Alkem Lab faces input shortage

Alkem Laboratories, one of the largest domestic pharmaceutical companies in terms of sales, is facing an acute shortage of raw materials used to produce three of its leading drug brands, as supplies from China slow and prices of cefixime saw a steep increase.

The active pharmaceutical ingredient that goes into the production of antibiotic brands ‘Taxim’ and ‘Taxim O’ have become a major concern for the company, said Chairman Samprada Singh. The three drug brands have a combined annual sales of Rs 300 crore.

Taxim, with annual sales of Rs 115 crore, is the fourth-largest selling drug brand in the country. Its another version, Taxim O, has over Rs 92 crore worth of annual sales and is also among the top 10 largest selling domestic drug brands. Alkem is also facing raw material shortage for its anti-infection drug brand Clavam (co-amoxiclav) and antibiotic Sumo (nimesulide with paracetamol). Both Clevam and Sumo, with annual sales of Rs 60 crore and Rs 50 crore respectively, are among the top selling 50 drug brands in the country.

“We are facing severe raw material shortage for these products. We are still able to manage the supplies from China but at much higher costs because of the rupee-dollar exchange fluctuations and also because of lesser supplies,” he said.

Cefixime’s price has shot up to $350 a kg in the international market in recent times, which is less than half of what it was a few years ago. In the last two years, the Chinese government implemented strict current good manufacturing practices (cGMP) at intermediate and API making units in China, causing numerous units to close down. Further, many units had to close production for over six months, as the Chinese government asked polluting industrial units to down shutters prior to the Beijing Olympics.

He said the company was yet to assess how the margins would be affected during the current year. Common antibiotics such as cefixime are among the price controlled drug category in India and manufacturers cannot pass on their burden to consumers.

Despite the setback, the privately-held Alkem is likely to post a turnover of about Rs 1,200 crore in 2008-09, Rs 200 crore more than that of last year. It is hopeful of maintaining 15-20 per cent annual growth with better focus on domestic sales, introduction of novel nutritional health foods and supplements, said the veteran industrialist.