China's API supply disruption worries pharma companies

A bulk of drug intermediates are sourced from China.

As the novel coronavirus outbreak continues to halt business operations in China, pharmaceutical drug companies relying on China’s supply chain of active pharmaceutical ingredients (API) are sighted to face significant roadblocks, said a report by Fitch Solutions.

China ranks first worldwide in the output of several bulk APIs including penicillin, statins and vitamins. The Indian drug market, in particular, has 84% of its APIs imported from China, according to the Central Drugs Standard Control Organization.

Fitch notes that the API supply chain will be significantly disrupted in the event of a protracted coronavirus-caused lockdown in China. Should the Lunar New Year holidays be further stretched from its previous extension of mid-February, the impact on formulation plants. especially those in India. could be severe, Fitch further stated.

Restrictions would prompt supplies and prices of vitamins and antibiotics to spike, read the report.

Fitch notes that multinational pharmaceutical companies may temporarily thrive on their inventory for about two to three months, however, should the the crisis continues, they will have to consider other options such as buying APIs from other countries at a higher price.