Ibuprofen API prices jump 30% in international market due to supply crunch

German firm BASF's plant shutdown in Texas resulted in short supply

The shortage in supplies of Ibuprofen active pharmaceutical ingredient (API) globally has resulted in a 30 per cent spike in prices and the ibuprofen formulations (medicines) have seen a fall in sales in the Indian market in the past few months. Prices in the domestic market, too, are up by 20 per cent and industry insiders claimed that the offtake of the bulk drug by formulation makers has thus fallen. 

Ibuprofen is a popular drug to treat pain. The API or bulk drug (raw material) of Ibuprofen has seen supply shortages in the past nine months, first because of production disruption in India in January and subsequently in China. There are around three big Ibuprofen API makers in China and India has three key players - Solara Active Pharma Sciences (which bought the API business of Strides Shasun subsidiary Strides Chemicals in April this year), Granules India, and IOL Chemicals and Pharmaceuticals. Granules India has a dedicated Ibuprofen API plant in China as a 50:50 JV with Biocause. 

Globally, German player BASF is one of the largest manufacturers of Ibuprofen API and it had to shut down its Bishop plant in Texas (US) on June 3 due to technical problem. The site has a capacity to make around 5,000 tonnes of API a year. The total requirement for Ibuprofen API is around 35,000 tonnes per annum globally, said Vijay Garg, joint managing director, IOL Chemicals and Pharmaceuticals. BASF's Bishop facility thus accounts for nearly one-seventh of the global supply. 

"The BASF plant shutdown has only added to the woes of Ibuprofen supplies, which was facing issues since the past nine months," Garg said. 

He said the international prices had gone up by 30 per cent or so to $15-18 a kg in the past few months as the Ibuprofen API has been facing supply challenges. The prices are unlikely to soften until more supplies come onstream. An email, which was sent to BASF on when it expects to commence the Bishop plant, remained unanswered. 
 

IOL Chemicals is running its Ibuprofen plant at 100 per cent capacity to meet the surge in demand. Last year, the unit was running at around 70-75 per cent capacity. IOL stocks, too, have zoomed in the recent past, going up by over 50 per cent since July. 

IOL has expanded its API facility to 10,000 tpa, which came onstream last quarter. The demand in the local market is around 6000-7000 tpa. IOL exports around 50 per cent of its production. 

Data from market research firm AIOCD AWACS shows the moving annual turnover (MAT) of Ibuprofen has seen an 11.3 per cent decline in July, while the Ibuprofen combination drugs has seen a 7.9 per cent dip in MAT value in July. Combination drugs include major brands such as Combiflam (Sanofi), Brufen (Abbott) among others. Combiflam MAT value growth in July was lower by 17 per cent while for Brufen it was lower by 9.3 per cent. 

Industry insiders said formulation makers were reducing the sourcing of the Ibuprofen bulk drug as the rising API costs was hurting the thin margins in the finished formulation. Ibuprofen brands are low margin. S V Veeramani, immediate past president of Indian Drugs Manufacturers Association (IDMA), said the competition of Ibuprofen API had to increase for prices to come down. 

Many of the drugs sold here are under price control and thus formulation makers cannot freely increase the rate even when the raw material becomes expensive. At global level, there has been consolidation of the Ibuprofen API making with the manufacturing being concentrated in a few hands.

BITTER PILL

• Ibuprofen API demand internationally is around 35,000 tonnes per annum (tpa)
• Consolidation at a global level has led to manufacturing being concentrated in the hands of a few
• Ibuprofen supplies facing issues since last 9 months; first production issue in India then China
• In June, German player BASF shut down its Texas plant due to technical problem
• Ibuprofen API prices are up 30% in international market; around 20% in India market
• Players claim that formulation 
• Players have lowered API sourcing due to high prices
• Finished drugs are low margin products
• Indian API makers like IOL Chemicals and Pharmaceuticals are running at 100% capacity