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Ranitidine: Prices recover after two years
After sustained fall in prices from Rs 740 per kg in May 2006 to Rs 490 in Jan-Feb’08, the Ranitidine Hydrochloride prices have rebounded to Rs 700 in fag end of May 2008
Ranitidine HCl belongs to a class of medications, called H2–Blockers used for treatment of ulcers. Ranitidine HCl blocks the action of histamine (acid) on stomach cells thus reducing stomach acid production. Ranitidine HCl is useful in healing of stomach ulcers and reducing ulcer pain and has been effective in preventing ulcer recurrence when given in low doses for prolonged period of time. In doses higher than that used in ulcer treatment, Ranitidine HCl has been helpful in treating heartburn and in healing ulcer and inflammation of the throat resulting from the acid reflects.
The product patent for Ranitidine HCl was held by GlaxoSmithkline (GSK) and was marketed under the brand name ‘Zantac’. The product patent for Ranitidine HCl held by GSK expired in 2002.
Damand and Supply
According to the industry sources, the annual requirement for Ranitidine HCl is around 6000MTPA. India, with around 3600MT of suppy, is the biggest supplier of Ranitidine to the world market. As the production os Ranitidine is very complex, the product is manufactured by few players only. These are; Neuland Laboratories, Shasun Chemicals and Drugs, SMS Pharmaceuticals, Orchev Pharma and Saraca Pharma.
Producers in India
SMS Pharmaceuticals: Hyderabad based SMS Pharmaceuticals is the largest producer of Ranitidine HCl and its intermediates in the world. The Company produces Ranitidine HCl in its Unit 1 located at Medak, Hyderabad, with an installed capacity of approximately 1440 MTPA. For the half year ended Sep’30, 2006, with a total revenue contribution of around Rs 46.38 crore, Ranitidine HCI and its intermediates accounted for around 50% of the Company’s revenue.
Shasun Chemicals and Drugs: The company has an annual capacity of 430 MT which is almost entirely utilized. Around 50-60% of Shasun's annual supplies go to GlaxoSmithKline (GSK), while the rest goes to various other companies in the international market. Shasun has a strong relationship with GSK for this product, as it supplies around 80% of the latter’s API requirements. Ranitidine is an important product for Shasun, despite its smaller size, as supplying to the innovator makes it more profitable than the other APIs like Ibuprofen, Nizatidine etc.
Orchev Pharma: Rajkot based Orchev Pharma is the laregst manufacturer of Ranitidine Hydrochloride in Gujarat with a production of around 300 MTPA. The capacity utilization stands at around 62%. At present, Orchev exports around 60 to 70% of its output to foreign markets. The Company expects to increase the capacity utilization to 100% in the next six months.
Saraca Laboratories: Incorporated in 1992, Hyderabad based, Saraca Laboratories is a part of Virchow Group, Hyderabad. Saraca Labs produces 1200 tonnes of Ranitidine HCl per annum. Of the total production, around 48% is sold in the domestic market, while the balance 52% is exported.
Manufacturing Process
Furfuryl alcohol, Para-formaldehyde and DMA HCl are reacted at reflux temperature and Cystamine Hydrochloride is added and refluxed for Cystofer formation. Nitromethane, MITC and Potassium hydroxide are reacted in the presence of Di-Methyl-Sulfoxide (DMSO). The reaction mass is further reacted with Dimethyl sulfate (DMS) and purified to get NMSM. NMSM and Cystofer are coupled to form Ranitidine Base and then treated with IPA HCl to form Ranitidine HCl.
Raw-Materials
Cysteamine Hydrochloride (CSH), Nitromethane and Dimethyl Sulphate (DMS) are the three major raw-materials used in the production of Ranitidine. Together, these raw-materials account for over 50% of the total ingredients used for Ranitidine.
Cysteamine Hydrochloride (CSH): Cysteamine is a chemical compound and is the simplest stable aminothiol and a degradation product of the amino acid cysteine.
Nitromethane: Nitromethane is the simplest organic nitro compound. It is a slightly viscous, highly polar liquid commonly used as a solvent in a variety of industrial applications such as in extractions, as a reaction medium, and as a cleaning solvent. As an intermediate in organic synthesis, it is used widely in the manufacture of pharmaceuticals, pesticides, explosives, fibers, and coatings. It is prepared by reacting sodium chloroacetate with sodium nitrite in aqueous solution. Nitromethane is distilled from the reaction and then dried over a mild desiccant.
Dimethyl Sulphate (DMS): Dimethyl sulfate is a clear, water-white liquid with a high boiling point and a high vapor density. This chemical is highly toxic and has no characteristic odor or warning property.
