Chinese competition hurting Indian drugmakers

Posted by: Bruce Einhorn on December 12, 2006

You might think that India’s pharmaceutical industry would be one business where locals needn’t fret too much about competition from China. While China has no big-name drugmakers with significant presence beyond the People’s Republic, India’s pharma industry is one of the country’s great success stories. Companies like Ranbaxy, Dr Reddy’s and Cipla are recognized worldwide for their high-quality, low-cost products. The Indians have helped revolutionize the world’s generics industry and some companies are trying, albeit with mixed results, to become players in the risky world of new drug discovery.

Still, the Indians are worried. See this story from the Business Standard newspaper, “Chinese drugs pose threat to Indian pharma.” The Chinese may not be in the same league as the Indians when it comes to producing finished drugs for use in the West or in the developing world, but reporter Joe C Mathew points out that China’s manufacturers of bulk drugs are going to town against their Indian counterparts, with prices for many Chinese-made antibiotics so much cheaper that some local drugmakers are giving up. “Indian companies are finding it impossible to arrest the trend as the imported drugs are of the same quality and brought in through legal channels,” writes Mathew. Smaller companies as well as more well-known names are both feeling the pinch, the paper reports, and some companies are shutting down bulk-drug production in India because of the Chinese onslaught.

If you’re an exec at Ranbaxy or Dr. Reddy’s and you want to look on the bright side, I suppose you could say that competition at the low end will provide even more incentive for Indian companies to move aggressively into the development of more advanced drugs. So far, that’s an area where the Indians have a clear lead. But how long do they have before the Chinese start becoming a threat there, too?

Reader Comments

Andy

December 12, 2006 10:25 AM

Indian drug companies succeded because they focused mainly on generic drugs. Is it a surprise to see Chinese coming at them? Generic drugs are opened to competition. Indians should move to R&D if they want to survive.

redescape

December 12, 2006 10:39 PM

Just few bad experience not supporting anyone...

Chiense are notorious for reverse engineering the products and selling them cheap. Don't want to do R&D just get it done u know sneak in. Same goes for Windows, Blackberry the list just go on.

As for Ranbaxy and co they are coming up. I guess there are atleast 15 new drug patents pending now. So that answers they r doing R&D or not.

Jim

December 16, 2006 5:33 PM

I have experience with Chinese first hand. They are very good at copying. The Indians on the other hand would like to create and innovate. I relly think the Indians will go further. They have more better work ethics.

Niti Bhan

December 24, 2006 8:54 AM

There's a sidebar article in BusinessWorld magazine dated December 25th on Ranbaxy's recent $70M purchase of South African pharma co Be-Tabs making them the only Indian player in ZA's top five generics list.

While China is busying copying and dumping in regional markets, Ranbaxy is focusing on strategic investments in other rapidly developing economies. South Africa's pharma market is growing faster than india's and they have a larger piece of this pie. They've also picked up a Romanian and a Belgian generic mfr as well as SKB's italian and spanish units.

Would Chinese firms even contemplate such moves into Europe? I see a long term strategy at play here of dominating the generic market worldwide with a reputable brand. Cheap chinese no names will survive only in certain segments - prescriptions are already too expensive to fill in the developed world and the margins higher. Let's wait and see what happens.

fp

December 25, 2006 6:02 AM

The consequences can be deadly. In May, 11 people were killed by antibiotics made in Heilongjiang. The manufacturers had mistakenly added diethylene glycol, an industrial toxin, to the ingredients. Last year, the media in Guangdong reported the deaths of two boys from rabies, against which their parents thought they had been inoculated until police found 40,000 boxes of fake vaccine. A year before, at least 50 babies in Anhui province died and more than 100 were severely malnourished after being fed fake milk formula, some of which had only 6% of the vitamins, minerals and protein needed for a growing infant.

From the Guardian - Dec 4th, 2006

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