Chinese goods’ boycott may hit life-saving drug production, push up prices

Amidst calls for boycoting Chinese goods in the aftermath of China’s soft stance towards Pakistan, the move has rang alarm bells for both the government and drug manufactures. Yoga guru Baba Ramdev has also alleged that Beijing’s actions are dangerous for countries unity, integrity and sovereignty and  has demanded a ban on the Chinese products.

Given that most of the raw materials used to make life saving medicines are imported from China, the drug manufacturers and government agencies are worried about impact of Chinese product boycott campaign on pharma industry as if it happens the prices of all essential drugs would go up by four times.

In the country there are about 300 major drug manufacturing companies while above 10,000 are small drug making companies and out of it 77 per cent firms make formulations, while 23 per cent are involved in making active pharmaceutical ingredients  (APIs). In the year 2015-16, India had procured APIs worth of Rs 13,853 crore.

Sensing the critical situation emerging out of campaigns to ban Chinese products, Central Drugs Standard Control Organisation (CDSO) under the Ministry of Health has called a closed-door meeting of all stakeholders, including major drug manufactures, finance ministry officials, state representatives to churn out a strategy for dealing with the situation. A meeting in this regard would be held in the second week of November.

According to officials, the government is keeping close eye on the recent developments and getting ready to deal with every adverse situation, if it arises. “It’s a fact that drug manufacturers are little worried after the people started boycotting Chinese products. At present, our pharma industry is totally dependent on APIs imported from China as about 65 per cent of raw materials are being imported from China. It’s not that APIs are not being manufactured in India, but since API manufacturing units have less producing capacity, it costs more to drug makers, so they prefer Chinese APIs, which are four times cheaper,” said GN Singh, the Central Drug Controller General of India.

Adding further, Singh said, “We will hold a closed door meeting with all major drug manufacturers and other stakeholders in coming days. The issues like offering incentives to indigenous API manufactures would also be on the agenda of the discussion to motivate domestic API producers.”

The government has established API clusters, but a very few have set their manufacturing units. Most of the pharma companies prefer Chinese APIs as it’s an import duty free product. National Security Adviser Ajit Doval had also expressed his concern over the Chinese APIs.

Expressing concern over the issue, traders body ASSOCHAM has released a paper suggesting increasing import duty on Chinese products so that price of imported and indigenous products would become same.