Active Pharmaceutical Ingredients (API)

Topics covered

  • Why in news? 
  • What is an API? 
  • How an API is manufactured? 
  • Schemes and Drugs production 
  • Promotion of Bulk Drug Parks Scheme
  • Production Linked Incentive (PLI) Scheme 
  • Concerns and effect of COVID19 on India’s Pharma Industry
  • How India lost its API market to China?

 

Why in news?

  • Export of active pharmaceutical ingredient (API) of paracetamol from the country is all set to resume with the Centre moving it out of the ‘restricted for export’ list.
  • About 40% of the paracetamol API manufactured in the country is consumed in the domestic market, while the rest is meant for exports.

What is an API? 

  • Every medicine is made up of two main ingredients — the chemically active APIs and chemically inactive, excipients, which is a substance that delivers the effect of APIs to one’s system.
  • API is a chemical compound that is the most important raw material to produce a finished medicine.
  • In medicine, API produces the intended effects to cure the disease. For instance, Paracetamol is the API for Crocin and it is the API paracetamol that gives relief from body ache and fever.
  • Fixed-dose combination drugs use multiple APIs, while single-dose drugs like Crocin use just one API.

How an API is manufactured? 

  • API is not made by only one reaction from the raw materials but rather it becomes an API via several chemical compounds. The chemical compound which is in the process of becoming an API from raw material is called an intermediate.
  • There are some APIs that pass “through over ten kinds of intermediates in a process when it changes from being a raw material into an API”. The long manufacturing process is continued until it is purified and reaches a very high degree of purity.

Schemes and Drugs production

  • Recently, the Union Cabinet has approved two schemes, namely the scheme on Promotion of Bulk Drug Parks and Production Linked Incentive (PLI) Scheme to promote domestic manufacturing of critical Key Starting Materials/Drug Intermediates and Active Pharmaceutical Ingredients in the country.

Promotion of Bulk Drug Parks Scheme

  • Number of Parks: The government aims to develop 3 mega Bulk Drug parks in India in partnership with States.
  • Funding: Government of India will give Grants-in-Aid to States with a maximum limit of Rs. 1000 Crore per Bulk Drug Park. A sum of Rs. 3,000 crore has been approved for this scheme for next 5 years.
  • Facilities: Parks will have common facilities such as solvent recovery plant, distillation plant, power & steam units, common effluent treatment plant etc.
  • Need of the Scheme: Despite being 3rd largest in the world by volume the Indian pharmaceutical industry is significantly dependent on import of basic raw materials, viz., Bulk Drugs that are used to produce medicines. In some specific bulk drugs the import dependence is 80 to 100%.
  • Objectives: The scheme is expected to reduce manufacturing cost of bulk drugs in the country and dependency on other countries for bulk drugs. The scheme will also help in providing continuous supply of drugs and ensure delivery of affordable healthcare to the citizens.
  • Implementation: The scheme will be implemented by State Implementing Agencies (SIA) to be set up by the respective State Governments.

Production Linked Incentive (PLI) Scheme

  • Aim: The PLI scheme aims to promote domestic manufacturing of critical Key Starting Materials (KSMs)/Drug Intermediates and Active Pharmaceutical Ingredients (APIs) in the country.
  • Funding: Under the scheme financial incentive will be given to eligible manufacturers of identified 53 critical bulk drugs on their incremental sales over the base year (2019-20) for a period of 6 years.
  • Impact: PLI scheme will reduce India’s import dependence on other countries for critical KSMs/Drug Intermediates and APIs. This will lead to expected incremental sales of Rs.46,400 crore and significant additional employment generation over 8 years.
  • Implementation: The scheme will be implemented through a Project Management Agency (PMA) to be nominated by the Department of Pharmaceuticals.

Concerns and effect of COVID19 on India’s Pharma Industry

  • Despite being a leading supplier of high-quality medicines to several countries, Indian pharmaceutical industry is highly dependent on China for APIs.
  • In the 2018-19 fiscal, the government had informed the Lok Sabha that the country’s drug-makers had imported bulk drugs and intermediates worth $ 2.4 billion from China.
  • But with an frequent lockdowns due to the deadly coronavirus outbreak, supplies of raw materials from China to produce drugs for treating HIV, cancer, epilepsy, malaria, and also commonly-used antibiotics and vitamin pills, are likely to be hit.

How India lost its API market to China?

  • During the early 90s, India was self-reliant in manufacturing APIs.
  • However, with the rise of China as a producer of API, it captured the Indian market with cheaper products and it eventually led to high economies of scale for China.
  • China created a low-cost API manufacturing industry. The industry was backed by the low cost of capital followed by aggressive government funding models, tax incentives. Their cost of operation is one-fourth of India’s cost. Even the cost of finance in China is 6-7 per cent against India’s 13-14 per cent.
  • So, due to low-profit margins and non-lucrative industry, Indian pharma companies over the years stopped manufacturing APIs.