By: Mathini Ilancheran, Principal Analyst, and Saber Shi, China Procurement Analyst --
22 April, 2020
COVID-19 has triggered an increase in demand for Active Pharmaceutical Ingredients (APIs), while drugs used as antimalarials has seen the highest demand, followed by bronchodilators, antibiotics, and antivirals. Another wave of shortage can be anticipated among sedatives, analgesics, anesthetics, and muscle relaxants, which are required for the care of patients on ventilators. These ongoing shortages have increased the need for generics with accelerating approvals from FDA, and the lifting of existing bans. Around 48 percent of the world’s pharmaceutical ingredients used to make generics originate from India and China, hence the reliance on these countries for imports.
China has currently resumed operations, and has begun clearing the backlog orders of pharma intermediates and ingredients to reduce supply disruption. Overseas orders account for over 50 percent of the materials produced. However, most of the key APIs are expected to be in shortage in China until July 2020. India imports over 70 percent of its pharma ingredients from China, and has suffered a massive shortage, with safety stocks expected to last for only 2–3 months. To offset the supply gap caused by China, India has stepped up its production of critical APIs and intermediates, with the support of the government. Although India has eliminated the restrictions on the export of generic drugs (fixed-dose combinations), a restriction on the export of the drugs’ API and raw materials continues.
Also, as observed by Kashyap Keni, Director of VerGo Group, shortage of labor and pushback from labor unions due to health and safety issues posed by COVID-19 would slow down production. Companies such as Indoco Remedies have announced a monetary compensation for employees who choose to come to work, starting March 24.
Given below are the drugs and APIs that are in demand globally, with their supply assessment in India and China, respectively.
India accounts for over 50 percent of the global supply of HCQ. With the government overturning the export ban on humanitarian grounds and sufficient domestic supply, approximately 23 million tablets were exported to the U.S., Europe, Brazil etc. The major exporters include Ipca Laboratories Ltd, Cadila Healthcare Ltd, Watson Pharma, and Amneal Pharmaceuticals Pvt Ltd.
In China, many factories manufacturing HCQ have shut down due to a shortage of raw materials, with an expected recovery time of June 2020. An overload of orders has also triggered a shortage, with 90 percent of orders coming from overseas, scheduled until July 2020. The key exporters include Chongqing Kangle Pharmaceutical Co Ltd, Jinghua Pharmaceutical Group Co Ltd, and Chongqing Southwest No.2 Pharmaceutical Factory Co Ltd.
India imports raw materials required for the production of azithromycin largely from China. With an anticipated shortage worldwide due to COVID-19, production in India is being intensified to meet the demand, with no shortages reported so far. Currently, 39.8 percent of exports are being directed to the U.S. The biggest exporters include Alembic Pharmaceutical, Wockhardt Ltd, Sandoz Srl, Lupin Limited, and Aurobindo Pharma Ltd.
China is currently facing a shortage due to an overload of orders, especially from overseas countries, with India accounting for almost 70–80 percent of orders. Current orders are scheduled for delivery starting June 2020. Key exporters in China include Shanghai Shyndec Pharmaceutical (Haimen) Co Ltd, Yatai Pharma, and Zhejiang Guobang Pharmaceutical Co Ltd.
Ventilators require certain medications to induce a state of sedation in patients. This drug has witnessed an increased demand, with hospitals globally running low on stock, which may result in a potential shortage across the world. There has been no active trade activity from India since they are not major manufacturers of API, with no reported shortage. Similarly, China has no reported shortage, with manufacturers supplying to the domestic market (~ 90 percent). Stringent regulations are being followed in China due to its psychotropic nature.
Cipla is the biggest manufacturer of this drug as well as APIs in India. The company has received approval for the generic albuterol sulphate inhaler from the USFDA, due to an increase in demand for this product to prevent asthmatic symptoms in COVID-19 patients. Furthermore, inhalers are being used in place of nebulizers as a treatment. There has been no reported shortage in India so far, although there is a potential for shortage if COVID-19 cases in India rise. Cipla has exported 35,446 kg of albuterol to the U.S. as of March 2020. China has not reported any shortage or exports, catering only to the domestic market.
