India Levies Anti-Dumping Duty on Two Important Drug Ingredients Imported from China And Mexico

Indian government may levy duty on two important drug ingredients imported from China and Mexico to protect local suppliers. The move could increase prices of popular antibiotics for consumers besides threatening business of about two dozen small drugmakers.

The commerce ministry has recommended anti-dumping duty on Penicillin G Potassium and 6 APA, after Indian suppliers complained Chinese and Mexican firms are shipping it at a low price to kill competition from Indian manufacturers.

Although a provisional suggestion for the duty was earlier rejected by the finance ministry, authorities dealing with anti-dumping measures to protect local industry have said that such concerns need to be addressed separately. The finance ministry has to take the final call on the proposed import tax.

Local drugmakers say this could increase retail prices of antibiotics that uses these ingredients, such as Ranbaxy's Mox, GSK's Augmentin and Cipla's Novamox, by up to 25%. The proposed duty will also hit 20-30 local bulk drugmakers who source the ingredients from Chinese companies to make active pharmaceutical ingredient (API), the key input used to make the final medicine.

"Local formulation makers will buy API from China at a much lower price as our manufacturing cost will increase by about 20%," a senior executive at Bulk Drug Manufacturer's Association (BDMA) told ET.

Directorate General of Anti-Dumping & Allied Duties, the nodal investigating agency of the commerce ministry, recommended the dumping duty acting on complaints by Vadodara-based Alembic and Southern Petrochemical Industries Corporation.

It has recommended duty of up to $2.5 per billion of units of Penicillin-G Potassium imported from China and Mexico and up to $9.28 per kg on 6-APA imported from China. At present, local companies buy penicillin and 6APA at $9.3 per kg and $29 per billions of units respectively, an executive from a bulk drugmaker said.

Another industry official familiar with the development said that the government has assured bulk drugmakers that they will look into their concerns once they felt the adverse impact. But it cannot allow local suppliers of the products to suffer pre-judging the impact of the duty.

Daara Patel, president of the Indian Drug Manufacturer's Association, which represents both branded drugmakers and bulk drugmakers, said it is too early to comment on the impact. But earlier, the industry body had suggested mandatory purchase of certain percentage of APIs from local bulk drugmakers as a compromise formula.

Local suppliers of the basic chemicals say Chinese exporters lowered their price whenever Indian firms tried to revive their manufacturing plants, thus hurting viability of making the products in India. But the Chinese firms increased prices when Indian companies put off their plans to produce locally.

BDMA has alleged local drugmakers who manufactures the two ingredients can meet only 10-15% of the country's demand, leading to a shortage of the product in the country. This is countered by Indian suppliers who say they can meet the entire demand in India if the state-owned Hindustan Antibiotics revives its manufacturing.