CHINDIA GENERICS A DREAM OR REALITY?
It seems logical for the two largest pharma suppliers in the world, one of active ingredients and another of generic drugs, to trade more, but forward movement between the Indian and Chinese industries may not be straightforward.
Indian firms are hoping to finally enter China’s generics market after years of testing the waters, while China is hoping to build alternative suppliers of affordable drugs to its market.
Following a recent hit movie in China about a Chinese smuggler of locally non-approved anticancer drugs from India who was hailed a hero, trade groups and governments on both sides now appear to be moving towards having more drugs legally introduced from India to China. (Also see "Downward, Eastward or Inward? Blockbuster Film Puts Cancer Drug Prices In China Spotlight" - Scrip, 11 Jul, 2018.)
With that in mind,the Pharmaceuticals Export Promotion Council of India (Pharmexcil),along with its Chinese counterparts, recently organized a meet and greet session in Shanghai with the aim of facilitating formal introductions. The 27-member Indian delegation is said to have included officials from the Ministry of Commerce along with executives from Dr. Reddy's Laboratories Ltd.,Lupin Ltd.,Cipla Ltd .and Aurobindo Pharma Ltd., among others, and was led by Pharmexcil’s director general Ravi Uday Bhaskar.
Meanwhile, Chinese attendees included officials from the China National Drug Administration, trade groups, and executives from Fosun International Ltd. and Shanghai Pharmaceuticals Holding Co. Ltd., totaling 200-plus companies from China.
The Indo-China pharma business corridor appears to be buzzing with activity following recent tariff exemptions announced by China to open up its market for cost-effective medicines, especially anticancers. China had earlier this year waived import tariffs for 28 drugs, including cancer drugs, from May 1.
Pharmexcil tweeted Aug. 20 that it had signed a memorandum of understanding with the China Chamber of Commerce for Import and Export of Medicines and Health Products (CCCMHPIE) and Health Products, though specifics around this were not immediately clear. The meeting, hosted by the Consulate General of India, Shanghai, was expected to, among other aspects, discuss India-China business opportunities and also better understand the evolving China FDA regulatory requirements.
Pharmexcil had, ahead of the meeting, noted that in addition to the tariff cuts, Chinese authorities were implementing measures to rein in costs using price negotiations with manufacturers, considering greater use of centralized government procurement and the inclusion of a “wider range” of antineoplastic drugs in the national healthcare insurance program.
China has also eased the approval process for medicines from abroad, especially in rare and life-threatening diseases (Also see "China Vs. Cancer: Seven Companies Given Price Cuts, Roche Gets New Approval" - Scrip, 21 Aug, 2018.).
Not Quite Eye-To-Eye
Some at the meeting called for a reduction in the review time for Indian generics to one to three years from five to seven years, and to exclude import tariffs on treatments for diseases with a high incidence rate in China, such as cardiovascular, internal-digestive, diabetes, CNS, and anticancer drugs.
In response, the officials of the CCCMHPIE said Indian companies should respect requests from Chinese counterparts, and seek outright partners in the country.
“China and India have a strong basis to complement each other, as China is India’s largest supplier of APIs and pharma media, contributing strongly to the Indian drug industry’s development,“noted the vice president of the chamber, Meng Dongping.
However, she said while Indian companies want to enter the Chinese market, they should pay attention to Chinese companies’ needs, and "focus on collaboration through the industry chain.”
Additionally, Indian makers should try to gain a deep understanding of Chinese regulations and policies, and follow up with expansion and rights partnerships.
Huge Trade Gap
There is still a huge trade gap between India and China’s pharma goods. From 2016-2017, India imported APIs from China worth INR122.54bn ($1.75bn), while, India exported finished drug products worth $146m to China, including loosely-packaged tablets and pharma media worth $104m.
Since then, Chinese API makers have seen costs skyrocketed, pressuring Indian generics makers to increase prices accordingly. For the first 10 months in 2017-2018, the export from China to India declined to $1.2bn.
While it seems natural for the prospect of China and India working together connecting API suppliers from China and affordable generics from India, the execution can be daunting.
China Really On The Radar?
While Indian firms, in general, see significant scope for increasing exports of life-saving drugs, antibiotics and anti-infective products to China in the new evolving trade scenario, the enthusiasm doesn’t appear to be shared uniformly across the industry in India.
“While the Indian government is doing its best for market access, I’m not sure if India Pharma Inc is fully ready to go to China. There are several complexities in the China market besides approval timelines,” one industry veteran toldScrip.
He believes that, in general, front-line Indian firms are “much more interested” in exploring Japan, Australia and some parts of Europe ahead of China, despite the seemingly improving business environment there. Firm’s like Cipla have, however, over the recent past indicated an interest in a China play in the respiratory space. (Also see "Home Gains Buoy Cipla In Q1 But US Momentum Pivotal" - Scrip, 9 Aug, 2018.)
Much of the apparent recent India-China bonhomie also comes against a backdrop of India’s crippling dependence on Chinese active pharmaceutical ingredients (APIs) for the production of their generics.
Prices of several APIs, intermediates and key starting materials imported from China, some of which are used in high-burden disease segments in India, have spiked sharply as China clamps down on polluting industries and ups the regulatory compliance bar, but also impacting cost dynamics at Indian firms. (Also see "China API Alert, Indian Firms Brace For More Pain" - Scrip, 3 Jul, 2018.)