India Weighs Minimum Import Price as Antibiotic API Prices Fall Sharply

India’s efforts to rebuild domestic capacity for fermentation-based antibiotic Active Pharmaceutical Ingredients (APIs) have entered a sensitive phase, with several global price corrections creating concerns among manufacturers preparing to launch production under the government’s Production Linked Incentive (PLI) scheme.

Over the past year, industry trackers and market reports have recorded significant declines in the prices of key antibiotic intermediates such as Penicillin-G and 6-APA. Penicillin-G, which had been quoted in the $30–$34 per kg range in earlier years, has been reported at around $14 per kg in recent months, with some variation depending on suppliers and timing. Analysts tracking the sector have noted that these levels are lower than the cost estimates for India’s upcoming fermentation facilities, which require higher input, energy, and capital expenses.

Dependence on Imports

India continues to rely heavily on imports for several fermentation-based APIs.

Government assessments and academic studies have placed India’s dependence on China for selected antibiotics and their intermediates in the 70%–90% range, varying by product. While India remains a strong global producer of formulations, large-scale commercial fermentation for antibiotics had declined sharply in the 1990s and 2000s, resulting in a narrow supply base.

To address this gap, the government included critical antibiotic APIs and intermediates under its PLI programmes. The broader pharmaceutical PLI scheme carries an outlay of ₹15,000 crore, while the dedicated PLI for bulk drugs/KSMs/DIs/APIs is being implemented through separate, product-specific allocations overseen by the Department of Pharmaceuticals.

Price Trends and Viability Concerns

The recent drop in global prices has led to concerns that domestic facilities may face difficulty competing immediately after commissioning.

According to market reports cited by financial and sectoral publications, Penicillin-G, 6-APA, and related intermediates have seen sustained corrections over the last several quarters. Industry stakeholders say the decline coincides with the phase when Indian PLI-backed projects are preparing to start production.

Some analysts have pointed out that if these price levels persist, domestic units may experience viability pressure in the initial years of operation.

Government Considering Minimum Import Price

In response to these developments, the government is considering the introduction of a Minimum Import Price (MIP) for certain antibiotic APIs.

Recent reporting indicates that discussions are taking place between the Department of Pharmaceuticals and the Ministry of Commerce, along with inputs from manufacturers and industry associations.

An MIP would establish a floor price below which imports cannot be cleared. Such a mechanism is being examined as one option to prevent import prices from falling below levels that could make domestic production commercially unfeasible.

At the same time, some formulation manufacturers—particularly MSMEs—have expressed concerns that any increase in input costs could affect margins in segments where retail prices are tightly regulated.

Policy at a Deliberation Stage

As of now, the proposal remains under evaluation, and no final decision has been notified. Stakeholders on both sides are continuing to present their views as new domestic capacities move closer to commissioning.

India’s attempt to restore large-scale fermentation capabilities comes after a gap of nearly three decades. The policy choices taken during this period of price volatility are expected to play an important role in determining how quickly the country can stabilise its antibiotic API supply chain.