Long before the Covid-19 pandemic gripped the world, there was a growing concern over heavy dependence on Chinese manufacturing across industries. The term ‘China plus one’, which means finding alternatives to China and diversifying the business into other countries, was coined in 2013, but this strategy hadn’t gathered much momentum until the pandemic struck.
The shortage of products and raw materials during the Covid-19 outbreak laid bare the need for companies to diversify supply chains outside China. China plus one strategy is now being considered with more seriousness than before. The anticipation is that India can be a beneficiary of this strategy, given its strong manufacturing base, skilled labour, and relatively low costs.
One sector that is expected to benefit is pharmaceuticals, particularly the active pharmaceutical ingredients (API) industry. API is a key raw material included in finished formulations, which enables medicine to produce the desired effect.
India’s API industry is fragmented, with about 1,500 manufacturing plants and market size is about INR1,000 billion. Most large and mid-sized players export to large and lucrative regulated markets in addition to serving semi-regulated and domestic markets. Other mid to small players mostly export to semi-regulated markets and operate in the domestic market.
Despite having domestic API capacities, India imports nearly 70% of its API and intermediates from China. China is the only supplier for many of the critical intermediaries and APIs, including high-burden disease categories such as cardiovascular diseases (digoxin and losartan), diabetes (metformin and glimepiride), and tuberculosis (isoniazid and streptomycin). The market is largely dependent on China for antibiotic APIs manufactured by the fermentation route such as penicillin, cephalosporins, and macrolides. Even global companies rely heavily on China for API supplies.
Read More at https://economictimes.indiatimes.com/prime/pharma-and-healthcare/india-has-the-parts-to-profit-from-china-plus-one-heres-the-make-or-break-piece-pricing-/primearticleshow/94663922.cms
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