Oxytocin ban: Sole producer KAPL struggles with excess capacity, inventory

The firm had capacity to produce five million ampoules of oxytocin in a month; it is in the process of adding another 5.1 million ampoules a month of capacity by October 15, says MD Nirja Saraf

With the ban on manufacture and sale of oxytocin, the peptide hormone, by private companies to finally take effect from October 1, the public sector unit chosen to be the sole producer, Karnataka Antibiotics (KAPL), struggles with both excess capacity and inventory.
 
The ban date was earlier deferred. While demand rose over recent months, with hospitals stocking the drug on apprehension of a shortage, a company official said hardly any demand had come for KAPL.
 
The firm had capacity to produce five million ampoules of oxytocin in a month; it is in the process of adding another 5.1 million ampoules a month of capacity by October 15, says managing director Nirja Saraf. This exercise has cost Rs 120-130 million. Monthly demand across the country is around 2.7 mn ampoules, said Saraf.

 
In creating this capacity, KAPL says it has sacrificed the manufacture of some products for the export and home markets. The revenue from these products is estimated at a combined Rs 150 million a year. KAPL only began making oxytocin from July 2, after having been chosen by the central government to be the only maker. The aim was to curb  misuse of the hormone in the dairy industry and in vegetable farming.
 
“We have been asked by the Centre to keep producing. We are creating inventory, so that there is no shortage situation in the market,” Saraf said. It has an inventory of 5.3 million ampoules at the plant and with its clearing and forwarding agents.
 
Demand has gone up in the market. Data from AIOCD AWACS shows multinational firm Pfizer’s Pitocin (its brand for oxytocin) sales picked up from Rs 19 million in May to Rs 28 million in July; it fell slightly to Rs 25 million in August. AIOCD data reflects sale at trade stockists. There would also be hospital stockists that would be selling the drug.  Pfizer did not wish to comment, saying the issue was before the courts.
 
It and US-based Mylan are the two companies with the bulk of the domestic market. Mylan has challeneged the government order at the high court in Delhi; it would not comment for this report, too.

 
Saraf said KAPL had not seen much demand but this could be because of the price, of Rs 15.58 an ampoule, plus goods and services tax, a total of Rs  17.78. This is not only more than the generic versions, at around Rs 6 each. It is also more than Pfixer's price  of Rs 13.77, within the National Pharmaceutical Pricing Authority's ceiling of Rs 16.57.
 
KAPL says its pricing had factored in the cold-chain logistics for delivering to the end user. Oxytocin has to be kept at 2-8 degrees Celsius and transported in that condition. To ensure this, Said Saraf, it had tied up with around 20 clearing and forwarding agents, apart from around 800 distributors and stockists.