Relief for pharma firms as govt starts clearing API imports from China

Source: Business Standard, Jul 01, 2020

New Delhi: Easing restrictions on imports from China, the Customs department has decided to clear pharma raw material shipments from that country. Consignments of 11 top importers, including LG, Samsung, Toyota, Honda, and Siemens, will also be allowed entry, relieving them of the 100 per cent inspection rule.

This comes after a week of economic disruption caused by introducing stringent scrutiny, resulting in shipments originating in China getting held up at Indian ports.

After representations from industry bodies, the government on Tuesday cleared imports of active pharma ingredients (APIs) from China. Besides, the top importers falling within the Tier 3 category of the Authorised Economic Operator (AEO) programme were given exemption from stringent scrutiny.

“Imports of APIs and shipments from AEO T3 importers have been exempt from the 100 per cent check. The Indian pharma industry is heavily dependent on API imports from China and they were facing a huge shortage of raw material. Besides, the tier 3 AEOs are the top importers who meet the highest level of compliance, so they have been given the relaxation,” said a government official.

He said these shipments would get moving from Wednesday. Over 60 per cent of APIs used in India come from China. On June 22, Customs officials in Chennai and Vizag were asked to put all shipments from China on hold until further orders. This was done on the basis of intelligence inputs about “illegal imports of narcotics”.

Informal instructions were given to all ports and airports to do 100 per cent physical checks of shipments originating in China. Bilateral trade between China and India was worth $88 billion in FY19, with a deficit of $53.5 billion in China’s favour.

India is also heavily dependent on China for intermediates and key starting material (KSM) for making drugs. This dependence has grown over the years as local manufacturers have moved to high-margin products (after they could not expand freely due to pollution norms) and Chinese APIs are 30 per cent cheaper than domestic stuff.

The country mostly imports APIs and intermediates for vitamins (like Vitamin C), common antibiotics, and metformin (diabetes) from China. The government has now drawn up a plan to reduce dependence on the country by incentivising the local production of APIs through production-linked incentives (PLI) of up to Rs 10 crore. The government has identified 41 products (molecules), covering 53 crucial APIs, for which India is dependent on China.

Almost 80 per cent of the 41 are intermediates. In 2016, the Customs department had launched the Authorised Economic Operator, or AEO, scheme. It is a voluntary programme, under which an importer gets preferential treatment from Customs for being compliant with supply-chain security standards. AEOs get benefits like fast-tracking shipments, deferred payments, exemption from issuing guarantees, and preferential treatment from Customs.

They are classified into three categories — T1, T2, and T3 — with T3 representing the highest level of compliance. Of the more than 3,000 AEOs, only 11 are in the T3 category. Meanwhile, the government is planning to curtail imports of at least 300 non-essential items from China, either through duty hikes and imposing non-tariff barriers.

Pharma exports up 19% in May

Source: The Hindu Business Line, Jun 23, 2020

New Delhi: After a lull during the lockdown in March-April, exports of drugs and pharmaceuticals surged 19 per cent in May.

According to data from the Pharmaceutical Export Promotion Council (Pharmaexcil) and the Ministry of Commerce, drug and pharma exports in May rose to ₹14,959 crore, from ₹11,758 crore in the same month last year.

According to R Uday Bhaskar, Director-General, Pharmexcil, apart from formulations, export of paracetamol and hydroxychloroquine in the wake of the pandemic has also driven exports.

“Another factor could be the easing of the export scenario in May compared the lockdown period of March-April. Some exports which could not be done in March-April must have taken place in the month of May. This lag-affect also pushed up overall exports,’’ he said.

The surge in exports should be good news given the trend in the previous months of the calender year. There was reduction of exports in February and March. While February saw growth of 7.7 per cent, exports declined 23.24 per cent in March affecting the overall performance of exports in the pharma industry for the year FY20.

Due to the lockdown, the last quarter saw negative growth of 3 per cent without which the overall growth for the full year would have been around 11 per cent as the growth in the first nine months in FY20 was at 11.5 per cent.

The country’s pharmaceutical exports increased 7.57 per cent in the financial year ended March 31, at $20.58 billion, against $19.13 billion in the previous year.

Future prospects

The Covid-19 impact might augur well for the Indian pharma sector. “The growth registered in May is likely to sustain to an extent in the coming months,” he said.

“The prospects of exports of Remdesivir and Dexamethasone will also push up exports further in the coming months. Most of the countries are using anti-virals for treatment of Covid-19 in which India is strong,’’ Bhaskar said.

