The government is in the final stages of approving a Minimum Import Price (MIP) for Penicillin-G (Pen-G), a key raw material for antibiotics, according to people familiar with the matter. The MIP, if approved, may potentially enable domestic capacity to survive the price onslaught of Chinese suppliers and will also make Aurobindo Pharma's investment under India’s Production-Linked Incentive (PLI) scheme viable.
“The proposal is close to being notified,” said a senior industry official who asked not to be named because the discussions are private. “This is about ensuring domestic capacity survives and stabilizes, not shutting out competition.”
Pen-G is the backbone for widely used antibiotics such as Amoxicillin and Ampicillin, critical to India’s primary healthcare system. For decades, India has depended almost entirely on imports—primarily from China—for these fermentation-based inputs. The PLI scheme was launched to reverse this structural vulnerability and restore local manufacturing of essential bulk drugs.
The proposed MIP is time-bound, usually for a year and transitional, applying only to imports for domestic consumption while leaving export-linked imports unaffected. Officials say the measure is designed to neutralize price undercutting rather than erect trade barriers.
MIP to salvage Aurobindo Pharma PLI investment
Hyderabad-based Aurobindo Pharma, one of India’s largest antibiotic makers, is among the beneficiaries of the PLI scheme.
The company has invested over Rs 2,500 crore in its Pen-G/6-APA project to enhance India's self-sufficiency in fermentation-based API facilities and is expected to ramp up production as pricing stabilizes.
Market analysts estimate that for domestic Pen-G production to be profitable, any meaningful MIP would likely need to be set well above $25 per kg which reflects the current domestic cost of production.
As of late 2025, international Pen-G prices have retreated to approximately $13.5 per kg, making it difficult for domestic manufacturers to compete without government intervention.
“Domestic players have restarted production but are operating at calibrated levels due to sustained price undercutting,” said an industry executive. “An MIP will provide breathing space for these investments to mature,” he added.
Parallel push on clavulanic acid
The move on Pen-G follows the government’s recent decision to set an MIP of $180 per kilogram for Potassium Clavulanate (KGA)—a critical component of combination antibiotics like Augmentin—effective until November 30, 2026. The measure aims to support local production but has sparked concerns about higher medicine costs for consumers.
Kinvan Pvt. Ltd. became the first Indian firm to produce clavulanic acid domestically, reducing dependence on Chinese suppliers. Backed by the PLI scheme, Kinvan plans to scale up to 300 metric tons annually, a move seen as pivotal for India’s self-sufficiency in key antibiotic ingredients.
An executive of Kinvan who didn't want to be named told Moneycontrol that they have enough production capacity to meet India's demand, and called the concerns of limited capacity are unfounded.
The executive said the prices of Potassium Clavulanate hovered around for $195 per kilogram (kg) for over a decade, but once the local producer came on board, the prices crashed to $150-$155 per kg in June 2025, which has put a huge strain on the project that had just took-off. Now the imported prices are back to $180-$190 levels, he said.
India’s leading pharmaceutical associations—including the Indian Pharmaceutical Alliance (IPA) and Bulk Drugs Manufacturers Association (BDMA)—have endorsed the MIP proposal, citing strategic risks of continued import dependence. Opposition has largely come from a small group of import-reliant firms, industry insiders say.
Despite fears of price hikes, officials note that most penicillin-based formulations are under price control and have seen stable MRPs even during periods of bulk drug volatility. Incremental cost impact at the formulation level is expected to remain marginal and within regulatory ceilings.
"Recent global disruptions, including the COVID-19 pandemic, underscored the risks of dependence on a single geography for critical APIs, which, over time, weakened manufacturing capacity," said . Sudarshan Jain, Secretary General, Indian Pharmaceutical Alliance
"As India rebuilds API capabilities under the Production Linked Incentive (PLI) framework, the MIP serves as a calibrated, transitional measure to support stability during this transition.
This support is vital for Indian pharma companies to sustain viability. It helps address short-term, predatory pricing practices that are unsustainable in the long run," Jain added.
Sujay Shetty, Global Health Industries Advisory Leader at PwC echoes similar views.
"As capacity is strengthened through initiatives such as the PLI scheme, supportive and time-bound measures can help ensure viability during the scale-up phase," Shetty said.
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