Analysts doubt veracity of US API import ban report

A report in the Hindu Business Line today said the US government has made it mandatory for all active pharmaceutical ingredients (APIs) to be manufactured locally. The development, if it has taken place, will deal a major blow to a number of Indian pharmaceutical companies, many of whom export APIs to the US.The report said that the new norms require all medicines purchased by the US government to be sourced from local companies, a move that will impact even US subsidiaries of Indian companies, which will now have to manufacture locally.The news likely bogged down many pharma stocks in trade today, with Cipla, Lupin and Divi's Labs all falling about 3 percent."I don't think it is feasible for the US to make this law mainly because the cost of generics for the US will go up. The US government wants the cost of drugs to reduce. It doesn't make sense," former Pfizer MD Kewal Handa told CNBC-TV18, adding that if such a move were to indeed take place, it would be "disastrous" for both API and formulations manufacturers in India.Handa added that he hadn't heard of any such rule being implemented in the US so far."I doubt this could be true," Prabhudas Lilladher Pharma Analyst Surajit Pal said, echoing Handa's view that such a move would increase drug costs in the US and said it would burden the US government's Medicare and Medicaid budgets.Please watch video for the full discussion.