Why pharma companies are turning towards China and Japan for manufacturing?

December 13 , 2018

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Why pharma companies are turning towards China and Japan for manufacturing? Not only the Pharmaceutical industry, but the entire leading industries have also taken their way to China. For your information, China is the second largest market in the world of pharmaceuticals. This country, itself wants to be the vital innovator of pharmaceuticals as it is the world’s manufacturing powerhouse which focuses more on value-add economy. So, in the healthcare industries, it could be dominated as both makers as well as the consumer. According to some survey related to the healthcare industry, it has also been realized that Japan’s rapidly ageing population also presents this very unique business opportunity. So, in order to fulfil this need, the government has responded in regulating life science and approved the new innovative drugs so they can further promote all the pharma companies. Made in China 2025: China’s ambitions are so clear for exporting generic medication. In fact, recently, the Chinese pharmaceuticals have received approval from the U.S. Food and Drug Administration for 38 generic drugs. So, as the part of the “Made in China 2025” pharma industry plan, their President Xi Jinping has recognized this pharmaceutical sector as a big push which has a good focus on innovation, homegrown research as well as development. Eli Lilly and Co. chairman with the CEO David A. Ricks has conveyed a Tokyo audience recently that all the Japanese leaders very well understand the importance of encouraging medical innovation. All the relevant changes have been done to attain the solution of the drastic diseases or other health care problems. So, basically, we can say, the rise in the price pressures of the North American market accounts for about a third of India’s pharmaceutical exports, are inducing the domestic drug makers to explore the avenues in the markets of China and Japan. Till the last year, pharma exports has attained $10.8 billion, that means a 12% rise from the last period. The director general of pharmaceuticals export promotion council of India has conveyed that Indian regulators are currently working with the Chinese counterparts in order to enable the local drug makers to attain access to the Chinese market by accelerating timelines for product approvals. India basically heavily depends on the imports from China for 30-40 APIs, KSMs as well as intermediates. Currently, India is importing around $2.5billion of the pharma products from China and exports more than $200million. The Indian pharma companies have been facing price pressures as Chinese raw materials mounting the price so the Indian drug makers company were unable to pass to its buyers. Moreover, the increased inspections by the global regulators as well as the customers increase the cost of compliance which further adds more pressures on the margins of the domestic drug makers. Apart from looking at this dependence, Indian pharma franchise companies are also involved in emerging opportunities in the markets such as Bangladesh and other south-east Asian countries. Therefore, pharma companies are turning towards China and Japan for the manufacturing and it will take a really long time for China and Japan to overtake the US.
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