Scalability is not a challenge: Industry on Indian govt building up local API production to reduce imports

By Tingmin Koe contact

- Last updated on GMT

The Indian government is ramping up local API production. ©Getty Images
The Indian government is ramping up local API production. ©Getty Images

Related tags: India, COVID-19

India is well equipped to meet government ambitions to increase capabilities in manufacturing essential active pharmaceutical ingredient (APIs) – which also includes vitamins B1 and B6.

The move had been triggered by the recent COVID-19 pandemic, where lockdowns and supply chain disruptions have posed a risk to a steady, continuous supply of APIs.

India currently imports about 70% of its needs from APIs powerhouse China, said local reports.  

But Amit Srivastava, who leads the Nutrify India project which seeks to responsible scale-up the nation’s nutra sector, believes that India is in a strong position to increase its self-reliance.

He cited a number of factors, including government’s incentives and the country’s history of manufacturing APIs.

"Bringing the API scalability back to India will not be a challenge, because it started from India, and Hyderabad city was the epicenter of APIs. API is a low-margin high competition business and China had gained high API manufacturing capacities with Chinese government subsidy support. 

"India lost out this segment as it could not compete on scale and costs. India shifted focus on the higher-margin ingredient discovery and formulation sector. 

“China had cost and scalability advantage, but the cost of China-produced APIs is now 20% higher with onset of pandemic plus the delayed supplies. With subsidy support from the Indian government, it will become lucrative for manufacture to set up API  units in India,"​he said.

For a start, the government will focus on the APIs used in essential drugs, but nutraceutical ingredients vitamin B1 and B6 are also included in the list of 53 APIs and key starting material (KSMs) prioritised by the government.

To attract firms, the government has announced incentives of capital subsidy, moratorium for two years, and interest free Equated Monthly Installments (EMIs) for three years.

Why B1, B6 included?

Asked why B1 and B6 were considered as ‘essential’ APIs, Srivastava said the government have made considerations based on cost and quantity of imports. 

“Currently the first API list published is based on cost and quantity of imports followed by criticality in pharmaceuticals. By this logic, vitamin B1 and B6 features in high value imports into India."

He added that the manufacturing of these vitamins required Form 25 as defined in Central Drugs Standard Control Organisation. As such, they are classified as drugs.

Local API production would allow manufacturers in keeping a lower inventory, since they could have easier and faster access to these ingredients, he said. 

Next up: ANI?

In the near future, there is also the possibility that the Indian government will focus on local production of active nutraceuticals ingredients (ANIs) as well, said Srivastava.

"Its is evident that after starting the manufacturing of APIs of first published list, the next step would be next set of higher value APIs and KSMs manufacturing being shifted back to India.

“The third phase will be going beyond essentials, getting into the large value ANIs,”​ he said.

It is a plausible forecast as the government recently announced the injection of US$132m to boost the nutrition industry.

The investment will go into farming of medicinal and nutraceutical plants.

“This will lead to the developments of extraction and processing units coming to India. I can foresee that by next year, or slightly over that, there will be ANI manufacturing rush due to continued subsidy roll out in pipeline by the Indian government," ​he said.  

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