In a significant regulatory overhaul, the Indian government is preparing to introduce a separate wholesale licensing regime for bulk drugs, active pharmaceutical ingredients (APIs), and key starting materials (KSMs). This move aims to strengthen accountability and traceability within the nation's massive pharmaceutical sector, which has faced intense scrutiny following tragic incidents linked to contaminated medicines.
Addressing a Critical Gap in Pharma Supply Chain
The proposed framework seeks to dismantle the current umbrella licensing system, which treats raw materials and finished medicines similarly. Instead, it will create a distinct licence category specifically for bulk drug traders. The primary goal is to build a comprehensive database of nearly 1.2 million bulk drug traders, a registry that has been long missing for the Drugs Controller General of India (DCGI).
This initiative gains urgency from incidents that have impacted India's reputation as the 'Pharmacy of the World'. Deaths of children in Uzbekistan, Gambia, Cameroon, and India have been linked to cough syrups manufactured by Indian firms, often involving contaminants like diethylene glycol. A senior government official, requesting anonymity, stated that the lack of transparency in the raw material supply chain, especially for high-risk solvents like propylene glycol, necessitates stricter monitoring.
Focus on Import Traceability and Domestic Data
A core component of the plan is improving the traceability of imported raw materials. Over 70% of India's bulk drug imports come from China, yet there is a glaring lack of granular data on the traders, exporters, and importers involved. The new database will allow regulators to swiftly identify and hold accountable specific dealers found supplying substandard inputs.
"Similar licensing parameters cannot be applied to bulk drug dealers and formulation sellers," explained a second government official. "Bulk drug sellers manage chemical-based processes for manufacturers, while formulation sellers deal with retailers and the public. Separate licenses will enable enforcement of stringent storage conditions and pinpoint accountability in case of tragedies."
Documents reviewed by Mint reveal a proposal for a separate application form for bulk drug wholesale licenses. Currently, APIs and excipients are sold under a common wholesale licence also used for finished formulations, a system that fails to distinguish between these fundamentally different activities.
Industry Support and Broader Regulatory Context
The pharmaceutical industry has largely welcomed the proposed change. Namit Joshi, Chairman of Pharmexcil and Director of Centrient Pharmaceuticals, emphasized that APIs are the critical foundation for medicine quality. He highlighted the need for detailed supply chain intelligence to manage the API and excipient quality management system effectively.
R.K. Agrawal, former president of the Bulk Drugs Manufacturers Association of India (BDMAI), noted that the government will finally have an account of entities handling bulk drugs and APIs, which should help address issues like pilferage and spurious medicines in transit.
Legal expert Akash Karmakar of Panag & Babu law firm called it a "welcome licensing framework" that fills a crucial regulatory gap. He pointed out that the previous absence of a specific license prevented compliant companies from obtaining proper authorization, and the new regime could boost ease of doing business, especially for foreign manufacturers.
This licensing plan is part of a broader government effort to regulate the crucial pharma sector. Steps already taken include implementing a minimum import price (MIP) on certain bulk drugs like Penicillin-G and Amoxicillin to curb cheap imports and support domestic production. Furthermore, the Production-Linked Incentive (PLI) scheme with a ₹6,940 crore outlay has led to 34 out of 48 selected projects being commissioned for manufacturing 25 bulk drugs domestically.
While a draft notification is in the works, officials caution that implementation may take time as it establishes a completely new mechanism. The move underscores India's commitment to restoring global confidence in its pharmaceutical exports, which are projected to see the API market alone reach $38.13 billion by 2034, by instituting robust, transparent, and accountable regulatory practices.
