Drug shortage in India?

According to the Indian Drug Manufacturers Assoc., Olympics-related shutdowns of key raw materials suppliers in India are going to mean drug shortages in India in the next few months. Says DNA India:

India imports as much as 80% of its pharma raw material requirement, including APIs, from China because it is 10-40% cheaper, said Swati A Piramal, director, Piramal Healthcare.

Shinde says the shortage is not being felt today because medical stores are coping with pre-clampdown inventories.

“But after September, the shocks will be felt everywhere. The current stock will be consumed by then.

People will find it difficult to source drugs they would desperately want,” Shinde warns.

Domestic manufacturers are hurting, too, because shortage is spiking raw material prices and price control has become a bigger headwind.

“After the clampdown, prices of raw material have risen by 30-50%,” Piramal said. About 40-60% of the total costs of a pharma company is accounted for by raw material.

Indian manufacturers blame price controls in the country for driving them to outsource so much raw material manufacture in China, although it's hard to imagine why they wouldn't go to the cheapest source even absent the price controls.

Tapan Ray, director general of Organisation of Pharmaceutical Producers of India (OPPI), says companies have primarily been sourcing raw material from China because the low cost offsets the price control in India.

The elephant in the pill bottle

A US Senator is hot and bothered about outsourcing by big pharma, says a piece at Outsourcing-Pharma, and the Congressional Record may shortly feature some interesting info:

Sen Brown has asked for specific information on the mechanisms Merck uses to track the chain of custody for reach ingredient used in its products, procedures to check that each facility in the supply chain adheres to its operating procedures and standards, and whether the US Food and Drug Administration (FDA) “periodically inspect every facility” that makes ingredients for the company.

He also asks for a detailed breakdown on the percentage of production that is outsourced to US providers, a ranking of the top 10 countries the company outsources to, and the estimated average and median wages paid at companies producing active pharmaceutical ingredient s(APIs) for Merck in each country.

He's done the same thing to Pfizer, apparently scandalized by something he found in the 2Q results, specifically a big hike in profits “due in part to cost-cutting measures,” Outsourcing-Pharma notes. Maybe he can't be blamed. According to the website, an FDA official made a serious accusation.

In April at a meeting of the Senate Health, Education, Labor and Pensions (HELP) Committee, says Brown, an FDA official “acknowledged that American drug companies outsource operations due to cost factors and the existence of weaker drug safety standards abroad.”

Or maybe Brown just didn't understand what he was being told at the time. He certainly doesn't seem to understand the drug industry. He seems to think that Pfizer's 17% outsourcing should be called "heavy reliance". Has he looked at the generics industry? Obviously no, because he probably would have had a stroke over 100% outsourcing.