API refers to active pharma ingredient present in medicine which produces the intended effects. A medicine can have single or multiple APIs. Generally, the name and amount of API present in the medicine are written on the package of the OTC drugs.
Often APIs are confused with raw materials in the pharma industry; they are quite different. Raw materials are the chemical compounds required to produce APIs. API manufacturers purchase raw materials from chemical suppliers. These chemical compounds undergo several processes such as reaction, crystallization, separation and purification in the reactors before becoming an API.
Opportunities for API Manufacturing in India
India is one of the global leaders in the pharma industry and is a leading supplier of generic medicines and vaccines in the world.
However, despite being one of the top producers of medicines, India is highly dependent on China for APIs that are essential in the manufacturing of medicines. India imports more than 70% of APIs from China. During FY 2018-19, India imported APIs of worth USD 2.4 billion from China.
The coronavirus pandemic has revealed the heavy dependence of India on China to meet its API requirements. India’s API imports from China include penicillin G, levodopa, streptomycin, meropenem, carbidopa, vancomycin, gentamicin and progesterone. Realizing the shortcomings in the Indian API manufacturing segment, the Government of India has decided to give to push for API manufacturing in the country.
The government has recently rolled out the PLI scheme for the manufacturing of drugs, including the APIs. Under the scheme, the government has announced production-linked incentives of worth INR 6,940 crores for domestic drug manufacturers in the country. This will help to boost the manufacturing of APIs in the country and reduce dependence on China.
Here is the list of APIs with strong demand:
- Penicillin G
- Levofloxacin ester
- Ofloxacin ester
- Ampicillin and Amoxicillin
- Vitamin B1
- Vitamin B6
Challenges for API Manufacturing in India
While the government is keen to promote API manufacturing in India, there exist some challenges and structural gaps in the industry. One of the major challenges for domestic API manufacturers is the cost-effective nature of APIs manufactured in China. So, Indian API manufacturers must devise strategies to provide APIs at relatively low prices than the imports from China. Another major challenge for API manufacturing in the country is lack of mega bulk drug parks with ready to use facilities to manufacture the products.
Apart from these, strict pollution control norms also pose a challenge to the API manufacturers in the country. The current pollution control norms mandate API manufacturing companies to undergo the approval process every time they change the composition of the product. This not only increases the time to market of the product but also increases the production costs.
Having said that, API manufacturing remains one of the sun rising sectors in India. It provides great opportunities for new entrepreneurs in the country.
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