China: Indian Pharma Firms Incoming

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The pharmaceutical industries of China and India, historically focused on their large domestic markets and exports to developed nations, are increasingly forging closer links. With US trade tariffs affecting both countries and regulatory reform underway in China, Indian firms are jumping at the chance to bring their competitively-priced drugs to China.

 

We are trying to deepen our position in Brazil and China because, believe it or not, China has a huge unexploited respiratory market

Umang Vohra, Cipla

Currently, India only exports a small fraction of its drugs to China; just one percent of its USD 17.3 billion annual drug exports, according to the Pharmaceutical Export Promotion Council of India (Pharmexcil). Additionally, the countries have not historically been close allies, with military tension reported just last year at the China-India border. However, this could stand to change, with both simultaneously being hit by trade tariffs from the US. China has been hit the hardest, with additional tariffs being proposed on top of the 25 percent already in place, but India is now having steel and aluminium tariffs imposed by the Trump administration. These trade tariffs, along with new Chinese drug policies, may be opening a door for the two countries to establish a working relationship.

 

In 2017 China rolled out a quality equivalence policy in which generic versions of drugs that have been approved must undergo a second evaluation for quality assurance if they want to remain on the market, a policy that pushes out smaller companies that develop lower-quality generics and leaves space for new players – including those from India – to enter the Chinese market. Furthermore, China is in the process of slashing prices on cancer drugs and has established the 4+7 procurement program, which imposes steep price discounts of up to 90 percent on generics. 

 

Indian firms, with their experience in producing large quantities of low-price generic medicines for export and against a backdrop of pricing pressures in the US, are grasping the opportunity to bring their products to China with potential additional discounts of 20 to 30 percent off the tendered prices. 

 

Trade between India and China is already beginning to grow, and government agencies are actively working to promote this cooperation, according to China’s Foreign Ministry spokeswoman Hua Chunying. Pharmexcil and the China Chamber of Commerce for Import and Export of Medicines and Health Products are in talks to form an agreement to ease clearance processes and help Indian companies find Chinese partners. China has also promised to start training Indian pharma companies on the Chinese regulatory system. As for drug approval, China is considering granting Indian drugs that are approved in Europe an expedited review pathway of six months.

 

This is music to the ears of companies like Cipla, an Indian multinational that focuses on treating respiratory and cardiovascular diseases, arthritis, diabetes, and depression. Cipla CEO Umang Vohra told PharmaBoardroom in 2018 that “we are trying to deepen our position in Brazil and China because, believe it or not, China has a huge unexploited respiratory market.” In July 2019 Cipla announced that it would be forming a joint venture with Chinese firm Jiangsu Acebright Pharmaceutical, holding an 80 percent stake in the combined investment of USD 30 million. Through the partnership, a manufacturing facility will be constructed to develop respiratory products for the Chinese market.

 

According to a recent report by Bank of America Merrill Lynch estimates that the number of joint ventures between Indian and Chinese companies will continue to increase. In this new climate of collaboration, other Indian companies are jumping on board, including Sun Pharma, which signed two licensing deals with China Medical System, one for the rights to psoriasis drug Ilumya and the second for its version of Allergan’s dry eye therapy Restasis. Dr. Reddy’s Laboratories, headquartered in Hyderabad, plans to build a new plant in China due to its substantial presence there, and has identified 70 of its products that meet Chinese regulatory requirements.

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