Government sets minimum import price for penicillin, salts; Aurobindo Pharma stock up

Antibiotics

• India sets minimum import prices for key antibiotic raw materials for one year
• Move aims to protect domestic industry from cheap Chinese imports
• Aurobindo Pharma shares rose 3 percent after the announcement

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The Directorate General of Foreign Trade (DGFT) has set a minimum import price (MIP) for penicillin and its salts, which are critical antibiotic raw material, for a year to curb dumping, especially from China.

MIP is a government-mandated, temporary floor price below which specific foreign goods cannot be imported, designed to protect domestic industries from cheap, predatory or dumped imports.

Through MIP, the government wants to protect the fledgling domestic fermentation industry from a surge of low-cost Chinese imports for critical antibiotic raw materials.

The move is a major win for Aurobindo Pharma, providing the necessary pricing floor to make its Rs 3,500-crore (approximately $420 million) investment under the government’s Production-Linked Incentive (PLI) scheme viable.

At 1.18 pm, the Aurobindo Pharma share was trading at Rs 1187.10 on the National Stock Exchange, up 3.17 percent from the previous close.

Aurobindo, which has built a massive facility to manufacture penicillin, 6-APA, and amoxicillin trihydrate, the policy provides a critical shield against international price undercutting that had threatened to stall its operations.

Price protection shield

Penicillin-G (Pen-G) will be have MIP of Rs 2,216 a kg (approximately $26.50 per kg); 6-APA Rs.3, 405 (around $40.80) and amoxicillin trihydrate Rs 2,733 a kg ($32.70), the government said in a notification on January 29.

International price for Pen-G had fallen to $13.5 a kg by late 2025, far below the $25 level analysts estimate is required for domestic production to remain profitable, forcing the government to step in.

Domestic players were being forced to calibrate production to minimal levels despite having the capacity to meet national demand.

Countering predatory imports

For decades, India has been almost entirely dependent on China for fermentation-based inputs, leaving its primary healthcare system vulnerable to supply chain shocks.

MIP is designed to neutralise predatory pricing rather than act as a permanent trade barrier.

The restrictions do not apply to export-oriented units (EOUs) or imports used for re-export under the Advance Authorisation scheme.

Expanding the playbook: Clavulanic Acid

The Pen-G decision follows a similar protective measure for potassium clavulanate (KGA), a critical component in widely used combination antibiotics.

The government set an MIP of $180 a kg, effective until November 2026, to support Kinvan Pvt Ltd., the first Indian firm to produce the ingredient domestically.

Kinvan, which plans to scale up to 300 metric tons annually, saw prices crash from $195 to $150 shortly after its project was launched, a volatility the MIP is intended to curb.

While some import-reliant firms have raised concerns about potential cost increases, government officials said most penicillin-based medicines are already under price control, meaning any incremental cost impact at the consumer level should remain marginal.