Many Indian firms, including Dr Reddy’s Laboratories and Hetero, have entered into agreements to manufacture and export Remdesivir.

The World Health Organization (WHO) on Sunday called for an increase in production of dexamethasone, an inexpensive steroid, which, after clinical trials, has “shown life-saving potential for critically ill Covid-19 patients”. Indian drug makers have strong production capabilities for this drug which may bring in more export opportunities.

China accounts for two-thirds of India’s bulk drug imports

Source: The Hindu Business Line, Jun 20, 2020

Pune: India imports various bulk drugs/active pharmaceutical ingredients (APIs) for producing medicines. About two-thirds of the total imports of bulk drugs and drug intermediates are from China. As calls for a boycott on Chinese goods and materials gains momentum, this statistic bears significance.

The Minister of Chemicals and Fertilizers told the Lok Sabha in March that the Indian pharmaceutical industry is the third largest in the world by volume and 14th largest in terms of value.

According to the Ministry of Commerce and Industry, the Indian pharma industry has been growing consistently over the last few years. Pharma exports in FY19 were $19.13 billion, with a growth of 10.72 per cent over the previous year. During April 2019 – January 2020, the exports stood at $17.32 billion, registering a growth of 11.53 per cent over the corresponding period of the previous year.

India also imported bulk drugs and drug intermediates worth $3,560.35 in FY19, of which 67.56 per cent, or $2,405.42, came from China, according to the Chemicals Ministry. The government told the Rajya Sabha on March 13, “The imports from China are mainly due to economic considerations.”

Drug security

The Department of Pharmaceuticals (DoP) has constituted a committee under the chairmanship of Eshwara Reddy, Joint Drugs Controller, Central Drugs Standard Control Organisation (CDSCO), to address the issue of drug security in the country in the context of the Covid-19 outbreak in China.

Based on the recommendations of the committee, the DoP has issued instructions to the National Pharmaceutical Pricing Authority (NPPA), Drugs Controller General of India (DCGI) and State governments to ensure adequate supply of APIs and formulations at affordable prices in the market and to prevent black-marketing, illegal hoarding and creating artificial shortages in the country. Also, the DoP has written to the DGFT, asking it to restrict exports of 13 APIs and formulations. The NPPA has also written to the chief secretaries of States, requesting them to closely monitor the production and availability of APIs and formulations to prevent black-marketing and hoarding.

India simplifies clinical trial rules for Covid-19 vaccine manufacturing

Source: Business Standard, Jun 04, 2020

Mumbai: The health ministry has allowed some relaxations to the Drugs and Cosmetics Act, 1940, and the subsequent rules. This has been done to make “suitable vaccines” available to meet emergency requirements arising due to the pandemic.

Simpler rules would help Indian players to get a vaccine to the market faster.

Earlier, if a company intended to manufacture and stock vaccine for Covid-19, which is under clinical trial, it had to follow a complex process for marketing authorisation (for sale or distribution). Several applications were to be made for conducting clinical trials. Upon completion of the trials, the firm had to again follow a series of application processes. A prior permission was also required from the Central Licensing Authority under the New Drugs and Clinical Trials Rules, 2019, to manufacture the vaccine.

Now, the health ministry has said some of the rules shall be “deferred in public interest” to meet the situation. “We are in talks with vaccine makers here. So far, it looks like some of the global candidates, like the Oxford one, may be available sooner than the others. There are some key Indian candidates, too. The government will take an inter-departmental approach to ensure that the right vaccine candidate is available for Indians at the earliest,” said a government official.

Already, Indian vaccine majors are moving rapidly towards developing the right vaccine that would offer protection against Covid-19.

Hyderabad-based Bharat Biotech is developing a vaccine with the Indian Council of Medical Research (ICMR).

The researchers have recently indicated that the next month is a crucial stage in this development. Pune-based Serum Institute is in discussions with AstraZeneca that has booked millions of doses for Oxford’s frontrunner Covid-19 vaccine candidate. Serum is trying to sign a deal with the British drug major and if everything goes well, it plans to make 100 million doses of the vaccine in India.

Huge scope for Indian pharma as FDA eases drug scrutiny over shortage in US

Source: Business Standard, May 19, 2020

Most Indian pharma plants that were inspected by the US drug regulator in the last few months or so have received positive outcomes.

As drug majors in the country have gradually improved compliance, against the backdrop of high shortages in the US, analysts see this as a positive sign for pharma exports.

Drug shortages have remained high this year in the US and the CLSA noted that the issue seems to be exacerbated when it comes to injectable products, which account for over 60 per cent of the current drug shortages. India accounts for roughly 30 per cent of the generic drug supply to the US and it is a great opportunity for the players here.

