Pharma News India Monthly – September 2026

 

Pharma News India Monthly – September 2026: Raw Material Crisis Threatens Medicine Affordability

The Indian pharmaceutical industry is facing one of its most serious challenges in recent years. While the sector continues to make progress in innovation and global expansion, a relentless surge in raw material and packaging material prices is putting unprecedented pressure on manufacturers. If this crisis is not addressed urgently, it could ultimately lead to higher medicine prices and a negative impact on public health. This month's Pharma News India Monthly examines the depth of the crisis and what it means for the industry and patients.

The Scale of the Raw Material Crisis

The numbers tell a troubling story. Prices of active pharmaceutical ingredients, solvents, excipients, and packaging materials have surged by 200-300 percent across the board. Paracetamol, one of the most widely used medicines in India, has seen its API price jump from approximately ₹250 per kg to ₹450 per kg within just fifteen days—a near 80 percent spike. This is not an isolated case. APIs, excipients, and solvents across the board are experiencing similar escalations, making formulation costs unviable for many manufacturers.

The crisis stems primarily from prolonged geopolitical disruptions in West Asia. The conflict has affected supply chains for petrochemical-based raw materials, solvents, and intermediates. Methanol, propylene, and ammonia—all critical feedstocks for drug manufacturing—have been disrupted. Freight rates on affected routes have surged multiple-fold, while war-risk insurance premiums and prolonged shipping timelines have added further stress on manufacturers.

Packaging materials have not been spared either. Prices of critical packaging inputs including granules, aluminium foil, kraft paper, PET bottles, and glass bottles have skyrocketed, pushing units towards closure. Polyvinyl chloride and aluminium foil prices have jumped 40 percent, according to industry executives.

The Impact on Pharmaceutical Manufacturers

The impact has been devastating, particularly for micro, small, and medium enterprises. MSME pharmaceutical manufacturers operate with limited inventory buffers of around three to six weeks due to working capital constraints and limited warehousing capacity. Unlike larger companies that may hold two to three months of API inventory, smaller firms have very little cushion to absorb sudden price increases.

Industry analysis indicates that the supply chain disruptions are expected to dent profitability by 3-5 percent for MSME drugmakers, while increasing working capital requirements by another 12-15 percent. The return on investment for smaller firms could fall by 5-5.5 percent. Many units are now facing the prospect of closure as they struggle to maintain operations under such severe cost pressures.

The Himachal Drug Manufacturers Association, which represents over 500 pharmaceutical manufacturing units, has urgently sought government intervention. The association has warned that unprecedented price hikes threaten MSME survival and essential medicine supply. They have also highlighted that deliberate hoarding and black marketing by unscrupulous distributors and vendors have started creating artificial scarcity in the supply chain.

The Path to Higher Medicine Prices

The most concerning aspect of this crisis is its potential impact on patients. The pharmaceutical industry has been absorbing these costs internally for as long as possible, but this cannot continue indefinitely. If input costs continue to rise and manufacturers cannot recover these costs, the inevitable outcome will be higher prices for medicines.

For scheduled drugs, the government permitted only a 0.6 percent increase in prices this year, which is far below the actual increase in input costs. For non-scheduled medicines, companies are allowed to raise prices by up to 10 percent once a year. Industry officials have indicated that many companies are implementing the maximum increase allowed under their pricing review cycle to offset the steep rise in raw material costs.

The impact on essential medicines is particularly concerning. Medicines likely to be affected include painkillers, several antibiotics, vitamins and minerals, dermatology products, some respiratory medicines and psychotropic drugs. Jan Aushadhi stores, which dispense generic medicines at 50 to 80 percent lower than branded drugs, may also see price increases of up to 15 percent as manufacturers pass on soaring input costs.

The oncology sector has already experienced the consequences. Cisplatin and carboplatin, government price-controlled medicines manufactured by only a limited number of companies, have faced supply shortages across hospitals. Manufacturers argued that regulated ceiling prices no longer reflected actual production costs, leading several companies to reduce production volumes or redirect capacity toward products offering better commercial returns. The National Pharmaceutical Pricing Authority eventually invoked exceptional provisions to allow price increases for these medicines.

Industry Demands Government Support

The pharmaceutical industry has united in seeking urgent government support to navigate this crisis. Industry bodies have urged the government to impose emergency price ceilings and form a crisis task force. They have asked the government to invoke the Essential Commodities Act to control prices, prevent hoarding, and ensure equitable distribution of critical pharmaceutical inputs.

The Confederation of Indian Industry has asked the Department of Pharmaceuticals to provide targeted freight subsidies or reimbursement schemes for pharma exports to conflict-affected markets, with special focus on MSMEs. The industry body has also sought time-bound relaxations in drug pricing norms to balance industry concerns and patients' needs.

The industry has also requested temporary relief on GST rates for key input raw materials and prompt overdue refunds. Reducing GST from the current 18 percent on inputs to 5 percent would provide much-needed relief and help mitigate cost escalations. The government has already taken some steps, including providing full customs duty exemption on critical petrochemical products used in drug manufacturing and packaging.

What This Means for Patients and Healthcare

The ultimate concern is the health of the public. If medicine prices rise significantly, it could affect affordability and access to essential treatments. For a country where many patients pay out of pocket for healthcare, even relatively small increases in medicine prices can have serious consequences.

The government's existing schemes, including the Production Linked Incentive schemes for bulk drugs and pharmaceuticals, have been designed to reduce import dependence and strengthen domestic manufacturing. The PLI scheme for bulk drugs has a budgetary outlay of ₹6,940 crore and aims to avoid disruption in supply of critical APIs by reducing supply disruption risk due to excessive dependence on single sources. However, the current crisis has developed rapidly and requires immediate, targeted interventions beyond the scope of existing schemes.

The pharmaceutical industry needs support to weather this storm. Without it, the dual goals of industry viability and patient affordability cannot both be achieved. Temporary price relaxations, freight subsidies, GST relief, and faster processing of refunds are essential measures that can help the industry maintain operations while keeping medicines accessible to patients.

Conclusion

September 2026 has laid bare the vulnerabilities in India's pharmaceutical supply chain. While the industry continues to make strides in innovation and global expansion, the raw material and packaging material crisis threatens to undermine these achievements. The government's support is not just a matter of industry viability—it is a matter of public health. If medicine prices rise beyond the reach of ordinary patients, the consequences will be felt across the healthcare system. The time for decisive action is now.