Prices have risen, supply has been unreliable
“Freight from Shanghai to Mundra is now close to $4,000 per container, almost 80% higher than it was two months ago. “In the past month, multiple APIs have moved up by 20-40%, and availability has become uneven. Because freight alone erases their margin, at these levels, many importers simply cannot justify moving lower-value consignments. Because you cannot run plants efficiently without predictable input flows,” he said, this directly impacts manufacturing plans for formulation companies. Because many KSMs and intermediates remain sourced from China, industry representatives said the shift is visible in the growing number of companies investing in API plants or expanding existing lines, but they cautioned that full insulation from China-linked shocks is still some distance away.
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Ronak Shah, a custom house agent, said. Manufacturers and traders said the current spike reflects a layered cost build-up, with freight inflating landed costs while solvent and other raw material increases lift manufacturing costs upstream. Procurement managers said that when both logistics and base input costs rise together, suppliers become less willing to commit to longer validity periods on quotations, particularly for molecules where demand is steady and inventory turns quickly. Atul Shah, treasurer of IDMA Gujarat, said the state’s manufacturers have made progress in moving up the value chain, even as they remain exposed to KSM imports. Over the longer term, that should create a much better scenario for the industry,” he said. Industry executives said policy support has helped during previous periods of stress, including measures that reduced cost pressure when input inflation surged. “Duty reductions and coordinated steps helped companies manage cost pressure at a difficult time,” said Priyvrat Gadhvi, MD of La Chandra Pharma Lab.
Gujarat’s pharmaceutical manufacturers are grappling with fresh pressure as the availability of several high-volume active pharmaceutical ingredients (APIs) tightens and prices climb sharply. He added, “In the past month, imports have dropped sharply. We’re seeing reduced movement not only of APIs and key starting materials (KSM), but also chemicals and auto parts, as buyers postpone purchases hoping freight rates will normalise. Compounding the freight shock is a jump in the cost of KSMs and processing aids used in API manufacturing. These include solvents that are often tied to petrochemical pricing and global energy volatility. Gujarat’s pharmaceutical ecosystem has been expanding domestic API manufacturing capacity since the Covid period, aiming to reduce structural dependence on China and improve supply assurance. Now, more APIs are being produced domestically, and we import only the required intermediates. He added that Production Linked Incentive (PLI) scheme has helped Indian API manufacturing increase in the last some years. Download the TOI App.
“Earlier we used to import APIs directly from China.
Key molecules including paracetamol, metformin and a cluster of cardiovascular and gastro therapies — valsartan, losartan, candesartan, irbesartan, omeprazole, pantoprazole and rabeprazole — have recorded price increases of about 20-40% over the past month, according to market participants.
Industry sources said dealers have become reluctant to hold quotes for long, while buyers are struggling to secure committed delivery schedules at earlier price levels. The squeeze is being driven by a combination of rising logistics costs and a renewed jump in prices of critical raw materials such as solvents, which together are lifting landed costs and disrupting routine purchase cycles.
The impact is particularly acute in Gujarat, which accounts for roughly 30% of India’s pharma output and houses more than 3,500 formulation plants. Prices of inputs such as acetone, methanol and isopropyl alcohol rose 30-200% in some cases, squeezing low-margin generic manufacturers. API PRICES JUMP 20-40%; RATE REVISIONS LEAD TO OPERATIONAL STRAIN Gujarat-based formulation makers said procurement teams are facing both price hikes and inconsistent availability across a set of widely used molecules that form the backbone of large-volume therapies.
