’t be any impact on drugs. However, he mentioned that raw material prices could go up further.
When asked about the situation with regards to supply and raw material prices, Mazumdar Shaw said, “That is a pretty realistic statement. If this continues beyond six months, we do have to worry about the impact. For now, we are okay. I also believe that because of this crisis, prices are going to go up in many cases but that is okay because even if the prices do go up, they won’t significantly impact drug prices.”
“India has a huge opportunity and this should not be a lost opportunity because there are opportunities in many sectors but pharmaceutical sector is a big one and we should focus on that,” she further mentioned.
Talking specifically on Trastuzumab, she said, “We are very gung-ho on this product. We have had a very successful launch with Pegfilgrastim, and Mylan is very confident that it can repeat that success with Trastuzumab as well. I believe we should be able to have a very successful launch and market share.”
When asked about inspections and observations, she said, “We have to understand that USFDA or any regulatory inspections are a way of life for us and with every inspector there are going to be observations and we have to address these observations through plans. So, every company should get used to that. We look at it as a continual improvement opportunity for the company.”
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| index | Price | Change |
|---|---|---|
| nifty 50 | ₹16,986.00 | -72.15 |
| sensex | ₹1,882.60 | +28.30 |
| nifty IT | ₹2,206.80 | +30.85 |
| nifty bank | ₹1,318.95 | -14.95 |
| index | Price | Change |
|---|---|---|
| nifty 50 | ₹16,986.00 | -7.15 |
| sensex | ₹1,882.60 | +8.30 |
| nifty IT | ₹2,206.80 | +3.85 |
| nifty bank | ₹1,318.95 | -1.95 |
| index | Price | Change |
|---|---|---|
| nifty 50 | ₹16,986.00 | -72.15 |
| sensex | ₹1,882.60 | +28.30 |
| nifty IT | ₹2,206.80 | +30.85 |
| nifty bank | ₹1,318.95 | -14.95 |
| index | Price | Change |
|---|---|---|
| nifty 50 | ₹16,986.00 | -7.15 |
| sensex | ₹1,882.60 | +8.30 |
| nifty IT | ₹2,206.80 | +3.85 |
| nifty bank | ₹1,318.95 | -1.95 |
| index | Price | Change |
|---|---|---|
| nifty 50 | ₹16,986.00 | -7.15 |
| sensex | ₹1,882.60 | +8.30 |
| nifty IT | ₹2,206.80 | +3.85 |
| nifty bank | ₹1,318.95 | -1.95 |
| Company | Price | Chng | %Chng |
|---|---|---|---|
| Dollar-Rupee | 73.3500 | 0.0000 | 0.00 |
| Euro-Rupee | 89.0980 | 0.0100 | 0.01 |
| Pound-Rupee | 103.6360 | -0.0750 | -0.07 |
| Rupee-100 Yen | 0.6734 | -0.0003 | -0.05 |
There is no plan regarding a ban on the exports of active pharmaceutical ingredients (APIs) at the moment, clarified Sudarshan Jain, secretary-general of Indian Pharmaceutical Alliance, after reports indicated that a high-level committee constituted by the Department of Pharmaceuticals of the government is contemplating a restriction on exports.
“We are closely monitoring the situation, taking stock of the inventory, how we can service the patients’ needs and I don’t think there is any decision at this particular moment regarding exports. The critical task at the moment is to take the inventory of the situation, evaluate alternate sources and then keep on monitoring the situation. At this moment, there are no suggestions to stop the exports of Active Pharmaceutical Ingredients (APIs),” said Jain.
The reports claimed that restrictions may be put on crucial antibiotics and vitamins in the light of the coronavirus outbreak.
“The biggest hit will be taken up by cephalosporin or Penicillin G manufacturer because almost most of the companies in India have shut down their shops and they source it from China because they are cheapest there,” Surajit Pal, pharma analyst at Prabhudas Lilladher, said.
Reacting to the news, Vijay Garg, joint MD of IOL Chemicals, said, “If the export ban is there then problems definitely will come but as far as IOL is concerned, we are majorly into pain management. Our flagship product is Ibuprofen. So we are very minimal dependent on China and moreover the product which we are importing from China is not in the epicentre of the outbreak. We are covered for six months plus we have an alternative. Definitely the problem will come only in antibiotics or in diabetics where the dependence is much more.”