Furfuryl alcohol: Also called 2-furylmethanol or 2-furancarbinol, this is an organic compound containing a furan substitited with a hydroxymethyl group. It is a clear amber liquid with a faint burning odor and a bitter taste. Furfuryl alcohol is manufactured industrially by the catalyctic reduction of furfural which is obtained from corncobs and sugar cane bagasse.
Paraformaldehyde: Paraformaldehyde is a white crystalline solid formed by polymerization of methanal gas (formaldehyde, HCHO) by heating. Paraformaldehyde is used to make various resins with mainly phenol (melamine resin; phenol resin; vinylon; polyacetal resin; terephthalic acid; diphenyl methane diisocyanate, acrylic acid esters)
DMA HCl: Di-Methyl Amine Hydrochloride (DMA HCL) is used as used as an intermediate (in powder form) for manufacture of Ranitidine and Metaphormine. DMA HCl is available as an aqueous solution in a concentration up to 70 %.
Potassium hydroxide: Potassium Hydroxide, commonly called caustic potash with formula KOH, is a caustic compound of strong alkaline chemical dissolving readily in water, giving off much heat and forming a caustic solution. It is a white deliquescent solid in the form of pellets obtained by concentration of purified electrolytic potassium hydroxide solution with very low chloride content.
Di-Methyl-Sulfoxide (DMSO): DMSO is a colourless, odourless (when pure), and very hygroscopic stable liquid (bp 189°C, mp 19.5°C). It is manufactured commercially by reacting the black liquor from digestion in the kraft pulp process, with molten sulfur to form dimethyl sulfide which is then oxidized with nitrogen tetroxide. DMSO is used as a local analgesic and anti-inflammatory agent, as a solvent in industry, and in laboratories as a medium for carrying out chemical reactions.
Trends in domestic Ranitidine Hydrochloride prices
The domestic Ranitidine HCl prices crashed from Rs 740 per kg in May 2006 to a low of Rs 490 per kg in January and February 2008. In FY07-08, the Ranitidine HCl prices tumbled down by over 22% to Rs 519.29 per kg. The condition was so bad that the prices, even on m-o-m basis, continued to fall.
The earthquake in China and the disruptions in production and exports, and the spike in input costs together lead to sharp spurt in Ranitidine prices from Rs 490 per kg in the week ended 18th March 2008 to Rs 700 per kg in the week ended 27th May 2008. But even these prices are lower than May 2006 levels. In this context, despite the sharp spike in a few weeks, they represent only a strong come back in prices, after two full years.
Industry sources attribute the sudden spurt in the prices to increase in the cost of raw-materials (140% increases in the last six months) and the removal of incentives on the export of APIs/intermediates by China. The two main ingredients; Cysteamine Hydrochloride and Nitromethane are imported from China and hence the domestic producers have no control on the prices of these raw-materials.
Moreover, in CY-2007, the Chinese Govt., in its effort to curb the malpractices in the pharma industry, removed the export incentives on a set of pharma raw-materials resulting into spurt in the prices. Besides, as commodities like sulphur and crude oil etc. have witnessed spike in recent months, the prices of other Ranitidine raw-materials, also, have increased. As a result, the producers of Ranitidine HCl had no choice but to hike the price for their finished product.
IDMA seeks upward revision of Ranitidine HCl prices
But players are expecting another 50-60% increase in the raw-materials prices in the coming months. Hence, Indian Drug Manufacturers Association (IDMA) has asked the Govt. to revise the Ranitidine prices. In a notification dated 5th June 2008, NPPA has revised the prices for formulation drug; Ranitidine (with combination) from Rs 3.96 per strip to Rs 4.36 per strip. Though, no notification regarding Ranitidine HCl has come as of yet. But as the price of formulation has increased, we expect the price for bulk drug, too, to get revised soon.
Outlook
Rising raw-materials prices have forced producers to increase their prices. However, Ranitidine HCl is under Drug Price Control Order, 1995, which has fixed the price for Ranitidine at Rs 615 per Kg. Resultantly, the producers can not sell their produce as a price higher than the fixed price in the domestic market. This has already impacted the performance of players like Saraca Laboratories, which is enjoying a very negligible margin on the sale of this product in the domestic market.
Currently, Ranitidine producers derive comfort from two factors; One, there is no direct substitute for Ranitidine HCl and the complex production process for Ranitidine results into high entry barriers. Second, the Companies expect the Ranitidine prices to spurt even more, by another 20-30% in coming months. They expect no cooling-off in prices atleast until Nov-Dec08. In such a scenario, big players like SMS Pharma and Shasun Chemicals are expected to reap more benefits than the minor ones.

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