China Muscles In On The Generics Industry
2 CommentsBy Ed Silverman // May 13th, 2008 // 11:35 am
A coming wave of Chinese pills is set to push down generic prices, as more low-cost finished meds from China win approval in major markets, Reuters reports, citing an IMS Health study.
You may recall that China is already the world’s biggest producer of active pharmaceutical ingredients, but so far hasn’t been a significant supplier of finished generic pills. But last year’s first FDA approval of a Chinese generic - a copy of the Viramune AIDS drug - indicates a big change is coming.
At least 10 other Chinese companies are set to follow suit, Reuters writes, and some could be available as early as this year, causing increased competition for the generic industry. “In order to ensure their success in the market, the Chinese manufacturers are likely to undercut all others on price,” IMS wrote. “Chinese policy will drive generic prices down still further, with far-reaching consequences for both R&D players and international generic companies.”
The rise of Chinese generic drugmakers is expected to mirror the advent of companies from India, such as Ranbaxy Laboratories, which also started out as an API supplier but moved into finished generics a decade ago. IMS believes China will seek to erode India’s strong position in manufacturing by targeting the US, Europe and key emerging markets.
One potential obstacle for China’s emerging generics industry, however, will likely be its reputation for quality, such as the Heparin scandal. “India has had less publicity than China for manufacturing inadequacies,” IMS writes, “…and it is here where the competitive battle may be won or lost.”
Ashok Bendre
The China threat in the generics area is something for the pharma companies in India to seriously take note of.
It is true that the pharma majors in India maintain world class manufacturing quality standards. It is also true that the India pharma companies have strong R&D capabilities for innovation, and, will be able to move into more complex, high value generics.
The one thing the India pharma companies must guard against is the temptation to take short cuts to improve their short term profit margins. The reputation of any company, whether U.S or foreign, once besmirched, is very difficult, if not impossible, to repair.
The Chinese companies are a prime example of companies tainted by substandard, outright adultrated, and/or, contaminated products, unfit for human consumption, manufactured and shipped overses. The Chinese companies will find it a long and hard slog to gain acceptance in the pharma marketplace.
Sanford Kimmel
Price is not everything! Although many electronics and clothing items are now made in China, the track record of Chinese companies in ensuring quality and safety for products meant for internal use has been notorious as of late. Items such as tooth paste, dog food, herbal products and even toys have been contaminated by heavy metals and other ingredients. Importers and purveyors of Chinese products must include the cost of continuous quality monitoring in their bottom line. Human life is not cheap!