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SIS International Research, January 2008: APIs Increasingly, drug companies are sourcing their APIs from India and China (“producer countries”). The API marketplace is highly competitive, and the move to sourcing from these countries is cost-driven. At the same time, the WTO patent protection regime and regulatory requirements from buyer markets are becoming more stringent – in particular developments in the GMP framework have imposed more stringent requirements, and therefore higher production costs, on API manufacturers wishing to sell globally. Also, in India specifically (although to the best of our knowledge not in China), local environment protection legislation has imposed new costs on API manufacturers. The net effect of all these forces is to increase barriers to entry and to force manufacturers in the producer countries to reformulate their long term goals. Companies in the producer countries are adopting a variety of strategies in the face of these competitive pressures. The major trends over the last 5 years have been: • Consolidation, to achieve economies of scale • Certification, to ease entry into new markets • Alliances and joint ventures with multinational drug companies, to secure longer-term and larger-scale revenue streams • Diversification into formulations and generics, to achieve added value production The outcome has been broadly very successful. For the API industry as a whole, net profit is thought to be around 18% per year in India. But it appears that the situation is not nearly so successful in the oncology sector. The purpose of this proposed research project is to examine, quantify and interpret the profitability gap between oncology API manufacturers and the market as a whole in the producer countries.
SIS Market Intelligences - “API: India & China”
 
 
 
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