Indian Generic Drugmakers May Face Supply Shortages From China If Coronavirus Drags On

Shortages and potential price increases of generic drugs from India loom if the coronavirus outbreak disrupts suppliers of pharmaceutical ingredients in China past April, according to industry experts.

An important supplier of generic drugs to the world, Indian companies procure almost 70% of the active pharmaceutical ingredients (APIs) for their medicines from China.

India's generic drugmakers say they currently have enough API supplies from China to cover their operations for up to about 3 months.

"We are comfortably placed with 8 to 10 weeks of key inventory in place," said Debabrata Chakravorty, head of global sourcing and supply chain for Lupin Ltd, adding that the company does have some local suppliers for ingredients.

Optimism that the worst of the outbreak centered in China's Hubei province and its capital Wuhan would be over by April took a major hit late on Wednesday. Chinese health officials, using a broader method of confirming coronavirus cases, said they shot up by nearly 15,000 in Hubei with total deaths in China nearing 1,400.

The outbreak and severe travel restrictions aimed at containing its spread has taken a toll on the world's second largest economy and disrupted international businesses dependant on Chinese supplies.

Sun Pharmaceuticals Industries Ltd said it has sufficient inventory of API and raw materials for the short term and has not seen any major disruption in supplies at the moment.

The Indian drugmaker, however, said supply has been impacted for a few API products and the company is closely monitoring the situation. It did not identify the products.

An extended outbreak that limits the volume of active ingredients and drugs available for export from China could lead to drug shortages and price increases, particularly in the United States—where prices are subject to market forces—according to rating agency Moody's.

India supplies nearly a third of medicines sold in the United States, the world's largest and most lucrative healthcare market.

Daara Patel, secretary general of the Indian Drug Manufacturers Association, which represents over 900 drug producers, said he expects supplies to be disrupted from April.

Patel said vitamins and antibiotics are likely to be among the hardest hit as India is a major global producer of both.

International pharmaceutical companies including Swiss drugmaker Novartis AG and Britain-based GlaxoSmithKline Plc have so far predicted minimal disruption in the near term to their supply chain.

"Companies are continuously monitoring the situation and are working proactively to prevent and mitigate potential shortages," Holly Campbell, spokeswoman for pharmaceutical industry trade group PhRMA, said by email.

Sudarshan Jain, secretary general of the Indian Pharmaceutical Alliance (IPA) trade group, said there are no API shortages at the moment because drugmakers had stocked up on inventory ahead of the Lunar New Year holiday in China, which was later extended to contain the virus.

—Ankur Banerjee

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