Acute shortage of equipments faced by Pharma Cos, rise in APIs, to affect drug availability during Covid: Infomerics
Hyderabad, August 26, 2021: Indian vaccine manufacturers face a crucial shortage of equipment including small- and large-scale bioreactors and fermenters. The report reveals that the steep 50 percent rise in the cost of Active Pharmaceutical Ingredients (API) is pinching the industry hard and raises doubts on the availability of drugs and could lead to shortages, particularly of those that are key in COVID therapy.
These are among the major findings of the Pharma Industry: Trends and Prospects report released today by Infomerics Valuation and Rating Pvt Ltd, the noted SEBI-registered and RBI-accredited financial services credit rating company.
Key highlights include:
The report by Infomericsstates that while nearly 70 percent of the country’s APIs are imported from China, the dependence rises to 90 percent for certain life-saving antibiotics like cephalosporins, azithromycin, and penicillin. Since these medicines are under price control, companies are forced to absorb the higher cost, raising questions about their viability. In this scenario, over time, certain medicines could disappear from retail shelves.
The report also highlights the gap in diagnostic services in India, particularly in rural India. This led to a scramble to urban areas for healthcare with attendant implications for loss of wages and the high cost of travel, testing and treatment. It makes a strong pitch for digital technology, which can be “a catalytic element of the transformation” of the healthcare scenario in India. “The success stories in diverse parts of India, viz., Rajasthan, Arunachal Pradesh, Telangana, Kerala, Haryana, Andhra Pradesh, Bihar, Jharkhand, Uttarakhand, and Maharashtra need to be replicated at the wider national level to bring about a perceptible improvement in the rural healthcare system,” it urges.
“Given the state of the rural healthcare system in the country and the meager expenditure on health earmarked in the Union Budget (the overall spending on health varied from 1.3 percent of the GDP in 2010-11 to 1.5 percent and 1.8 percent of the GDP RE for 2019-20 and BE for 2020-21, respectively), there are strong and compelling reasons for enhancing the expenditure on the healthcare system in India,” the report states.
The report highlights some catalytic initiatives of the government including the Production Linked Incentive (PLI) scheme for the promotion of domestic manufacturing of critical key starting materials (KSMs)/and Drug Intermediates and APIs, and the Janaushadhi Pariyojanato make available quality medicines consumables and surgical items at affordable prices for all and reduce out of pocket expenditure of consumers/patients.
It also notes the wide-ranging ramifications of Liberalized Foreign Direct Investment (FDI) with74% FDI under automatic route in brownfield pharmaceuticals, production linked incentive (PLI) scheme which augur well for the steady growth of the industry. “This crucial sector with requisite government support, enabling eco-system and a conducive policy frame,” it states.
The way ahead
The report is optimistic about the future of the sector. Despite being wrecked by COVID, the pharma industry grew 37 percent year-on-year and 15 percent sequentially in Q1FY22. The growth was driven by sales of COVID treatment drugs and other drugs. “The cost of manufacturing in India is approximately 33 percent lower than that of the US. Therefore, the industry can benefit from these attributes and accordingly scale up production, productivity, and efficiency. But the realization of this potential necessitates harnessing economies of scale to move to a newer and higher orbit,” the report concluded.
It also recommended that the industry explore new and innovative options to generate and sustain new revenue streams. The increased demand for healthcare and insurance, for example, opens new avenues for investment, particularly in areas like chronic therapies for diseases such as cardiovascular, anti-diabetes, anti-depressants, and anti-cancer treatment.
INFOMERICS Valuation and Rating Private Limited are a SEBI registered and RBI accredited Credit Rating Agency. Run by a pool of industry experts, Infomerics does a free & fair analysis and evaluation of creditworthiness & Ratings of Banks, NBFCs, Large Corporates, and Small and Medium Scale Units (SMUs) while providing deep insights to Investors & Financial Institutions. Infomerics plays a key role in serving the financial market by minimizing information asymmetry amongst lenders & investors and facilitating borrowers/issuers to various fund-raising opportunities/avenues. With Mr. Vipin Malik, a professional Chartered Accountant as the Mentor, corporate governance and compliance is the driving force behind all its activities. Besides in-depth sectoral reports, Infomerics has enabled several smaller and mid-sized firms to scale up to next-generation large-size firms also. The agency is technologically advanced and uses AI analysis tools to predict the probability of default to mitigate any human error and is the only company where Credit Ratings are carried out by a team of autonomous committees independent of the Board of Directors.