Experts warn of risks from govt price floor on key pharma inputs

NEW DELHI: Experts in the pharma industry have raised their concerns over the government's move to notify a minimum import price (MIP) for certain key pharmaceutical inputs to combat aggressive undercutting and dumping from Chinese manufacturers.

Experts said a chain-wide MIP on Pen-G, 6-APA and amoxicillin would raise costs across essential medicines, disrupt government tenders and concentrate supply-without clear evidence of dumping or import-led injury.

"The country must protect and build its local infrastructure. However, the approach must be measured, so as to not destroy an entire network of MSMEs and significantly increase the cost for life saving antibiotics for the nation's poorest and most vulnerable," said an expert on the condition of anonymity.


The government has proposed to impose MIP on Penicillin-G (Pen-G), with possible extension to 6-aminopenicillanic acid (6-APA) and amoxicillin.

Penicillin-G is not a standalone product. It is the upstream 'mother molecule' for a wide range of essential antibiotics, feeding into intermediates such as 6-APA, GCLE and 7-ADCA, and into high-volume formulations including amoxicillin, ampicillin, multiple cephalosporins and widely used combinations.

"Because of this structure, an MIP at Pen-G-or worse, across Pen-G, 6-APA, amoxicillin-acts as a cost floor across dozens of price-controlled formulations used extensively in primary care and public procurement," he said.

The National Pharmaceutical Pricing Authority had earlier in 2019 and 2024 invoked Paragraph 19 of DPCO-to raise ceiling prices for penicillin-family antibiotics after manufacturers reported non-viable economics. "This confirms that essential anti-infectives operate on extremely thin margins even without trade restrictions," another expert said.\

An analysis of tenders shows that the state government procurement for amoxicillin and key combinations totals about Rs 1,012.6 crore at current prices. "If API costs double to the MIP levels under discussion, suppliers face losses of approximately Rs 350 crore, rendering multiple contracts non-viable. Past tender data already shows that similar input-cost shocks led to sharp price increases, bidder exits and re-tendering across states," said another expert.

He said that data suggested that Pen-G prices have reverted to pre-Covid levels of about $13.5 per kg.

Over the last twelve months, India imported approximately 8000 tonnes of Pen-G. In the same period, the country imported around 11,250 tonnes of 6-APA, compared with reported domestic capacity of roughly 3,600 tonnes per annum.

"Even after adjusting for exports, domestic requirements materially exceed available capacity. Notably, there has been no meaningful open-market domestic supply of Pen-G or 6-APA in the current financial year, and significant volumes have been transacted with related parties," he added.

In 2020, the government launched a production-linked incentive (PLI) scheme to draw investments in the manufacturing of critical raw material from domestic players, as part of efforts to reduce the country's dependence on China and bring pricing stability. However, the Chinese started cutting the prices even further, putting at risk huge investments made by the PLI beneficiaries.

"Layering a high MIP on top of PLI risks converting it into permanent protection, weakening efficiency incentives and transferring costs to patients and public budgets. Where a PLI beneficiary shows low-capacity utilisation, high fixed costs and reliance on inter-company financing, the corrective tools should be operational restructuring and scale-up-not a nationwide price floor on essential inputs".