Date:12/06/2004 URL: http://www.thehindu.com/2004/06/12/stories/2004061205200300.htm

Karnataka - Bangalore

Chinese penicillin hits domestic industry

By Our Special Correspondent

BANGALORE, JUNE 11. Penicillin, the oldest and still the cheapest among the antibiotics in the market, may become a victim of price wars soon.

The liberal import policy in regard to Penicillin-G has encouraged China to export large quantities of the most popular variant, according to the Indian Penicillin Manufacturers' Association.

The domestic penicillin industry, which includes small and medium companies, with several units in Karnataka, may soon fall victim to the price cutting strategy resorted to by the Chinese pharmaceutical companies, the association said.

The total accumulated losses of the domestic Penicillin-G industry is estimated to be above Rs. 500 crore, almost wiping out the new investments made in the growing biotech industry to make the country self-sufficient. As soon as the Indian Government removed the antibiotic from the "negative list" for imports, the Chinese pharmaceutical firms began cutting prices making it impossible for Indian companies to compete, the association said.

Penicillin-G is manufactured through a complex fermentation technology using various agro-based inputs such as sugar, starch, soya oil, flour and cottonseed meal as raw materials. The new units in this sector have been funded by financial institutions to the extent of Rs. 300 crore, and this has been eroded due the price crash, the association said.

The Chinese variations of Penicillin-G have already made an appearance in the drug stores here.

Despite most doctors having some misgivings about prescribing antibiotics of unknown brands or manufacture, the drug stores are more than happy to stock them, apparently because of higher margins.

The coming of drugs manufactured in China may not really benefit the consumer. The international news magazine, Time, last week published an article of Chinese authorities cracking down on makeshift factories manufacturing fake drugs, including imitations of the popular drug for male sexual dysfunction, Viagra.

The Indian association has asked for several policy changes to curb disproportionate imports, more rational taxes, and reduction in export obligations to save the domestic penicillin industry.