This API has seen a more than 200 percent increase in global orders, especially in the U.S. India has not yet reported shortages of this neuromuscular blockers needed for patients on ventilators. There has been no active trade operations from India yet. In China, some suppliers such as Lianyungang Guike Pharmaceutical are facing tight production due to an overload in overseas orders, mainly from Europe, scheduled until May 2020. Meanwhile, other suppliers such as Shandong Boyuan Pharmaceutical have not reported shortage issues.
There is an increase in demand due to its use as an anesthetic for infected patients. The biggest manufacturer — Dr. Reddy's Laboratories — has said that it is unable to source API, with an expected resupply expected only by October 2020. Currently, there is a limited supply and there would be a shortage if domestic infections increase. Recent trade activity was witnessed by Aspiro Pharma for export orders to the U.S.
There is no shortage in China, and no exports as well. Limited production for domestic use, with stringent regulations in place due to its psychotropic nature. Given the current limited demand, some suppliers have halted production, with the next scheduled manufacturing likely in mid-2021, with exports to Europe, India, and the U.S.
This API which is being used as a sedative for infected patients, is seeing an increase in demand. No shortages have been reported in India so far, with the expected resupply scheduled in October 2020. In China, there is no shortage or export activity. Limited production for domestic use, with stringent regulations in place due to its psychotropic nature.
Hospitals across the globe have seen an increased use of norepinephrine to improve circulation among patients. So far, no shortage has been reported, however, supplies are diminishing and may lead to a crisis. No trade activity or production increase in India or China.
A need for paralytics for patients on ventilators is driving the demand for this drug. Over 13,000 kg of shots was exported from India to the U.S. last month. In China, no shortage has been reported, with orders from overseas at 50 percent and inventory availability.
India is facing a manufacturing delay due to the unavailability of key ingredients imported from China. However, there has been no reported domestic shortage. China has no reported shortage as well, and limited overseas orders so far.
Cefepime shots are in short supply globally, and production was ramped up in India with no reported domestic shortage. Recent exports of cefepime for shots to the US by Astral Steritech have been reported. China has no reported shortage, with limited overseas orders so far. Major exporters include Qilu Antibiotics Pharmaceutical Co Ltd and Shenzhen China Resources Gosun Pharmaceutical Co Ltd.
The demand for antivirals like ribavirin has tripled since March 2020, with clinical trials using ribavirin in combination with other therapy progressing well. No reported shortage and exports in India. China has no reported shortage, with limited production to address domestic demand and exports - largely to the U.S. and Europe. Furthermore, the next production is scheduled for the fourth quarter of 2020. Key exporters include Zhejiang Cheng Yi Pharmaceutical and Star Lake Bioscience Co Inc.
India has upped the production of antivirals (acyclovir) anticipating an increase in global demand. There is no reported domestic shortage, with active trading in March 2020 by suppliers such as Hetero Labs, Geno Pharmaceuticals, and Mylan Laboratories. China has no shortages or large overseas orders yet.
India is ramping up the production of bronchodilators, antibiotics, and antivirals to meet domestic and global demand. The trade relations between India and the U.S. during these times are cordial, with India already exporting critical drugs and APIs to the U.S. In response, the Trump administration has allowed pharmaceutical companies to engage with bulk supply contracts with India for testing kits and ventilators . In light of a rise in cases within the European Union, there are restrictions on the export of pharmaceutical products to non-EEA countries to protect supply availability.
Despite the pandemic, China has exported a total of 10.2 billion yuan worth of supplies, including 3.86 billion masks, 37.52 million protective gowns, and 16,000 ventilators to India, the U.S. and Europe between March 1 and April 4, 2020 .
Suppliers of APIs are currently working on the delayed orders, with free flow of trade expected from the end of May or the beginning of June 2020. With the U.S. government and certain EU countries raising concerns over the quality of medical supplies, China has been responsive by imposing new certification and inspection requirements on surgical face masks, testing kits and thermometers. It has also banned the export of the aforementioned products not licensed to sell domestically as of April 2020 .
With the impact of COVID-19 increasing the demand for critical drugs and APIs, pharma companies could engage with existing suppliers on supply maintenance with a fair and equitable allocation of stock, in order to avoid shortages or carry out dual/multi-sourcing with alternate suppliers.
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