Market Place
Chinese industrial activity revival at 98.6 percent, officials assure of API supplies
While the world feels the heat of the Covid-19 pandemic with the global pharmaceutical supply chain getting impacted, normalcy is returning to China. According to new reports, the production of drugs and APIs in China is also returning to normal.
Officials had paid heed to resumption of production
The officials highlighted that during the critical period of epidemic prevention and control, the Chinese government had paid close attention to the resumption of production of API companies. After receiving reports that some companies in Hubei had not resumed work, which would impact the supply chains of products like metronidazole, ibuprofen, and taurine, the authorities urgently coordinated with the relevant departments of Hubei, other provinces, cities and counties to carry out key scheduling for some API manufacturers and actively organized employees to return to work.
However, despite these initiatives, due to the impact of the epidemic, wherein some enterprises had stopped production and subsequently faced challenges with logistics and transportation difficulties, there was a shortfall in supply.
The export volume of APIs did decrease this year compared with the same period last year and the officials estimated that most products witnessed a drop of about 10 to 20 percent, and in some cases the decline of individual varieties had reached 30 percent. Repeated communications between the officials and these companies revealed that the main contributor to the decline in exports was sea freight, as international shipping had greatly reduced, and transportation costs have also increased.
Although international transportation has become a bottleneck for the supply of some APIs, the press conference highlighted that the output of other APIs had exceeded the level of the same period last year.
China to meet global demand for chloroquine
The officials made a special mention of medications like chloroquine phosphate which have received significant attention as a potential treatment of the novel coronavirus. After chloroquine phosphate was identified as a potentially effective treatment, the government worked with the two major API manufacturers in China to organize the companies to meet international demand. For example, Chongqing Kangle Pharmaceuticals exported 4.9 tons of chloroquine APIs within five days.
This news from China is encouraging to the global supply chain as following the rising interest in a chloroquine analog — Hydroxychloroquine (HCQ) — the Indian government issued a directive which prohibits the export of HCQ API and formulations made from HCQ. The directive did, however, offer exemptions to exports from special economic zones/export-oriented units and in cases where export is made to fulfill an export obligation under any advance license issued on or before the date of the notification.
Last week, Hungary, which is also one of the world’s largest exporters of HCQ, also banned the commercial export of the ingredient and the United Kingdom (UK) banned the export of finished formulations of HCQ as part of a list of 135 medicines posted that cannot be exported from the UK because they were needed for the UK patients.
In early March, the Indian government had also restricted the exports of 13 APIs along with some of their finished formulations. The list included paracetamol tinidazole metronidazole acyclovir vitamin B1 vitamin B6 vitamin B12 progesterone chloramphenicol and neomycin.
However, a recent report published in The Economic Times highlighted that out of 13 drugs whose exports were restricted, the government is likely to lift the ban on the following five APIs — paracetamol, tinidazole, metronidazole, ornidazole and azithromycin. There were also reports of significant pressure from the US on the Indian government for products like paracetamol and the officials expect the ban to be lifted in the coming days.
The Chinese officials further went on to provide assurances that the supply of chloroquine phosphate can be increased in accordance with international market demand and that China’s Ministry of Industry and Information Technology will also organize the implementation of monitoring and production scheduling of key products, coordinate and solve the export transportation difficulties encountered by enterprises and strengthen communication.
Our view
The press conference highlighted that China attaches great importance to the safety of the global pharmaceutical industry supply chain and President Xi Jinping had promised at the G20 summit of member states on March 26 that China will increase its efforts to supply APIs to the international community.
The Chinese government is working earnestly to implement the commitment to maintain the production of API manufacturers and ensure the safety and stability of global industrial chain supply, the statement emerging out of the press conference said.
Given the global pharmaceutical supply chain’s overwhelming dependence on China, the nation’s return to normalcy is a positive sign for countries across the world. For the time being, the pandemic has only increased the world’s dependence on China. All countries that want to reduce their reliance on China will take time not just to build capacities, but also to emerge out of the Covid-19 crisis.
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