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IPA Prices Rise as China Backfires India through High Cost APIs

Indian pharma companies saw a retaliatory action after India decided to reduce import dependency on China which announced a substantial rise in the prices of APIs (active pharmaceutical ingredients), various KSMs (key starting materials) and certain drug intermediates exported to India. As per the Secretary General of Indian Pharmaceutical Alliance, which holds several Indian pharmaceutical companies as its members, the overall increase in the prices of APIs and KSMs is nearly 20 per cent since the pre-pandemic period. The personnel stated that much depends on the kind of product and the volume imported as some (which are high in demand) have witnessed a sharp increase. One of them is the Isopropyl Alcohol (IPA) which has witnessed almost 100 per cent increase in its international as well as domestic prices. IPA being an important ingredient in the disinfectants, sanitizers and other pharma products has witnessed skyrocketing demand since the COVID-19 pandemic. Another product heavily imported from China is ‘para amino phenol’ or PAP, which is a key starting material for making paracetamol.  Since China is one of the main suppliers of PAP in the global market, local players have reported around 27 per cent increase in its import prices. Apart from this, domestic pharma companies are also witnessing higher cost and freight charges due to logistic issues still prevalent across international borders. Analysts believe, that the hike in rates will take undoubtedly take a  toll on the pharma players’ gross margins, but there are chances that the loss could be offset by the rupee depreciation against the dollar as India also exports products in large volumes.