Never mind the toxic toys, poisoned puppy food and dangerous drugs, China’s suppliers of active pharmaceutical ingredients are ready to take on the world, especially India, and develop a generic industry that supplies not only the domestic market, but foreign markets, too, The Wall Street Journal reports (subscription required).

The first indication came quietly this summer, when Zhejiang Huahai Pharmaceutical won permission to export finished pills to the US, although the company must wait until 2012, when a US patent held by Boehringer Ingelheim for the Viramune AIDS drug nevirapine expires, the Journal writes. But the FDA imprimatur will make it easier to get other approvals and attract foreign partners. And Huahai hopes to start exporting a finished-dosage Alzheimer’s drug to Europe as early as next year.

Others are hoping to win a share of the generics market, such as Hisun Pharmaceutical, which is one of China’s largest producers of APIs. And Shanghai Desano Chemical Pharmaceutical exports materials for AIDS drugs to India, Thailand and Brazil. Konda Reddy, a health care analyst in India for Frost & Sullivan, a research and consulting firm, tells the paper that Chinese prices for APIs are 10 percent to 15 percent below Indian rivals. Previously, “the Europeans were afraid of India,” says Jinsong Du, a health care analyst in Hong Kong with Credit Suisse. Now, “it’s China. The growth is so huge.”

And foreign drugmakers are increasingly purchasing APIs in China. “Our global head of operations comes here every year just to make sure that this relationship and this supply are reliable,” Yin Xudong, AstraZeneca PLC’s vp of primary care China, tells the Journal. He adds that Chinese drugmakers are the main suppliers of the raw ingredients used to make Seroquel.

For now, Huahai doesn’t plan to follow Indian generics titans actively challenging the patents of blockbuster drugs in the courts. Nor does it plan to try to develop drugs on its own. “Currently, we don’t we think have that kind of capability or technical knowledge of doing a patent challenge,” Jessica Yu, Huahai’s regional representative for North American and Japanese sales, tells the paper.

Although counterfeiting remains a concern and patent laws aren’t uniformly enforced, AZ’s Yin Xudong doesn’t appear worried. “We will see counterfeits,” he tells the Journal. “But the Chinese SFDA will not issue a new drug license for a compound that we already have a patent for. That will not happen.” And quality? Once Huahai’s Viramune is sold in the US, the FDA will inspect the factory and drugs periodically, “depending on a variety of factors, including any known risk associated with the product, manufacturing process or facility,” an agency spokeswoman says.

The chart comes from the WSJ.