Bulk Drug Firms

The current prices of both ampicillin and amoxycillin are placed at 39 and 42 dollars per kilo in the international markets as compared to around $50 earlier.

This is as a result of serious competition from the Chinese manufacturers who have pushed down the prices of both ampicillin and amoxycillin. Apart from economies of scale, Chinese manufacturers benefit from a duty- free entitlement for imports based on their export performances.

This enables them to quote rock bottom prices in the global market.

As a result, domestic prices of ampicillin have also seen a fall from Rs 3,500 in December 1996 to Rs 3,000 per kg in June 1997. Amoxycillin prices have fallen from Rs 2,825 to Rs 2,200 in the same period. In case of some other drugs, the prevailing prices are lower than that prescribed by the DPCO.

 

The lull in demand in the semi-synthetic penicillin (SSP ) market has also affected producers like Kopran, Morepen Labs and many others which have large capacities.

In fact, with its plant located in Solan district of Himachal Pradesh, Morepen Labs faces a locational disadvantage when compared to other SSP producers .

Morepen has planned a backward integration by going into the manufacture of Dane salt which was being importing earlier.

The move could give the company a cost advantage but it may take time to yield results.

Other SSP majors have slowly switched from ampicillin/ amoxycillin combinations to other molecules or are charting plans for the same.

A clutch of Hyderabad-based companies, which were dependant on ampicillin and amoxycillin, have already closed down, and many others are on their way . The share prices of companies like Sol Pharma and Natco Pharma have seen a tailspin. Until the government policies in this sector are liberalised in terms of allowing duty-free entitlement against exports, no hope seems to be on the horizon.

The performance of other companies like Dr Reddy's Labs has also disappointed the markets but this particular company enjoys the advantage of having gone into research long before the other players.