War is always painful but this time it is also impacting medications that alleviate pain. Those who suffer from fever or pain may have often heard of medicines like paracetamol or ibuprofen. These and several other medicines depend on chemicals that form the “key starting materials or KSMs” in their manufacture. Take Benzene for instance, it has an important role in the manufacture of paracetamol in the manufacturing process called para-nitrochlorobenzene or just PNCB to many in the industry. Incidentally, benzene is the base for many chemicals used in the pharmaceutical industry.
Similarly, for ibuprofen, the crucial chemical is propylene. Several crude oil-based chemicals have witnessed a two to three-fold increase in price over the past month. It has all been triggered by the sharp rise in crude oil, now close to $100 a barrel. The backbone of many chemicals used by the pharma industry, including the solvents, most used in the manufacture of medicines, is derived from crude oil and gas processing.
According to a leading pharma company founder, who did not want to be named, the industry is unable to pass on the increase in prices, as most customers abroad are either not willing to absorb any increase or are constrained by the process. For example, the compulsion to give an advance notice of about 90 days, which again, for a manufacturer, is risky in an uncertain world, as there is severe competition with many competitors always ready to step in and replace you in the hope that the raw material prices will fall at some stage. Within India, there is a cap on the end price for many medicines. The government is apparently closely monitoring the raw material supplies and seeking details from manufacturers of inventories to ensure there is no hoarding of these chemicals. “It is just like in the COVID time when the government was monitoring the sector,” he said.
Many in the pharma industry also point to packing materials, especially plastics, witnessing a sharp increase in prices.
While much of the supply chain snarls and the resultant price rise could all be temporary, there is also an argument that even if things were to settle, the return to normalcy will not be overnight.
Ammonia, the shortage of which is hurting the agriculture sector, also finds use in the manufacture of metformin, the first line of medication prescribed to combat diabetes.
Those who were moving away from coal and seeking to use natural gas in their manufacturing processes are also having to deal with shortages.
