The global pharmaceutical industry is huge and the value chain is divided into two categories namely API and finished goods. API forms the basis of the drug that enables it to produce the desired effect.
China is one of the largest suppliers of API and when the world was hit by the coronavirus pandemic, the pharma industry suffered losses due to a shortage of raw materials.
What is API?
API or Active Pharmaceutical Ingredient is an active component that is included in medicines to produce the intended outcome. It makes up for one of the two main ingredients in medicine, the other one being excipients which deliver the effect of API.
India’s Dependence on China
The pharmaceuticals industry in India is the third-largest in the world. China caters to about 70 percent of India’s pharmaceutical requirements including Active Pharmaceutical Ingredients that are required to produce finished drugs. These Chinese APIs cost nearly one-third as compared to APIs manufactured in India. The subsidized pricing of Chinese APIs led to the shutting down of domestic API manufacturers in India.
As a result, Indian firms slowly started disengaging from the production of APIs as their large investments did not convert into greater returns. The high cost of APIs in India has various underlying reasons such as infrastructure requirements and the high cost of technology for the manufacturing process.
The Indian API Market
The API market is currently witnessing prominent trends like rapid growth in the biopharmaceuticals sector and technological advancements in the API manufacturing front. The segment of API manufacturing in India can be divided into two sectors namely, branded or innovative and unbranded or generic.
The ongoing global drug cliff is expected to boost the revenues of the Indian Active Pharmaceutical Ingredients (API) market. The API industry in India has
gained a considerable amount of recognition worldwide due to its high quality. The API market in India is expected to grow 10 percent in the next 2 years.
The Future of APIs in India
The Government of India has proposed an INR 10,000 crore scheme that aims at boosting the domestic manufacturing of APIs. This, in turn, would result in encouraging exports of these raw materials to drug makers all over the world. The government is of the view that this scheme would enable API manufacturers in India to earn more revenue. The Union Cabinet has established three API parks to reduce dependencies on China for 53 APIs.
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