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China’s lockdown may affect Indian pharma sector

IFM_China lockdown impairing Indian pharma sector-image
Shanghai and Shenzhen, two major port cities of China, are under lockdown with a fresh surge of COVID cases.

A newly imposed lockdown in Hong Kong and parts of mainland China will potentially affect the pharma sector in neighbouring India.

India is home to the third-largest pharmaceutical market by volume in the world. According to reports, there might be delays in the movement of active pharmaceutical ingredients and other key materials from the ports of Shanghai and Shenzhen as a result of the lockdown.

The percentage of Chinese imports in the category usually has been around 70-80% in recent years. These imports, including antibiotics, are majorly sourced through the sea route due to its low costs compared to a meagre 30% which is routed through air cargo.

In the wake of a fresh surge in COVID cases, the local government has imposed a lockdown in Shanghai in line with their zero-COVID approach. There will be two stages over nine days of lockdown with the government stepping up efforts to test and isolate the infected population and contain the number of cases.

Not only the Indian pharmaceutical industry, if the situation persists it will affect industries across the world as Shanghai is home to the world’s largest container shipping port.

Tesla has already suspended its operations in the Shanghai plant while the government is insisting that companies run the factories in a closed-loop system with workers staying within the facilities during the lockdown period.

As of now, there has been no distress in supply with some cargo already on the sail. The logistical operations in the ports enjoy relaxations from the lockdown rules, but goods vehicles on roads that are outside Shanghai are finding it hard to make their way into the city.

The country has also imposed a 21-day curfew for incoming international travellers. As a result of this, the International Air Transport Association announced that its annual general meeting will be held in Doha instead of Shanghai.

As a positive side-effect, global oil prices have eased with these restrictions, which were on a mercurial rise since the war in Ukraine, as the war struggled to meet the void left by dwindling Russian supplies.

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