Iran War Pushes Solvent Prices Up, Pharma Hub in Vizag Struggles
The crisis is affecting all 92 companies operating in Parawada Pharma City, as well as the 35 firms in Achutapuram and 20 to 25 large-scale pharmaceutical manufacturers in Pydibhimavaram.
Visakhapatnam: The pharmaceutical industry in the Parawada Pharma City here is facing a severe crisis as the ongoing Iran war has disrupted supply chains and sent solvent prices soaring.
The pharma city manufacturers association says the cost of raw materials used in drug manufacturing has risen by upto 500 per cent within a matter of days. As a result, these companies are struggling to maintain production and meet the existing commitments vis-à-vis orders. “There is no scope to accept new orders” under current pricing conditions.
Exports have been hit hard. The association notes, “While shipping a product once cost around $2, the current rate is more than $12, making international trade unsustainable.”
Transportation costs within the domestic market have also risen sharply. As a result, production has been curtailed by 30-40 per cent, and business operations have been disrupted. If the situation persists, companies may be forced to lay off permanent employees within the next two to three months. They have already reduced casual labour by 20 per cent and trimmed the regular workforce.
The crisis is affecting all 92 companies operating in Parawada Pharma City, as well as the 35 firms in Achutapuram and 20 to 25 large-scale pharmaceutical manufacturers in Pydibhimavaram. Together, these clusters form Asia’s largest pharmaceutical hub, generating approximately Rs.35,000 crore in annual revenue and contributing Rs. 6,000–7,000 crore in taxes to the exchequer.
The sector employs around 45,000 workers directly, with lakhs more dependent on it indirectly.
With 40 per cent of the production geared toward exports, the disruption is particularly damaging for smaller firms that lack the financial resilience of larger players.
The association says it has brought the issue to the attention of the central government. “The Centre has announced certain relief measures, including reductions in the prices of solvents and polymers. However, these directives have not reached actual suppliers, who continue to demand higher rates.”
The scale of the surge in solvent prices illustrates the depth of the crisis. Between February 28 and March 10, Methanol price rose from Rs.34 to Rs.51 per kilo, MDC from Rs.32 to Rs.58 per kilo, acetone from Rs.70 to Rs.145 per kilo, and IPA from Rs.91 to Rs.150 per kilo.
Ethyl acetate climbed from Rs.75 to Rs.100, acetic acid from Rs.38 to Rs.60, and toluene from Rs.84 to Rs.124. N-hexane rate increased from Rs.110 to Rs.130, acetonitrile from Rs.165 to Rs.220, and n-heptane from Rs.210 to Rs.260. Ortho xylene rate rose from Rs.95 to Rs.135, while diisopropylether and THF saw steep hikes, reaching Rs.220 and Rs.240 respectively.
Pyridine recorded one of the sharpest increases from Rs.200 to Rs.380. Other solvents such as DMSO, DMF and cyclohexane also registered significant jumps.
Industry leaders are closely monitoring the international developments and are hoping that the conflict would end soon.