Penicillin-G Units Hit By Global Slump

Falling global prices of penicillin-G have hit domestic manufacturers like SPIC, Max GB, Torrent, Alembic and J K Pharma whose sales are said to be down 20 -30 per cent during the past three months.

An industry source said formulators are making do with imported penicillin inspite of a government order preventing the import of bulk pen-G except in the case of drugs meant for export. "A large part of imports through this route is diverted to the domestic market which is the root cause of the present crisis", the source added.

Nearly 1000 mega million units (MMU) of pen-G is imported every year, mostly from Chinese manufacturers as they sell at prices atleast one or two points below the prevailing international rate.

 

After rising in late 1997, Pen-G prices have fallen below the official Indian price of around Rs. 1000 per Kg to about Rs. 650 to Rs. 700 per Kg in recent times. (Bulk Pen-G is measured in Kg while the unit of measurement at the user end is MMU.)

Stocks of Pen-G, the most widely used bulk antibiotic are available at even below the international bulk price, the sources said indicating that substantial stocks was coming into the country unofficially.

Domestic Pen-G prices started becoming highly volatile since the last two years after Chinese and Taiwanese manufacturers started dumping their stocks into India, one of the world's largest consumers of the antibiotic thanks to large number of drug formulators.

Local price has shown a continued fall which has been most pronounced since the beginning of this year.

Internationally, Pen-G offtake has suffered due to availability of synthetic antibiotic raw stock. Synthetic bulk drugs are fast replacing traditional bulks and intermediaries in antibiotic formulation due to their longer shelf life and easier handling.

One of the domestic Pen-G manufacturers, Torrent, has blamed its poor results in the last financial year to the turbulent and volatile demand-supply and price movements of the Penicillin markets. The company suffered a fall in 35 per cent in average per unit sales realisation of Pen-G.

Another source in one of the domestic pen-G licencees said the falling price is due to overcapacity in the domestic industry and the ban on pen-G imports, imposed in mid-1996 has not helped hold the price line.

Even the shutdown of the public sector Indian Drugs and Pharmaceuticals limited (IDPL), one of the largest producer of pen-G has not helped a cutback on the accumulated stocks.

The fall in pen-G price would soon start reflecting in prominent brands of antibiotics very soon, the sources said adding that a marginal fall in the prices of pen-G based formulations had already started by small manufacturers.

The sources said the current demand is in the region of 4000 mega million units (MMU) while the supply was atleast 1000 MMU in excess.

When domes prices were higher than international, the industry was pressing for the opening up of imports under a small duty so that the two prices balance out.

However, with the situation in reverse now, both the industry and the governmment have been caught on the wrong foot.