How to deal with Chinese API

- Jul 18, 2020-

The Indian government approved the Production Linked Incentive (PLI) plan in March to reduce India’s dependence on China’s production of APIs for important antibiotics, anti-HIV drugs, vitamins and heart drugs.


        The plan will have a financial impact worth Rs 694 crore in the next eight years.

What is the PLI plan




       The coronavirus outbreak interrupted the supply chain and raised concerns about India's drug shortage, which triggered the government's move.


       Indian pharmaceutical manufacturers import about 70% of raw materials from the eastern neighboring country (here China).


       To meet short-term and long-term challenges, the central government established a high-level committee in February to monitor the supply of raw materials. According to an earlier report by ThePrint, the committee, led by joint drug controller Dr. Eswara Reddy, has proposed a series of incentives to encourage API manufacturers to increase local production.


       According to the draft guideline obtained by ThePrint, the selection criteria include manufacturers that can ensure "higher production capacity" and use less polluting new technologies (eg "green chemistry, mobile chemistry") for production. The document also mentioned that the company's "production costs should be low" and should have "prior experience in manufacturing similar products"


       Indian authorities have reached out to more than 600 manufacturers of APIs and other key raw materials. The plan is discussing and formulating low requirements, eligibility criteria and incentives for manufacturers. Eventually, 136 manufacturers will be selected for incentives .




Incentives




       According to the final guidelines, the plan’s incentives for pharmaceutical companies are divided into four parts.


       • The first part deals with the production of “Four key fermentation starting material (KSM) products”, which are used to manufacture the best-selling antibiotics, including penicillin and clavulanic acid. Eight companies will be selected with a total incentive amount of Rs 36 crore, rewarding 20% for each company.


       • The second part deals with "10 fermentation-based niche (fill-in) KSM and API products", including neomycin, gentamicin, vitamin B1, tetracycline, doxycycline and betamethasone. Here, 20 companies will be selected to receive a reward worth Rs 100 crore, and the total reward for each company will be 20%.


       • In the third part, "4 KSM or API products based on chemical synthesis" attracted 960 crore rewards, each reward will be given a 10% reward.


       • The fourth part will attract an award of Rs 138 crore for "23 chemically-synthesized KSM and API products", including cardiovascular drugs valsartan, atorvastatin, ofloxacin antibiotics, anti-HIV drugs Lito Navir and lopinavir, vitamin B6 and aspirin. Each merchant will receive a 10% reward.


       The government will also announce the mandatory minimum capacity of each manufacturer under the plan. For example, the small production capacity of penicillin is 5,000 tons, while the small production capacity of clavulanic acid is 150,000 kg.


       It takes at least 155 days (five months) from the date of announcement to the invitation to issue the application to be approved, register and start production according to the plan.


       Obviously, India's PLI plan will have an impact on Chinese API manufacturing companies, and the era of low quality and low prices will be a thing of the past.


       Using new technologies, developing better processes, improving product quality, and reducing API manufacturing costs are urgent needs of every API manufacturer.


       As ThePrint proposed in the draft guide, API manufacturers need to choose to ensure "higher production capacity" and use less polluting new technology (such as "green chemistry, flow chemistry") for production.


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