Amid ongoing lockouts in parts of China following the outbreak of coronavirus, rating agency ICRA has revised its outlook on Indian pharmaceutical industry to negative from stable. The agency mentioned that the domestic drug industry is highly dependent on imports, with more than 60 per cent of its active pharmaceutical ingredients (API) requirement being shipped from overseas locations, especially China. In some specific active pharmaceutical ingredients (APIs), like cephalosporins, azithromycin and penicillin, the dependence is as high as 80 to 90 per cent.
It also said of the total imports of APIs and intermediates into India, China accounts for 65-70 per cent. It further asserted the situation is more alarming in case of intermediates of stages prior to APIs and key starting materials (KSMs) which are the building blocks for drugs, wherein, in some cases, China is the exclusive supplier. Domestic API manufacturers have an inventory of one-two months, which should adequately support their production till mid-March 2020.
Besides, it noted that the outbreak of the coronavirus in China and the consequent lockout in parts of China have resulted in a shutdown of production units in China. Though majority of the pharmaceutical manufacturing facilities in China are located far away from the coronavirus affected sites, there has been a disruption in the supply chain due to the lockouts.