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Market Cap £15.95bn
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Indian pharma firms go local seeking to end reliance on China

Tue 23rd February, 2021 11:35am
By Krishna N. Das
    NEW DELHI, Feb 23 (Reuters) - Indian drug companies are
looking to local makers of so-called active pharmaceutical
ingredients (API) or trying to make them in-house in a bid to
end their reliance on China as ties between the two countries
soured after a deadly border clash last June.
    Though India is known as the pharmacy of the world for its
massive production capacities of both generic drugs and
vaccines, China accounted for half of its API needs in 2019 from
nearly nothing three decades ago, industry data shows.
    Executives at India's Cadila Healthcare  CADI.NS , Cipla
 CIPL.NS , Sun Pharmaceutical  SUN.NS  and ‎Biocon  BION.NS 
said on Tuesday they were aggressively working on reducing the
dependence on the richer rival for raw materials.
    Disruption to supplies from China due to the COVID-19
pandemic was also a major factor, they said, as early last year
many of them had to scramble for ingredients to make important
drugs sold worldwide.
    "Because of the anti-China sentiment ... most of the
companies are working towards de-risking themselves in terms of
making it clear that their supply chain linkages with China are
limited," Gaurav Suchak, supply head of Cadila, told the BioAsia
conference organised by the southern state of Telangana.
    "For the critical API molecules, the idea is to go for a
backward integration where you are in control of that pie which
is going to make the most impact on your business, and also to
make sure that the entire value chain is secure."
    Companies are also eyeing reliable local vendors who can
promise consistency and competitive prices, he said.
    Cipla's supply chief Swapn Malpani said it had launched an
"API re-imagination" programme to possibly expand its own
manufacturing capacities using recent government incentives
 such as production subsidies, apart from working with local
    Biocon's supply head Prasad Deshpande said the company had a
target on "how much percent of revenue is independent of China".
    "We are happy to say that by the last quarter, we were
almost 50% completely independent of China," Deshpande said.
"That does not mean we will not source from China, but we are
not dependent on China anymore."
    But he also said India would have to improve its
infrastructure and accelerate approval processes to take on the
scale and speed of China.

 (Reporting by Krishna N. Das; editing by David Evans)
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