If one looks at the inspection outcomes for plants between March and May, most have received Establishment Inspection Reports (EIRs) from the US Food and Drug Administration (USFDA). For example, Lupin’s active pharmaceutical ingredient (API) unit in Vizag got an EIR in mid-May.

The facility was inspected by the USFDA in January this year. Earlier, Lupin’s Pithampur plant -I and Nagpur plants (both formulation making units) had received EIRs in April.

Following these, some brokerages upgraded the Lupin stock to ‘buy’ from ‘reduce’. Analysts see the combination of Indian plants clearing USFDA scrutiny and the growing drug shortages in the US as positive signs for exporters here.

CLSA analyst Arun Dalal noted that fewer warning letters, partly aided by fewer inspections, are nonetheless positive.

Kedar Upadhye, global chief financial officer (CFO) at Cipla, said wherever it sees any demand uptick, the company will attempt to supply. Industry insiders said the current drug shortages could be only a short to medium term opportunity as such, but the EIRs will go a long way to boost overall exports.

Sudarshan Jain, secretary general of the Indian Pharmaceutical Alliance (IPA), felt that the pharma sector has worked on improving compliance and the string of EIRs is a testimony to that.

Meanwhile, given the transportation and logistical issues during the pandemic, the USFDA, too, is looking at alternative inspection tools and approaches. In a recent statement, it noted, “During Covid-19, the US Food and Drug Administration will continue to utilise and implement additional alternative inspection tools and approaches while postponing domestic and foreign routine surveillance inspections.” It said while the pandemic has added new complexities to its normal operations, it implemented alternative approaches with onsite surveillance inspections.

Jain, however, does not see any slack in scrutiny by the agency. He said the US regulatory authority has enough checks and balances in place to ensure that quality paramaters are maintained across the globe. The FDA noted, “Based on decades of experience with our diverse regulated industries, we believe most FDA-regulated firms understand and appreciate their responsibility to ensure the safety of the products they manufacture or produce….Most firms strive to reliably provide quality products and maintain the integrity of the supply chain.”

Antibiotic sales drive domestic pharma mkt down 11.2% in lockdown-hit April

Source: Business Standard, May 13, 2020

Mumbai: After growing by almost 9 per cent in March when consumers stocked chronic medication out of panic, the domestic pharmaceutical market declined by 11.2 per cent year-on-year (YoY) in April. The prime drag on the market was the drop in sales of acute therapy medicines like antibiotics, apart from dermatology and gynaecological drugs that witnessed a sharp fall.

According data from the market research firm AIOCD AWACS, the sale of anti-infectives (which comprise 11 per cent of the domestic pharma market) fell by 21.5 per cent, while gyanaecological drugs (around 5 per cent of the market) dropped by 23 per cent and dermatology segment (6 per cent of the market) fell by 22.5 per cent.

Senior executive of an acute therapy focussed company said that with people staying indoors they did not contract much of infections, and this resulted in the fall of antibiotic sales. Segments like dermatology, gyanaecology, vaccines etc depend on fresh prescriptions. With the lockdown in effect for the entire month of April, there was hardly any fresh prescription from doctors. “If one compares the Indian pharma market (IPM) on a month-on-month basis, the fall is much sharper, at around 19 per cent,” he added.

The firm is now actively pursuing doctors through webinars and is helping doctors to on-board several telemedicine platforms to generate prescriptions. Acute therapy focussed firms like Wockhardt and Alkem saw a steep decline in April numbers – 26.9 per cent and 16.6 per cent respectively.

Analysts at Motilal Oswal pointed out that for firms like Alkem the sales growth was weighed by decline in anti-infective (-20.2 per cent YoY) which forms almost 40 per cent of the company’s sales. While most firms have reported a decline in sales growth, Mumbai-based JB Chemicals, the makers of Metrogyl, saw a 5 per cent YoY growth in April riding on the cardiac segment. MOSL analysts said that JB Chemicals performance was driven by a 30.8 per cent YoY growth in the company’s cardiac segment. Pranabh Mody, president, JB Chemicals told Business Standard that they had launched a drug in the segment just before the lockdown started in March through webinars with doctors. While panic buying had boosted sales of cardiac and anti-diabetic segments in March, these did not fare too badly in April either – posting 5.9 per cent and 6.4 per cent YoY growth respectively.

Pakistan lifts ban on import of Indian drugs

Source: The Economic Times, May 13, 2020

New Delhi: Pakistan is importing key life-saving drugs and vitamins from India as cases of Covid-19 and other ailments continue to rise there.

