Financial Daily from THE HINDU group of publications
Friday, Jun 11, 2004
Industry & Economy
Penicillin makers seek steps against Chinese imports
(From right) Dr S.K. Sagar, President, Indian Penicillin Manufacturers' Association; Dr P. Ramanujam, Vice-President, and Mr Nitin Jaywant, President-API Business, Alembic, at a press conference in Chennai on Thursday. Bijoy Ghosh
Chennai , June 10
DOMESTIC penicillin manufacturers have sought the Central Government's help after their operations had been rendered unviable following a big increase in China's manufacturing capacity of the drug and a subsequent crash in its price.
At a news conference on Thursday to highlight their problems, industry representatives said that a series of events in the domestic market last year following a big increase in China's manufacturing capacity had hurt them.
The price of Pen-G, which was $10/BU in May 2003, dropped to $5.8/BU a year later.
Dr S.K. Sagar, President of the Indian Penicillin Manufacturers' Association, said that Indian manufacturers' variable costs came to $5-6. Once the cost of servicing capital is included, the industry's total cost is about $10.
The essence of the domestic industry's case was that an unusually large quantity of Penicillin-G and another intermediate, 6APA, had been imported into India to be used in the manufacture and subsequent export of downstream products (antibiotics).
However, in contravention of the import rules, some of the Pen-G may have found its way into the domestic market and reduced the price sharply.
The association recently asked the Government to take measures to protect them. Key requests from the industry are a duty of Rs 200/BU on Pen-G imports, changes in advance licence rules to cut loopholes and strict monitoring by the Government.
Though China was not directly responsible for the industry's plight, officials said that global Pen-G prices began to crash after Chinese manufacturing capacity increased two-fold about two years back.
The industry's presentation showed that imports (under advance licence) between October 2003 and April 2004 was 9,000 MMU, a 250 per cent rise over the previous year when annualised. It added that 90 per cent of the imports were from China.
Pen-G is the building block for key antibiotics such as ampicillin. In the mid-1990s, Indian industry invested about Rs 750 crore in manufacturing capacity for Pen-G. Currently, SPIC Pharma, J.K. Pharmacem, Alembic and the Torrent group are engaged in its manufacture.
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