homebusiness NewsGlenmark Life Sciences says rising API raw material costs a worry, co likely to hike price
Glenmark Life Sciences says rising API raw material costs a worry, co likely to hike price
API companies are seeing a jump in their input prices from key starting materials (KSMs) that are the raw materials to manufacture APIs. Yasir Rawjee, MD and CEO, Glenmark Life Sciences Ltd, said that if this trend continued then it could have a bigger impact that what is normally seen. He mentioned that so far, the company hasn’t done a pass-through and managed the cost with better processes, more efficiency in manufacturing, savings and so on.
API companies are seeing a jump in their input prices from key starting materials (KSMs), which are the raw materials used to manufacture APIs.
In fact, because of factors such as the power outage in China and the subsequent rise in chemical prices, API companies have seen their key starting material prices rise anywhere from 10 percent to over 30 percent in the past one month.
India imports at least around 35-40 percent of key starting materials from China.
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For one API in particular, benzimidazole, which is an input for blood pressure drug Telminsartan, prices have risen by 45 percent in the last six months, this is also because a supplier has shut down production in China. Meanwhile, most solvent prices have risen in 2021, with some as much as 140 percent.
Indian API companies import over 50 percent of solvents, which have been impacted by global supply issues.
Overall, Indian API companies have seen costs impacted by 5-10 percent and margins could be impacted by as much as 3 percent. It is likely that companies will have to pass through costs, going forward.
In terms of trend, companies are cautious. However, while input costs have risen, API companies have said that demand remains intact.
Yasir Rawjee, MD and CEO, Glenmark Life Sciences Ltd, discussed this further.
“We typically do see prices going up, but for a smaller number of KSMs. In this period though, things have been going up and we don’t see things coming down. That is a little worrying,” he said.
“Typically, the company is able to absorb the rising cost for a short period of time, because we have a distributed portfolio, it doesn’t have a big impact but if this kind of trend continues then it is likely to have a much bigger impact than we normally see. We are hoping that all this business with the power crisis in China and so on settles down and our KSMs settle down and bounce back,” he stated.
So far, the company hasn’t done a pass-through and managed the cost with better processes, more efficiency in manufacturing, savings and so on.
“Certain products have been impacted by 10-15 percent. That is worrying, so we probably will go back to customers and ask them for that incremental increase just so that we can keep things going. That is the plan, let us see how that works,” he mentioned.
According to him, this whole business of coal driven power with Chinese government hasn’t made a lot of commitments globally to reduce emissions, the first hit is coming on coal driven power.
“More than 50 percent of power generated in China is through coal, so the heavy industries that consume a lot of electricity are the ones that have been hit now. Metals, phosphorous, aluminium, these are the kind of things that are being hit, indirect impact of this is massive. That is something that we need to see,” he explained.
In terms of Molnupiravir, he said, “We have developed the drug already. In case there is a surge in demand, we would then get into a licensing agreement with Merck and then sell the API to whichever manufacturer is interested. We took the same approach last year with Favipiravir.”
“We are ready both from the R&D perspective, the processes, as well as the manufacturing perspective and we will see how that plays out,” he added.
For the full interview, watch the accompanying video.
(Edited by : Dipikka Ghosh)
First Published: Oct 7, 2021 12:31 PM IST
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