Pen G industry demands a strong shot

From feeding world marke
01 July 2004

Venkatachari Jagannathan 1 July 2004 Chennai: The four domestic penicillin-G (Pen G) manufacturers are a baffled lot. These four — J K Pharmachem Limited, Southern Petrochemicals Industries Corporation Limited-Spic, Torrent Gujarat Biotech Limited and Alembic Limited — are not able to relate the economic theory of prices increasing when supply goes down to their industry.

The sudden closure of operations by Hindustan Max GB Limited (HMGB) last December hasn''t resulted in the increase in demand and prices of Pen G. HMGB had a capacity of 2,400 mega million unit (mmu-635 kg equals 1 mmu), nearly one third of the domestic production capacity.

The price of Pen G has crashed to $5.8/billion unit (BU-635 grams equals 1 BU) from $10.5 BU that prevailed in April 2003. However there was a marginal increase in prices in January 2003 to $6/BU from $.5.4/BU, subsequently the prices came down.

"At this price we are not in a position to cover even the variable costs. As a result nearly 95 per cent of the investments in the domestic biotech industry — Rs750 crore — is likely to turn lemon," bemoans Dr S K Sagar, president Indian Penicillin Manufacturers Association (IPMA) and president & director J K Pharmachem.

The building block The crude bulk Pen G is a product of fermentation. The major inputs are sugar, soya oil / flour, starch, cottonseed meal, etc. From Pen G, intermediates like 6-APA, 7-ADCA, 7-ACCA and others are derived. These in turn are converted into semi synthetic penicillin/semi synthetic cephalosporin bulk drugs, like ampicillin, amoxycillin, cephalexin, and cloxacillin and later to therapeutic antibiotics formulations.

Amongst the domestic Pen G manufacturers, only the Rs91.38-crore turnover Torrent Gujarat and the Rs600 crore Alembic are integrated manufacturers.