ET has learnt that Pakistan government has lifted the ban on import of medicines and raw material from India to ensure there is no shortage of essential drugs amid the pandemic.

Quoting a document of Pakistan’s ministry of national health services (NHS), Pakistan’s leading English daily The Dawn reported that a number of vitamins, drugs and medicinal salts have been imported from India recently.

Following India’s decision to revoke the special status of Jammu & Kashmir under Article 370, the Imran Khan government had on August 9, 2019 suspended all kinds of trade with India. But after the pharmaceutical industry there appealed for a relaxation and sought clearance for goods already imported from India, the Pakistan government relented.

Later, Pakistan’s pharmaceutical industry demanded that the ban be lifted on Indian medicines and medicinal raw material because the country might face a severe shortage of medicines, especially life-saving drugs. Subsequently, the federal government lifted the ban on import of medicines and medicinal raw material from India, ET has learnt.

The NHS document, presented before the Khan cabinet on May 5 and available with Dawn, states that “the prime minister in his capacity as minister in-charge for NHS sought a list of drugs being imported from India”.
The document, signed by MHS secretary Dr Tanveer Ahmed Qureshi, shows that a number of vaccines, including those to prevent or treat tuberculosis, polio and tetanus, have been imported. Moreover, a number of vitamins, including B1, B2, B6, B12, D3 and zinc sulphate monohydrate, were also being imported from India, according to the Dawn report.

Sources here said that India decided to continue with drug exports to Pakistan notwithstanding Pak Army-ISI designs in Jammu and Kashmir.

Pakistan Pharmaceutical Manufacturers’ Association senior vice chairman Syed FarooqBukhari had in a news conference held on Monday at the press club in Karachi suggested that the Pakistan government should not take any decision against the import of medicine raw material from India or from any other country when there had been an unabated increase in Covid-19 patients in the country.

The import of pharmaceutical raw material from India or from any other country was done under a well-regulated regime being overseen by the Drug Regulatory Authority of Pakistan and other relevant state agencies, Bukharisaid.

“Any decision to disrupt the international supply chains associated with the Pakistani pharmaceutical industry would negatively affect the ability of country’s medical practitioners to treat the cases of Covid-19,” he warned.

The import of pharmaceutical raw material from India, he pointed out, was being done under a proper SRO No 429 approved by the government, according to Bukhari.

Price drives Indian pharmaceutical market growth to five-year high in FY20

Source: Business Standard, May 11, 2020

Mumbai: For the first time in at least five years, price is the key factor driving the Rs 1.4-trillion Indian pharmaceutical market (IPM). During FY20, price accounted for over 55 per cent of growth in the sector.

In the last five years, it ranged from -15 per cent to 36 per cent, according to data from pharma market research firm AIOCD-AWACS. The other two components of IPM growth are volume and new product launches, which accounted for 20-25 per cent each.

Sector experts and analysts pointed to factors like premiumisation, growth of trade generics, and product rationalisation for the higher contribution of price to the growth mix. Aditya Khemka, fund manager of DSP Healthcare Fund, said: “Drug majors are using brand extensions to premiumise their portfolio. This is helping boost price growth.”

Ipca’s Zerodol brand, along with its multiple variants used in treating pain and inflammation, is an example of how this trend is playing out. The Zerodol franchise, now valued at over Rs 500 crore, grew over 20 per cent in FY20.

Abhishek Sharma and Rahul Jeewani of IIFL said: “More and more firms are refocussing their efforts on creating large brands. It is clearly more profitable and sustainable to build large brands.”

Companies may have better pricing power with larger brands. Further, multiple launches increase marketing costs and lead to a cluttered portfolio.

Consequently, new product launches by Indian drug majors — who control 80 per cent of the market — are on a decline. The contribution from new products is now at a five-year low; they now account for 24 per cent of the pharma growth, compared to 45 per cent in FY17.

The rapid growth in the trade generics market, which accounts for a third of IPM volumes, is another trend impacting volume and the overall growth of the branded segment.

An analyst at a domestic brokerage said: “The buying capacity of consumers has reduced in light of the slowdown, with growing preference for generics and lower-priced medications. This is eating into volumes of branded generics players.”

Higher sales of trade generics and Jan Aushadhi stores, to a smaller extent, are eating into volumes/pricing of the branded market, especially in tier-3 and tier-4 towns.

IIFL believes that of all risks to the India branded generics market, the emergence of trade generics is the most potent that could impact growth rates of branded players. On the overall pharma growth, Praful Bohra and Rajat Srivastava of Emkay Global had said in an earlier report that growth driven by price hikes was not sustainable, and the declining volume growth trend remained a worry.

