What’s the medicine for this crisis?

The Cure: India must revive its bulk drug manufacturing capacity, rather than depend on China

The tiny Coronavirus has shaken several strong countries all over the world. For beyond the virus-related deaths, the shutdown of cities and industries in China is causing panic for another reason, especially in India: our drug-manufacturing companies are heavily dependent on China for raw material supplies. With China having shut down its manufacturing units in Wuhan and several other cities, supplies aren’t coming, which is already leading to price rise and could in a matter of weeks lead to crippling supply shortages, making essential medicines unavailable in the market.

In simple terms, this is the problem: There are basically two types of medicine manufacturing companies. One is the ‘bulk drug’ or Active Pharmaceutical Ingredient (API) manufacturer (the API is the active ingredient of the medicine that helps treat/cure the disease); the other is the ‘formulation’ manufacturer, who procures the API from the bulk drug manufacturer and, using these active ingredients, makes the medicine in various forms like tablets, syrups or injections. Most companies specialize as either bulk drug makers or formulation makers. Obviously, all the latter depend on the former for active ingredients. In fact, the bulk drug makers are the lifeline of the formulation makers, which is what most Indian drug manufacturers are.

For many years now, India, the US and several other countries have become dependent on China for APIs. Nearly 70% of India’s pharmaceutical industry depends on China for APIs. Indian API imports from China annually are worth about $4.5 billion. This dependence on China has been much debated, but Indian drug makers have finally opted for this “easy way” of business. It is precisely this attitude that has come back to haunt India: if the Coronavirus-related shutdown continues for more than a couple of weeks, then India will start to face a shortage of life-saving medicines, mostly antibiotics, hormone injections, blood pressure medicines, and the like.

The city of Wuhan in China’s Hubei province is the epicentre of the Coronavirus epidemic and has been completely shut down for that reason. Wuhan, unfortunately, is also the centre of bulk drug manufacturing in China – some 30% of the country’s bulk drug manufacturers are located in this city. This terrible coincidence has brought home to the world the perils of being so dependent for essential medicines on manufacturing units in a single city.

According to an article in the London-based Financial Times, US President Donald Trump’s advisers are now thinking of ways to create an American pharmaceutical supply chain for bulk drugs. The European Union is discussing the issue as well and are leaning towards building their own production capabilities (which means the EU will have to overcome its own tough environmental regulations and thus face an increase in drug prices).

Bulk drug manufacturing causes heavy environmental pollution. It is for this reason that the advanced countries conveniently pushed all bulk drug production to China and other developing countries, while their pharma companies kept for themselves the lucrative part of patented medicines. This has come back to bite them. India, too, urgently needs to examine its policies and to alter them to encourage API manufacture in the country.

What needs to be done

The government has set up a panel under the Drug Controller General of India (DCGI) to handle a crisis if one arises. The Indian embassy in China has said, however, that several drug manufacturers in that country may resume operations soon. Though that may bring some relief, it is estimated that some 57 essential medicines may still end up in short supply if the shut down in China lasts even another week. The major concern is that we could be faced with shortages of life-saving antibiotics like amoxicillin, azithromycin, gentamicin and metronidazole, which are all supplied from industries located in and near Wuhan.

Regardless of what happens in the next few weeks, the government will have to think long term and ensure that India is able to make APIs on scale. But this will mean some introspection and tough decisions. We need to revisit policies that were somewhere along the line dismissed as outdated and given up. For instance, the way forward seems to be to strengthen public sector drug manufacturers.

When the Indian drug industry was in its infancy in the 1960s and 70s, it was the public sector that helped the Indian generic industry to grow to become the “pharmacy of the developing world.” At the turn of the century, when Africa was faced with a huge public health crisis due to HIV/AIDS, it was the Indian generic industry that showed the way. But that success was built on the back of support from the public sector drug-makers.

Yet, today, among the five PSU drug-makers, three have been reporting losses since 2013-14 and are sick, the fourth is in “incipient sick” stage. Karnataka Antibiotics & Pharmaceuticals Limited (KAPL) remains the only profit-making Central Public Sector Enterprise (CPSE) in this field. There is an urgent need to revive the sick PSUs and make them hubs of bulk drug manufacturing.

The PSUs are the fastest and surest way to bring up API manufacturing. We must appreciate that the private sector will not be ready or able to take the risks and costs of manufacturing bulk drugs due to environmental pollution concerns and norms. Only the public sector can do so.

(The writer is President, Drug Action Forum – Karnataka)