New Delhi: The government’s push to divert petrochemical feedstocks for domestic LPG (liquefied petroleum gas) supplies – in the wake of cooking gas supply cuts from the West Asian war – sparked a near-crisis in India’s pharmaceutical sector last month.
The move has strangled the production of a key solvent – isopropyl alcohol, or IPA – used in essential and life-saving drugs, and forced leading drugmakers to warn of disruptions to drug supplies, according to documents reviewed Mint and three persons familiar with the matter.
According to industry stakeholders, the crisis was averted after the Center on April 1 intervened with emergency measures that allowed redistribution of “certain minimum” quantities of critical refinery inputs such as propylene and propane to DFPCL and other suppliers for priority sectors including pharma, food and distribution and petrochemicals.
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Supply to these sectors would be based on the allocations of the Center for Advanced Technology under the Ministry of Petroleum, though the priority of supply of these molecules for LPG production continues.
Further, according to a communication issued to pharmaceutical associations such as the Indian Drugs Manufacturers Association (IDMA) and three industry people familiar with the matter, the Ministry of Chemicals and Petrochemicals has initiated an emergency audit of 11 key chemicals.
The audit would focus on petrochemical and petroleum derivatives used to make essential medicines, including ethanol, acetone, aniline and para-aminophenol – the basic precursor for the production of paracetamol – among others.
Companies were asked to share current inventory status, indicate how critical each chemical is, and suggest alternative sources or substitutes.
“This audit is a reflection of a structural vulnerability that India was aware of but did not promptly respond to – an almost total dependence on petrochemical and natural gas feedstocks that takes place in concentrated geographical areas,” said Hari Kiran Chereddi, managing director and CEO of Hyderabad-based HRV Pharma.
He noted that with 11 chemicals (including solvents) at the heart of antibiotics, analgesics, antifungals and tablet formulations, “any supply disruption is not a business issue, it’s a public health event.”
However, the first signs indicate that the situation has stabilized. A spokesperson for Zydus Lifesciences Ltd said that although there was an industry-wide concern at the start of March, the company is now able to obtain IPA and its operations are now on track. “There is no disruption to production or supply of formulations or APIs at any of the manufacturing sites,” the spokesperson said in an emailed response to Mint questions.
A spokesman for Hetero Labs Ltd declined to comment.
Queries emailed to PMO spokesperson, Ministry of Petroleum and Natural Gas, Ministry of Health and Family Welfare, Drug Controller General of India, Department of Petrochemicals, Department of Drugs, Sun Pharmaceutical Industries Ltd, Zydus Lifesciences, Aurobindo Pharma, Glenmark Pharmaceuticals, Indian Oilindustan Corporation, Ltd, H. Petroleum Corporation, Bharat Petroleum Corporation, H. Industries Ltd remained unanswered till press time.
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What the industry told the government
During the first half of last month, leading Indian pharmaceutical companies – including Serum Institute of India, Sun Pharmaceutical Industries Ltd, Zydus Lifesciences, Hetero Labs, Aurobindo Pharma and Glenmark Pharmaceuticals have sent urgent statements to the Cabinet Office, the Petroleum Ministry and the country’s main supplier of IPA, Deepak Fertilizers and Petrochemicals Corporation Limited (DFPCL).
Their pleas warned that “failure to grant a waiver will force them to close India’s essential drug supply chain”, “will jeopardize the production of life-saving drugs, create critical and potentially life-threatening patient shortages” and that IPA is “a critical raw material for the production of essential pharmaceuticals, including products that support hospital, emergency care and public health requirements”.
The crisis was presented to the DFPCL on March 26 before a Joint Working Group (JWG) on Petrochemicals comprising officials from the Department of Chemicals and Petrochemicals and the Ministry of Petroleum.
“Seventy-five percent of all IPA consumed in India goes to the pharmaceutical sector to manufacture essential drugs in the form of bulk drugs and formulations,” the company’s representation to the government said, warning that “if this does not happen, pharmaceutical manufacturers will have to stop production of many essential drugs.”
Raghunath Kelkar, president, industrial chemicals at DFPCL, said the company has demonstrated to the government that it serves 75% of the domestic demand for IPA. “We have formally committed to the government that once our raw materials are recovered, 100% of our IPA production will be dedicated exclusively to the pharmaceutical sector to prevent national shortages of life-saving drugs and ensure health security,” he said.
Kelkar noted that the DFPCL plant must operate at a minimum of 80% capacity to convert propylene into a high-purity solvent that meets strict pharmacopoeial specifications, “a grade that cannot be replicated by bulk imports that suffer from contamination and lack of traceability”.
background
The crisis dates from a government mandate to divert petrochemical feedstocks for LPG blending to domestic cooking gas supply cuts caused by West Asian conflict. This disrupted supplies of propylene – a key input for the production of isopropyl alcohol (IPA) – bringing domestic production of the solvent to a near halt. The entire requirement of IPA is catered by domestic manufacturers like DFPCL and others.
IPA is a critical pharmaceutical grade solvent used in the manufacture of a wide range of pharmaceutical ingredients. It is indispensable for production medicines on the National List of Essential Medicines (NLEM), including diabetes, cardiovascular disease, infection and pain management, as well as key antibiotics, antivirals and antifungals.
The disruption is significant not only for India’s $50 billion pharmaceutical market – the third largest globally by volume – but also for global supply chains, given that Indian manufacturers account for about 20% of the world’s generic drugs and 60% of their vaccines.
Industry executives said the diversion of raw materials led to shutdowns in downstream chemical plants with cascading effects on downstream drug production. Jaijit Bhattacharya, president of the Center for Digital Economy Policy Research, said that stopping the production of propylene and IPA could make it impossible to make critical medicines, such as those used for diabetes and epilepsy.
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The impact was also felt in the wider chemical ecosystem. Shivarama Narayanan, CEO of Manali Petrochemical Ltd, said the company was forced to declare higher power in March after propylene supplies were disrupted, disrupting the production of propylene glycol, a key ingredient in cough syrups.
At the same time, rising input costs intensified the pressure. Vijay Mamania, vice-president of Aarti Industries, said prices of key raw materials such as benzene and ammonia have risen sharply in recent weeks, adding to the strain on both the pharmaceutical and agricultural supply chains. Aarti Industries produces 70% of the domestic supply of para nitro chlorobenzene (PNCB), which is largely used in the production of paracetamol.
