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Pharmaceuticals to be India – China’s next sour spot

December 24, 2012

When it comes to the healthcare sector, both China and India are learning from each other and upping their skills dramatically to be able to offer their citizens the best in medicine. A major challenge for any developing economy, especially one with the size of India and China, healthcare reforms in infrastructure, services, quality of ingredients and distribution is vital.

While China is learning softer healthcare services skills from India, the South Asian nation is regulating and checking quality on Active Pharmaceutical Ingredients (API’s) imported from China. According to the figures with the Department of Pharmaceuticals in New Delhi, India in 2009-10 imported 60 percent or US$ 1143 million of her API’s from China.  In 2010-11, API’s imported into India from China rose 64 percent of the total imports to  US$1881 million.

API’s or key ingredients that go into concocting medicine, are mostly manufactured in China and India. It is vital for the quality of these ingredients to be above par, and quality cannot afford to suffer due to cost. At present, more than 45 percent of bulk drug exporters registered in India are from China, which makes it vital for India to check the quality of Chinese API’s before manufacturing the medicine.

Therefore, in a bid to reduce their dependence on Chinese API’s and check quality, the Department of Pharmaceuticals in India has decided to open its first foreign drug inspection office in Beijing by March 1. Four drug inspectors are expected to be placed in the national capital to inspect manufacturing sites and check whether good manufacturing practices (GMP) are being complied with. The Drug controller general of India Dr GN Singh told The Times Of India that the commerce ministry has cleared the proposal.

Another argument is that India is keen to set up its foreign drug inspection office in Beijing to check on the supersonic growth of the Chinese pharmaceutical industry. Threatened by the pace of growth and the rise in API manufacturing in China, Indian pharmaceutical majors are worried and seem to be pinning their fear on the only intangible Chinese grouse – quality.

Furthermore, M&A activity in especially Chinese drug R&D is on the rise and high investments will lead to China leading drug manufacturing worldwide. All together, including capital from both overseas and domestic drug manufacturers, M&A in emerging countries has totaled US$20 billion this year. That’s a jump of 67 percent over last year. China deals were responsible for one-third of the total – US$6.8 billion. As a result of the rise in R&D, Chinese manufacturers will be able to produce more API’s and consequently manufacture more drugs possibly usurping India of ter title of the largest manufacturer by volume.

The pharma industry is all poised to be the next bone of contention between China and India, and tensions between the two nations in production and manufacturing of drugs is only going to escalate as value, investments and incomes rise. Just like the power and telecom industry of yesteryear, where Indian companies lacking investments, government support or technology struggled and fought off Chinese companies over quality in a losing battle, pharma companies are gaining their strength for a battle.

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