Government Reveals New Rules to Curb Cheap Medicines Imports

By John Pranay (Editor)

A new set of rules imposed by the Indian government aims to curb cheap pharmaceutical imports, specifically targeting the prices of potassium clavulanate and its derivatives. According to a Directorate General of Foreign Trade (DGFT) notification, the import price of diluted potassium clavulanate or its derivatives has been fixed at $180 per KGA, while the imported price of ATS-8, a crucial intermediate used in the synthesis of atorvastatin calcium, has been set at $111 per kg. The move is part of the government's efforts to reduce the country's dependence on China and bring pricing stability in the pharmaceutical sector.

The Indian government's decision to impose floor price restrictions on the import of potassium clavulanate and its derivatives has sparked controversy in the pharmaceutical industry. The Directorate General of Foreign Trade (DGFT) notification, issued on an unspecified date, sets the import price of diluted potassium clavulanate or its derivatives at $180 per KGA and the imported price of ATS-8 at $111 per kg. Industry insiders have expressed concerns that the move is a desperate effort to save companies that have taken advantage of the government's PLI scheme, and that the decision is not based on ground facts. The government's production-linked incentive (PLI) scheme, launched in 2020, aims to draw investments in the manufacturing of critical raw materials from domestic players to reduce the country's dependence on China.

• November: An MIP of ₹1,174 per kg is announced for sulphadiazine, effective till September 30 next year.

• 2020: The Indian government launches a production-linked incentive (PLI) scheme to draw investments in the manufacturing of critical raw materials from domestic players.

• Unspecified date: The Directorate General of Foreign Trade (DGFT) issues a notification setting the import price of diluted potassium clavulanate or its derivatives at $180 per KGA and the imported price of ATS-8 at $111 per kg.

The Indian government's move to impose floor price restrictions on the import of potassium clavulanate and its derivatives is part of a larger effort to reduce the country's dependence on China and bring pricing stability in the pharmaceutical sector. In 2020, the government launched a production-linked incentive (PLI) scheme to draw investments in the manufacturing of critical raw materials from domestic players. However, the Chinese started cutting prices further, putting at risk huge investments made by the PLI beneficiaries. Industry insiders have expressed concerns that the government's move is a desperate effort to save companies that have taken advantage of the PLI scheme.

The Indian government's decision to impose floor price restrictions on the import of potassium clavulanate and its derivatives has significant implications for the pharmaceutical industry. The move aims to reduce the country's dependence on China and bring pricing stability in the sector. However, industry insiders have expressed concerns that the decision is not based on ground facts and that it may be a protectionist tool for PLI beneficiaries. The government's move also raises questions about the effectiveness of the PLI scheme in reducing the country's dependence on China and bringing pricing stability in the pharmaceutical sector.

The Indian government's decision to impose floor price restrictions on the import of potassium clavulanate and its derivatives is likely to have far-reaching consequences for the pharmaceutical industry. The move may lead to a shortage of critical raw materials, including potassium clavulanate and its derivatives, which could impact the production of essential medicines. The government's production-linked incentive (PLI) scheme is also likely to be affected by the move, as companies that have taken advantage of the scheme may struggle to compete with imported prices. The government's next move will be crucial in determining the fate of the PLI scheme and the pharmaceutical industry as a whole.

The Indian government's decision to impose floor price restrictions on the import of potassium clavulanate and its derivatives is a classic example of a protectionist policy gone wrong. By setting arbitrary prices for critical raw materials, the government is essentially creating a monopoly for domestic players, which could lead to a shortage of essential medicines. Crucially, this overlooks the fact that the PLI scheme was launched to reduce the country's dependence on China and bring pricing stability in the pharmaceutical sector. By prioritizing the interests of domestic players over the needs of patients, the government is essentially sacrificing the very purpose of the PLI scheme. This suggests that the government needs to re-evaluate its approach to regulating the pharmaceutical industry and prioritize the needs of patients over the interests of domestic players.

On balance, this event screens as Bearish in our sentiment view.

1. Centre draws a price line to curb cheap pharma imports — https://economictimes.indiatimes.com/industry/healthcare/biotech/pharmaceuticals/centre-draws-a-price-line-to-curb-cheap-pharma-imports/articleshow/126083815.cms

Methodology: This analysis combines real-time data aggregation from manually selected global sources with advanced AI synthesis, engineered to provide neutral and data-driven insights.