The global pharmaceutical supply chain, that has become heavily reliant on China and India, could get disrupted because of the coronavirus pandemic, warned analysts. This has been accentuated by India taking strong measures of social distancing to prevent the spread of the virus pandemic in the country. The virus outbreak in China had already disrupted the supply situation.
China manufactures many of the crucial raw materials in drug production. Those are then exported to India where the final products are made using the raw materials. The drugs are then exported to countries around the world.
This critical supply chain is now set to get disrupted because of the coronavirus pandemic, say analysts, which can result in some significant disruption to the availability of drugs over the next several months.
While supply activities in China are getting better, the critical element and cause of concern now is India, according to experts who participated in a Morgan Stanley investor call last week.
While China is the largest supplier of the world of active pharmaceutical ingredients (API), India is one of the largest manufacturers of generic drugs globally. Almost 70 per cent of the APIs used by Indian drug makers is imported from China as well as some other key ingredients required for drug production.
Chinese drug-ingredient manufacturers are facing a supply issues because of the coronavirus outbreak in China which has reduced production and shipments. However in recent weeks, there has been an improvement in Chinese manufacturing of API and intermediates — other raw materials, noted Morgan Stanley’s pharma equity research team noted on Sunday.
Full disruption in China looked unlikely, wrote Rohit Bhat, research analyst at B&K Securities, a Mumbai-based financial advisory firm. However, many of the Indian drug manufacturing companies depended on supplies from the Hubei Province of China, the original epicenter of the outbreak, and such companies could feel the disruption in supply and could feel the need to quickly source the products from other suppliers or traders.
The Morgan Stanley analysts also warned that, “although coronavirus cases are currently limited in India, our experts see risk that rising infection rates could disrupt the drug supply chain.”
However the Indian government is currently is stepping up measures to prevent the spread of the coronavirus pandemic in the country. A call for a voluntary “curfew” was successfully implemented across the country on Sunday with substantial restrictions on transport while dozens of cities and districts being put into a lockdown on Sunday evening.
Compared to the rest of the world, the number of coronavirus positive cases in India is still fairly limited. According to Johns Hopkins University, there have only been 519 confirmed cases and 10 deaths because of the virus pandemic. In comparison, there has been 3,281 and 6,077 deaths from coronavirus respectively in China and Italy, the worst-hit countries.
However the actions of the Indian government are severe compared to what other countries had under similar circumstances with respect to the spread of the coronavirus pandemic, with the intention to break the chain of transmission of the virus and stop community transmission.
(Adapted from CNBC.com)