Rising Chemical Costs Squeeze Pharma Ingredient Producers

India’s drug ingredient makers are facing a sharp rising chemical costs crisis, as surging prices of key inputs disrupt production and squeeze margins across the pharmaceutical supply chain.

Bulk drug manufacturers are struggling after prices of critical solvents and intermediates jumped due to supply disruptions linked to the West Asia conflict. This sudden spike in rising chemical costs has forced several units to cut output or temporarily shut operations, raising concerns over API production and medicine supply.

The impact is clearly visible in paracetamol, one of the most widely used medicines. The price of its active pharmaceutical ingredient (API) has more than doubled in recent weeks, rising from Rs 220–240 per kg to Rs 550–600 per kg. “The new quote of paracetamol that I got yesterday (Monday) was Rs 550 per kg, up from Rs 240 earlier,” said Bhavin Mehta of Kilitch Drugs.

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Industry executives say the sector is facing a “double crisis” as both domestic and Chinese suppliers have raised raw material prices. At the same time, government price controls under the Drug Price Control Order (DPCO) cap retail prices, limiting the ability of companies to pass on higher costs.

Prices of key petrochemical-linked inputs such as ammonia, isopropyl alcohol, and acetic anhydride have surged 30–100% within weeks. The spike is driven by rising energy costs, supply shortages, and global logistics disruptions.

• API price (paracetamol): Rs 220–240/kg → Rs 550–600/kg
• Input chemical costs: up 30%–100% in weeks
• Isopropyl alcohol: Rs 90/kg → Rs 120/kg
• Dimethylformamide: Rs 68/kg → Rs 125/kg

Smaller manufacturers and contract drug makers are the worst hit, with margins under pressure and production becoming unviable. Experts warn that if supply disruptions continue, it could lead to API shortages and impact the availability of essential medicines.