MIP on key pharma inputs seen boosting local production, offtake in India

DGFT's floor prices on select bulk drugs aim to curb Chinese dumping, support PLI-backed manufacturers and lift domestic offtake, though capped medicine prices may limit cost pass-through

The Centre’s decision to impose a minimum import price (MIP) on certain key pharmaceutical ingredients to counter dumping and predatory pricing by Chinese manufacturers is likely to boost offtake of locally produced pharma inputs, industry insiders said.

 

The Directorate General of Foreign Trade (DGFT) has imposed floor price restrictions on the import of ingredients such as potassium clavulanate (a key ingredient for a popular antibiotic) and its derivatives, fixing the imported price at $180 per kg. The imported price of another critical intermediate used in the synthesis of atorvastatin calcium (a cholesterol-lowering drug), ATS-8, has been fixed at $111 per kg. These price restrictions will be in place till November 30, 2026, according to a DGFT notification dated December 18.

   

Namit Joshi, chairman, Pharmexcil, told Business Standard that the move is important to protect manufacturers producing these key pharma ingredients under the production-linked incentive (PLI) scheme. “It’s important to protect the manufacturers under PLI through the MIP, or else the whole PLI would fall flat,” he said.

 

Joshi explained that the installed capacity for clavulanic acid was around 300–400 tonnes, and when the PLI started, the price set was around $195 per kg. India began producing this key ingredient for the first time last year when Mumbai-based Kinvan started making small batches and planned to gradually scale up production. The company invested over Rs 400 crore to build a 300-tonne capacity plant.

 

“Chinese players slashed prices of this ingredient to $135 per kg once Kinvan started commercialising the product, forcing Kinvan to sell its product at a loss. This has happened with several PLI winners — the moment commercialisation starts, predatory pricing by Chinese players hits them hard,” an industry source explained.

 

India is thus trying to ensure that some key bulk drugs cannot be imported below the MIP. However, the move may also raise manufacturing costs for Indian players. “Since prices of most essential medicines are capped, the makers would not be able to pass on the rise in input costs. Either this will make these products unprofitable, or the government would have to allow price hikes in some products,” said a small Gujarat-based pharma manufacturer.

 

Can India meet the entire requirement of clavulanic acid bulk drug? Industry sources said imports cannot be fully stopped at this point until local production scales up to meet total demand.