Pharma industry faces risk of supply delays due to rising petrochemical-based input costs

It has been more than 20 days since the war between West Asia nations started. The gas shortage is impacting the progress of industrial activities. Even things like tiles, plastic products, and underwear are being impacted by it. The cost of cooking oil is increasing because of the import cost.

Medicines are prepared using petrochemical products as raw materials. So, it will be difficult to obtain medicines in the future. There are 600 ceramic tile factories in Morbi, Gujarat. Out of these, around 560 are facing a gas shortage for industrial activities and are closed.

Gas constitutes 40 percent of the raw materials required to produce ceramic tiles. Philip, director of Morbi-based tile manufacturing company Letoja, stated that 400,000 workers are employed in 600 tile units in Morbi, and due to the shutdown, they are gradually returning to their homes. The shutdown has led to a 25 percent increase in tile prices, and this trend will continue.

At the same time, the production of plastic items such as toys, PVC pipes, bottles, buckets, and drums has also been affected. Plastic granules are their raw material, made from polypropylene derived from petroleum products. Due to disruptions in the supply of petroleum products and rising prices, the price of plastic granules has increased by up to 30 percent in the last 20 days.

According to the All India Plastic Manufacturers Association, the price of plastic items will begin to rise from April. Currently, they have old stocks of raw materials. Therefore, manufacturers are not increasing prices immediately. Undergarment manufacturers in Tirupur stated that polyester yarn and elastic are used in undergarments.

The price of elastic has already risen, and the price of polyester yarn has increased by 35 percent in the last 20 days. Polyester yarn, which used to sell for Rs. 104 per kilogram, has reached Rs. 137 per kilogram.

Raw materials used in pharmaceutical manufacturing, as well as syringes and plastic items used in treatment, are set to become more expensive. According to drug manufacturers, the impact on packaging may slow the supply of medicines.

India imports 60 percent of its edible oil needs. Sunflower, soybean, and mustard oil have already become more expensive by Rs. 10-20 per liter. Palm oil is also showing a strengthening trend. Due to these factors, the prices of prepared food items have increased by up to 20 percent in the last 22 days.

The Ministry of Civil Aviation has decided to remove the cap on airfares from Monday. Although the government has asked all airlines to keep fares reasonable, experts say that the removal of the cap is bound to lead to an increase in airfares.

In December last year, the government announced a cap on airfares after IndiGo's airline impacted air travel. Experts also say that the price of air turbine fuel (ATF), used in airplanes, will be revised from April 1st, and oil companies are likely to increase it. Consequently, air travel will become more expensive from next month.