COVID-19 Impact on API Intermediate Market in Pharmaceuticals Industry | DBMR

Posted by swarajya on May 17th, 2021

COVID-19 Impact on API Intermediate Market in Pharmaceuticals Industry

Coronavirus (COVID-19) is a novel disease which was first originated in China, Wuhan and then spread worldwide due to which World Health Organization has declared it as a global pandemic. The novel strain of coronavirus belongs to the same virus family that causes the acute respiratory syndrome (SARS) and middle-east respiratory syndrome.

Due to rapid growth of Coronavirus, lockdown and quarantine was the government initiatives in order to control the coronavirus spread. Therefore, these initiatives have created an unpredictable effect on both human daily lives and on global economy along with that the global pandemic of COVID-19 is affecting the health and personal decision-making of people.

APIs are the effective ingredient present in the medicine, and even small amount of active ingredients known to produce effective result. The APIs are manufactured using the raw materials which are known as intermediates. The intermediates are the key products for carrying out the process of formulating the active pharmaceutical ingredients. API and the intermediate market is such a huge market and has a great application in the medical field there is a huge demand of close monitoring of manufacturing process. But due to continuous pandemic of COVID 19 and long term shut down has put an adverse effect on overall drug manufacturing companies. The governments of several countries have reported that there is huge scarcity of APIs and intermediates amid the COVID 19 pandemic. The reason behind that is the barrier across the countries border that has an ultimatum effect over the import and export facilities of medicinal product among others.

The effect of COVID-19 is different for every industries and their products. Mainly COVID19 affect the economy by three different ways:

  • By affecting the demand of product /services,
  • Affecting the price,
  • Affecting the supply chain.

Demand of various API intermediates product and raw material increased in the pandemic situation of COVID19 due to increase in more respiratory disorder and people investing more in healthcare.

BASF SE, Winthrop (A Sanofi Company), A.R.Life Sciences, Aceto are leading pharmaceutical companies for manufacturing API intermediates. Their sales affected due to the COVID situation because the supply of the intermediates were banned during the lockdown.

IMPACT ON PRICE

The COVID-19 outbreak led to a number of countries putting their citizens on various forms of lockdowns, although the terms differ from country to country. India and China are among the countries that have imposed highly restrictive mass quarantines that have impacted several markets and their economies. India and China is considered as one of the countries dealing with highest share in the field of APIs and their intermediates, as there were lockdown policies and all borders were closed so there has been a huge impact on the pricing as the active pharmaceutical ingredients and their intermediates are not available adequately.

Due to some factors such as disruption in supply chain, the cost of the APIs and their intermediates have increased up to 40-50% in India especially for the medicines such as paracetamol, penicillin and anti-asthma drugs. As there was risk in supply chain during the COVID-19 and there was a delay in the supply chain. The air shipments were decreased and the price of the shipment was increased by three times which will increase the price of the APIs and their intermediates as the shipment charges were increased.

There is increase in the demand for the API intermediates which are used for manufacturing of finished drugs. However, fear of COVID 19 infection is a major factor that effect the demand of products.

The price of many products increased due to great effect of COVID 19 on the supply chain of products and other factor responsible for the increase in price due to the demand of product.

For instance,

  • In January 2018-19, Indian pharmaceutical companies imported bulk drugs and intermediates worth USD 2.4 billion from China, which was about 68% of total imports of the raw material. While most large companies usually keep an inventory for about two to three months due to fluctuating supply and prices of bulk drugs, if the crisis continues, they will have to consider other options, including buying them from other areas at a higher price
  • High demand for the supply of 1- (4-isobutylphenyl) ethanol (4-IBPE) API intermediate of Ibuprofen globally has resulted in a 30 per cent spike in prices. The API or bulk drug (raw material) of Ibuprofen has seen supply shortages in the 3 quarters in 2020, due to production disruption in India in January and subsequently in China which are the major supplier.

Therefore, as the production of the APIs have been slower down by the manufacturing companies which has resulted in lower availability and increased the cost of the materials that is required in the production of finished products.

IMPACT ON DEMAND

As during the pandemic, the supply of active ingredients for major chronic diseases has been shut down, increasing the demand for the product more.

Due to the spread of COVID-19, there is a lockdown in the world which leads to the closure of manufacturing plants and distribution channels, plus worker being held up to their homes slow down the production and supply of API intermediates which badly affected the global economy and also affect the demand of many products which indirectly increases the demand and need for the pharmaceutical product by the people.

During COVID-19, there was a slight change in the demand for APIs and intermediates as the manufacturing companies were involved in finding the novel treatment for the COVID-19 patients. There was an increase in demand for antiviral APIs and intermediates. The other chronic diseases were untreated as the demand was decreased from the consumer side due to fear in the patient population of the exposure of the virus. Read more…

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swarajya

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swarajya
Joined: April 7th, 2021
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