Prices of medicines in India could rise sharply as there has been a 30 per cent surge in the cost of key raw materials needed to make them amid the war in Iran.
The prices have been driven up primarily due to a scarcity of container ships and surging freight charges.
Industry officials who spoke to the Economic Times said that the vessel shortages restricted the movement of raw materials from China, the biggest supplier to India’s drug makers.
This would affect both local manufacturing and the producers, who may be forced to pass on the costs to consumers. Medicines in India, however, are regulated by the National Pharmaceutical Pricing Authority (NPPA). This would force pharmaceutical companies to absorb the higher input costs.
"Importers, squeezed by surging raw material costs, are passing the pain directly to big pharma companies," said one industry official. "With APIs up, solvents spiking 20-30%, and every shipping line charging a premium, importers have no room to absorb."
Prices of some of the key raw materials have risen by more than 60 per cent, data accessed by the news outlet showed. The price of glycerine, for example, has jumped 64 per cent since December. Meanwhile, Paracetamol prices are up 26 per cent.
Muscle spasm-relieving drug, Thiocolchicine, has recorded one of the highest increases, rising from Rs 3.4 lakh to Rs 7 lakh – a jump of over 100 per cent, according to a list by Arora.
The pharmaceutical sector could now face a loss of up to 2,500 to 5000 crore if its exports to the Gulf, wider West Asia and North Africa are disrupted.
The Gulf Cooperation Council (GCC) accounts for about 5.58 per cent of India’s total exports. Countries like the UAE, Saudi Arabia, Oman, Kuwait and Yemen rely on India for cost-effective medicines. There had also been growth in emerging markets like Jordan, Kuwait and Libya, with demands rising for vaccines, surgical products and AYUSH formulations, the TOI reported.
The growth, however, is now at risk due to challenges in the global freight market and the upending of the shipping routes due to the Iran war.
Pharmexcil chairman Namit Joshi said that there has been a doubling of freight charges for both exports and imports. The surcharges of $4,000-8,000 per shipment are also exerting pressure on Indian pharma companies, he said.
One industry expert said that the minimum stock levels by pharma companies may be depleted if the war continues for another 10 to 15 days.