Sanchit Chaturvedi, chairman of the Indian Drug Manufacturers’ Association (IDMA) Gujarat chapter, said, “The impact is visible in both API prices and availability. Chaturvedi said the industry had earlier witnessed a spike when geopolitical tensions escalated around the US-Iran conflict, followed by some easing, but the pressure has returned in recent weeks. Forwarders and customs agents said high freight is already prompting some importers to scale back, particularly for low-value cargo. Industry sources said the combined effect is a broad rise in conversion costs, which is pushing up quotes for several widely used molecules and narrowing the scope for manufacturers to absorb increases within already thin generic margins. A pharma company director said the industry was still recovering from the previous disruption caused by the US-Iran conflict, which sharply pushed up API, solvent, fuel and logistics costs. GUJARAT-BOUND CARGO FACES TIGHTER ALLOCATION, HIGHER SPOT PRICING Shipping and forwarding executives said the recent escalation in China-India freight has been unusually abrupt, driven by a mix of seasonal demand, equipment imbalance and capacity redeployment to other lanes. Forwarders said the compression in capacity is also reducing predictability, forcing importers to book earlier and accept longer lead times, while still facing the risk of rollovers. Trade participants said the logistics spike is feeding directly into pharma input pricing, as suppliers pass on incremental costs through revised offers. Darshan Mashroo, vice-president, Ahmedabad Customs Brokers’ Association said, “Over the last month, we have seen a clear reduction in imports. APIs and KSMs are among the categories where buyers are either downsizing orders or waiting,” he said. Jignesh Rathod, MD of SKJ Healthcare Pvt Ltd said, the day-to-day nature of rate revisions is creating operational strain. APIs manufacturers like us are confused about at what price we should buy,” he said. Industry sources said the market is also reacting to recent geopolitical volatility, which has amplified caution across supply chains. A senior company director said the earlier disruption around the US–Iran conflict left companies more sensitive to logistics risks and commodity-linked input inflation. “After the earlier spike tied to geopolitical risk, there was some moderation, but now the combined freight and solvent impact has brought renewed pressure,” the executive said. Executives said the immediate response typically involves recalibrating safety stocks, prioritising production of higher-demand SKUs, and working through alternate procurement routes where possible.
In paracetamol, the rates are being revised almost every day, and even after agreeing to new prices, deliveries are difficult to secure. A major contributor to the present wave of cost escalation is the surge in freight rates from China to India, which has accelerated as seasonal cargo demand builds ahead of India’s festival months. Import demand typically firms up through Aug and Sept, but vessel space on Asia-India services has tightened as global carriers redeploy capacity to higher-yield routes, while schedule disruptions and blank sailings reduce effective weekly slots. The capacity compression has also triggered container equipment imbalances at several Chinese load ports, raising the likelihood of delayed bookings and rollovers for Indian consignees. Companies managed the shock through inventory buffers, selective price hikes and industry-level representations. With carriers shifting tonnage toward routes offering better yields, and blank sailings reducing weekly departures, India-bound cargo is facing tighter allocation and higher spot pricing, particularly for west coast gateways such as Mundra. Some importers are spreading procurement across multiple sailing windows, but that can fragment shipments and complicate inventory planning for plants that require consistent input quality and batch continuity. For formulation manufacturers, the effect is twofold: higher input cost and greater uncertainty about delivery timelines. In a segment where production schedules are tightly linked to regulatory batch planning and customer deliveries, procurement volatility can create a cascading impact on plant utilisation and working capital. “The same pattern is visible in chemicals and auto components, which tells you this is a broad freight-driven recalibration, not a product-specific issue. The list includes analgesics and antipyretics such as paracetamol, anti-diabetics such as metformin, cardiovascular molecules including valsartan, losartan, candesartan and irbesartan, and gastro products including omeprazole, pantoprazole and rabeprazole. “Solvent prices have increased sharply and dealers are revising prices almost daily. Even after accepting higher prices, it is difficult to secure deliveries in time. For formulation makers, fully absorbing the cost shock is difficult, particularly for products sold into price-sensitive channels. However, for high-volume molecules with tightly linked supply chains, substitution is limited, making stable API sourcing critical. PUSH FOR DOMESTIC API MANUFACTURING, BUT RELIANCE ON CHINESE KSMs REMAINS