China. At this time, we do not see China as a significant export opportunity for regulated-market API manufacturers. Some API manufacturers
may find markets for products that are very difficult to manufacture or require dedicated facilities. However, in general,
we find that China has the capability to manufacture most products locally. And in cases where Chinese companies do import
APIs, because of the country's heavy focus on cost, they are more likely to import APIs from other lower-cost countries than
from the EU or US. Also, unlike India, China does not export large quantities of finished-dose products into regulated markets
and therefore does not need high-quality APIs from regulated markets.
Although we do not expect regulated market API manufacturers to benefit greatly from the Chinese market, we certainly expect
regulated market API manufacturers to take advantage of China's lower cost base and talent pool by setting up manufacturing
and R&D facilities there. Although the costs, including salaries, are rising in China, the salaries for scientists are still
considerably lower in China than in the EU or US. Also, having a low-cost manufacturing base in China makes it easier for
western companies to sell into other emerging markets that tend to focus on price. Among the regulated market players that
have set up facilities in China are such major API manufacturers as DSM, but also smaller API manufacturers such as Hovione
(Loures, Portugal) and Esteve (Barcelona). Earlier this year, Hovione anounced it had acquired a majority stake in Hisyn Pharmaceutical
(Zhejiang), giving Hovione acess to additonal manufacturing capacity for APIs and development laboratories as well as a lower
cost base. Meanwhile, Esteve has had a joint venture in China since 2000.
Conclusion
Emerging markets such as India and China have already left their footprints on the pharmaceutical world thanks to their lower-cost
products and inexpensive scientific talent. As pharmaceutical market growth in the US and major European markets slows to
low single digits, we expect that emerging markets, among them the BRIC countries, will continue to have a major impact on
the pharmaceutical value chain both as suppliers of active ingredients and finished-dose products to regulated markets but
also as consumers of pharmaceutical products manufactured by regulated market players.
Kate Kuhrt is director of Generics and API Intelligence at Thomson Reuters, 215 Commercial St., Portland, ME 04101, tel. 207.871.9700
ext. 26, fax 207.871.9800, kaire.kuhrt@thomsonreuters.com
.
References
1. T.D. Clark, "Brazil," PharmaHandbook: A Guide to the International Pharmaceutical Industry, J.C. Taylor II, Ed. (VOI Consulting, New Orleans, LA, 5th ed., 2007), pp. 467–481.
2. T.D. Clark, "Russia," PharmaHandbook: A Guide to the International Pharmaceutical Industry, J.C. Taylor II, Ed. (VOI Consulting, New Orleans, LA, 5th ed., 2007), pp. 423–437.
3. T.D. Clark, "India," PharmaHandbook: A Guide to the International Pharmaceutical Industry, J.C. Taylor II, Ed. (VOI Consulting, New Orleans, LA, 5th ed., 2007), pp. 55–78.
4. T.D. Clark, "China," PharmaHandbook: A Guide to the International Pharmaceutical Industry, J.C. Taylor II, Ed. (VOI Consulting, New Orleans, LA, 5th ed., 2007), pp. 33–54.
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