Drug shortages in US market, compliance gains positive for pharma exporters

Source: Business Standard, Apr 23, 2020

Concerns over price erosion in the US market, which has impacted the revenue growth of Indian pharma majors over the last four years, could be reversing. The drug shortages in the US market have increased by 37 per cent since December 2017. Kunal Randeria of Antique Stock Broking says drug shortages are at five-year highs and there is a direct correlation between drug shortage and prices. This is evident as price erosion peaked in 2017 when shortages were at their lowest levels.

Manufacturing and quality issues remain the single biggest reason for drug shortages, according to the US Federal Drug Administration (FDA), with other reasons being lack of raw materials and discontinuation of the some products by manufacturers. With half of the drug shortages accounted for by injectables, Abhishek Sharma and Rahul Jeewani of IIFL expect companies with a strong injectable pipeline such Aurobindo Pharma to benefit. They add that drug shortages will continue to provide pockets of opportunity to individual players such as Alembic and Divi’s for hypertension drug valsartan. The shortage for the drug was a result of multiple recalls by companies due to presence of contaminants.

Manufacturers exiting the products or category is attributed as another reason for the shortage. Buyer consolidation, increased intensity of product approvals by the US drug regulator and higher cost of compliance has led to generic industry leaders such as Teva, Mylan and Sandoz rationalising their low value and unprofitable products, according to Sharma and Jeewani of IIFL.

The coronavirus (Covid-19) outbreak is expected to help Indian companies gain market share. Antique Stock Broking expects Indian generic majors to benefit by supplying more to the US and EU adding that if shortages do increase some companies whose plants are under Warning Letters may also see exemption. The other key trigger for the sector is the slew of approvals for facilities which were not compliant with US FDA’s procedures on manufacturing. Over the last few weeks, facilities of Aurobindo, Lupin, Biocon and Strides have been approved. Further the US regulator has also given exemption to supplies of Ipca’s anti-malarial medication hydrochloroquine sulphate from import alerts at the company’s facilities. The approvals this month is in contrast to 19 Warning Letters the US FDA had issued last year, the highest number in the last four years. In addition to facilities, the drug regulator has also approved a number of drugs including Cipla’s asthma drug albuterol, as well as drugs of Dr Reddy’s, Cadila and Alkem Laboratories. The launch approval for Cipla’s asthma drugs comes almost a year ahead of the planned launched by the company.

Govt allows imported drugs with residual shelf life of under 60%

Source: Business Standard, Apr 18, 2020

Mumbai: With containers stuck in transit for days together, the Indian government has decided to allow some relaxation on the import of drugs. Under the existing rule, imported drugs that have less than 60 per cent shelf life remaining are not allowed into the country. However, given the supply chain disruption this rule has been relaxed by the Central Drugs Standard and Control Organisation (CDSCO).

In a notification dated April 17, the Directorate General of Health Services (DGHS) said that under exceptional conditions the licensing authority may allow import of drugs with lower shelf lives, provided that the expiry date has not been reached. The reasons, however, have to be recorded in writing.

The lack of truck drivers amid the lockdown has had several thousands of tonnes of cargo, including essentials, stuck at various ports across the country. Reports in the first week of April suggested nearly 40,000 containers were stuck at Chennai and container freight stations (CFS).

India is not a large pharmaceutical formulation importer and depends on China for active pharmaceutical ingredients (APIs) or raw material to make drugs.

According to rough estimates, India imported pharmaceutical products worth $1.7 billion in 2019. Most of this was bulk drugs from China. “India imports bulk drugs and some vaccines.

Importers were finding it difficult to comply with the condition that imported medicines should have more than 60 per cent shelf life as some of the consignments are stuck in ports not just for weeks, but for months. Moreover, any consignment coming China especially is quarantined for some weeks,” said a senior official in an industry association.

The DGHS move comes in the wake of the health ministry directive to all departments to take steps to ensure that drugs were available in sufficient quantity in the domestic market.

One of the steps taken by the ministry is to issue immediate approvals to applications for registration, import and manufacture of pharmaceuticals.

Further, after industry associations raised concern that due to the Covid-19 crisis there are challenges in clearances at port offices and many products are losing shelf life and getting below the threshhold of 60 per cent, the government took the call. Welcoming the move, Sudarshan Jain, secretary general of the Indian Pharmaceutical Alliance said that the government is taking all steps necessary to iron out the challenges the pharma industry now faces.