China and India in API manufacturing: what changed, and what it means for formulation supply

Two large economies supply a large share of the world's active pharmaceutical ingredients, and the relationship between them has not developed in the direction many predicted. For a company buying finished dosage forms rather than raw material this matters mainly in one way: it shapes how much documentation you can expect to obtain with a product, and how easily it can be moved between markets.

The dependency moved in one direction

India's import of APIs and intermediates from China was recorded at between 66% and 71% of its total over the FY2018-2022 period, an increase rather than a decrease. The Indian Production Linked Incentive scheme, announced in 2020, committed 69.4 billion rupees over eight years across 53 critical APIs, with committed capacity figures for penicillin G, 7-ACA, ciprofloxacin and other key molecules. The committed timelines have passed without the expected effect on trade flows. Indian raw material costs are estimated to run 25-30% above Chinese levels and electricity costs around 20% higher, and Chinese labour productivity in the sector is reported to be approximately 1.5 times Indian levels. Complete upstream petrochemical capability that India does not have at comparable scale, combined with a deep chemical engineering talent pool, has kept the cost gap from narrowing.

Where the two bases are genuinely different

The distinction that matters for a formulation buyer is not commodity price, it is the type of product and the documentation attached to it. China has built scale in high-volume fermentation and antibiotic chemistry, and its registered API facility base has expanded substantially, with more annual DMF filings than India for the first time in over two decades. India has moved toward differentiated and complex chemistry, with a growing DMF and ANDA portfolio in higher-barrier categories. Both trends are visible in pricing: on a widely traded macrolide API, Chinese material remains the lowest-cost origin while German and United States origin material commands a structural premium tied to impurity control rather than volume. Regulatory scrutiny of nitrosamine impurities has opened a genuine quality tier above commodity grade, and the gap between those two tiers has been widening rather than closing.

What this means when you qualify a source

For a company that buys finished products the practical questions are the same regardless of where the API originates, and they are the ones that determine whether your file will survive inspection in your market. Ask where the active ingredient is sourced and whether the manufacturer holds the relevant DMF, CEP or written confirmation for the market you are registering in — this determines whether your product can be supplied without the authority requiring additional written confirmation from a third country. Ask about the route of synthesis and the controls on mutagenic impurities, elemental impurities and residual solvents, because these are the areas where a specification commitment and a supplier's actual process control diverge most often. And ask where the dossier for your own product has been filed before, because a supplier with existing registrations for your region has already absorbed the regulatory learning.

This article reflects publicly reported industry and investment research and does not constitute legal or regulatory advice. Cost structures, trade flows and regulatory policy change over time — confirm current requirements and current commercial terms against the authority in your market and with your own suppliers before acting.