The recent increase in the government-administered price of vitamin A salts should come as a welcome relief for Nicholas Piramal India Ltd, India''s largest vitamin A producer. For the last couple of years the company has made several independent representations to the ministry of chemicals and fertilisers and to the National Pharmaceutical Pricing Authority, pleading for an upward revision of this product. Until now its pleas had fallen on deaf ears.

The government has fixed prices for three varieties of vitamin A salts -- vitamin A acetate dry powder, vitamin A acetate oily liquid and vitamin A palmitate oily liquid. The price revision comes after a period of five years. The last revision was done in 1994.

According to a recent NPPA notification, the price of vitamin A acetate dry powder has been hiked to Rs  4,166 per 100 miu (or million international units) from Rs 3,001 earlier.  The price of vitamin A acetate oily liquid has been raised to Rs 3,136 per 1,000 miu from Rs 2,256, while that of vitamin A  palmitate has been revised to Rs 3,178 per miu from Rs 2,595.

Unlike other bulk drugs, the prices of vitamin A are fixed on the basis of its potency expressed, in miu or mmu, or million million international units. For vitamin A acetate, 0.345 grammes give a potency of one miu and for vitamin A palmitate  0.54 gm give a potency of one miu potency. In other words, 34.5 gm of vitamin A acetate dry powder would now cost Rs 4,166, since one miu is equivalent to 0.345 gm.

According to a senior Nicholas Piramal official, the production cost alone worked out to around 95 per cent of the earlier DPCO prices. So costs "crossed over the notified price when marketing and distribution overheads were taken into consideration".

Manufacturing vitamin A is a complex technology-intensive process involving high capital costs. The primary compound is citral, obtained from lemon grass oil. Citral is processed through a 12-step chemical synthesis to produce vitamin A acetate. for flowchart on vitamin A manufacturing process.

The complexity of the process has dissuaded local manufacturers from entering into this arena, leaving Nicholas Piramal with a virtual monopoly. The only other Indian manufacturer of vitamin A in India is the south-based Kerala State Drugs and Pharmaceuticals Ltd, which produces 15-25 mmu of this product annually and caters to certain pockets in Kerala and Tamil Nadu. Nicholas Piramal manufactures, on an average, 120-140 mmu per annum, company sources say.

Why aren''t other Indian companies entering the fray? for details.

The total demand for vitamin A in the country is an estimated 200-250 mmu. Industry experts say the demand may grow 25 per cent annually for the the next couple of years to stabilise at around 300-350 mmu. Vitamin A is predominantly used in pharmaceuticals, foods (nutraceuticals), feed supplements and hydrogenated oils (vanaspati).

Nicholas Piramal inherited its vitamin A business when it acquired Roche from Hoffman La Roche in 1993. With Roche came Thane facility, which had the technology to manufacture 75 mmu to 80 mmu of vitamin A from the basic stage.

With increasing demand for the bulk, the company was faced with the problem of increasing its manufacturing capacity. This was not easy. Increasing the capacity from basic stage manufacturing to meet the demands meant substantial additional capital investments.

With price controls, this was thought to be unviable, says a company official. Moreover, under the agreement signed between Nicholas Piramal and Hoffman La Roche, the Indian company cannot export its produce outside India.

"Hence, it was decided to import acetrine, a penultimate stage intermediate, from Hoffman La Roche and do a one-step synthesis to get vitamin A," the company official adds. The company thus managed to produce 140 mmu, of which half is made from the basic stage and the remaining through a penultimate stage conversion.

Problems started for Nicholas Piramal sometime around April 1999 after Hoffman La Roche raised the price of acetrine by 8-10 per cent, according to a senior company official. "The price increase in acetrine would have rendered manufacturing of vitamin A impossible at current DPCO prices," he says.

In order to avoid acetrine imports, the Nicholas Piramal management decided to double manufacturing from the basic stage by using first stage intermediate pseudo-ionone, which again is imported from Hoffman La Roche. With some modifications, the company embarked on a full scale basic stage manufacturing.

However, production has been erratic since May 1999, hovering around 7-9 mmu per month, against 12-14 mmu envisaged by the company. Nicholas Piramal produced 14 mmu in August 1999, sources say.

Now with the upward price revision, it remains to be seen whether the company would resume acetrine imports and do a one-step conversion.