The pharmaceutical business is no different; given the impact on the entire supply chain, it won’t be long before we start to see price rises. Taking a $1 pill would be acceptable. What would happen if the API contained within this pill’s price rose by 40%? Does the price of the full tablet increase by 40%?
It can be difficult to dissect medicine prices. Typically, pharmaceutical companies are reluctant to disclose the precise prices they spent for APIs, other chemicals, and production costs.
However, in general, the price of the API is determined by the batch size, the nation in which it was produced, the producer’s quality control procedures, their profit margins, and possibly the possibility that the buyer of the API is a well-known client who frequently purchases additional APIs from them, resulting in a discount.
How much excipients cost
The excipients are the next. Excipients are components that are added to a medicine to support the active pharmaceutical ingredient (API), such as to add flavour, bulk, or stability.
Hence, does the drug’s new price increase if the API’s price increases by 40%? Most likely not, as the excipients, packaging, and formulation all continue to be priced the same. Since the cost of the API is “only” roughly half that of the final cost, a 40% increase in the API’s cost will result in a 20% rise in the final cost.
On the other hand, if you locate an API source that is 40% less expensive, for instance by contacting many suppliers, it also means that the cost price of the medication will be 20% lower. which would result in a $20.000 save for you. You decide if you want to reduce the asking price.