China vs. India: the fight for pharma supremacy
India’s position as a pharma powerhouse is well established, but a galvanised China has set its sights on overtaking rivals
As the world races to develop and distribute a vaccine to combat coronavirus, there is a parallel contest gathering momentum between India and China’s pharmaceutical markets. The pharma industries in both countries are perceived to be competing for a position at the head of the global market. While India retains its position as a world leader in generic medicine production, China has increased its investment in research and development, signalling an interest in overtaking competitors.
India, recognised as a pharmaceutical powerhouse, is facing a threat. In Made in China 2025, China’s industrial policy aiming to make the country dominant in global high-tech manufacturing, biomedicine is a key strategic goal. A laser-sharp focus on expanding their burgeoning pharma market is providing China with a distinct edge in drug development compared with India.
China’s growth driver: emphasising innovation
In 2016, China’s pharmaceutical market was worth $123 billion, but this figure is projected to surge to $573 billion by 2022. McKinsey & Company hails China’s biopharma industry as only second behind the United States in global numbers. Its imminent transformation will arise from the investment and support being put into innovation.
“China is investing heavily in R&D and they know this is the first step to achievement in this industry,” says Dr Kamal Rashid, founding director of the US Center for Biopharmaceutical Education and Training. “Investment in the workforce is also essential. To produce a good product that will receive approval, you need both manpower and facilities. There is a need for a good workforce to make innovation a reality. This is something China is getting into more aggressively.”
The Chinese government has created a support system to incubate new firms, allowing them to leap from old technologies into creating biologics. Key players in their domestic market include Sinopharm Group and Shanghai Pharmaceuticals, but multinationals such as AstraZeneca, Pfizer, and Novartis make up a substantial component of the ecosystem. In China, the latter contribute to global pharma revenues at an average of 8 per cent.
Indian pharma continues focus on generics
A dearth in the creation of biologics sets India a few steps behind China’s vision for their pharma market. Yet India continues to be hailed as the largest provider of generics globally. “India is referred to as the pharmacy of the world and with good reason,” says Nithya Balasubramanian, director at investment management firm Bernstein.
At present, generic drugs manufactured in India account for 20 per cent of the global consumption of generics, in addition to 40 per cent of prescriptions dispensed in the United States, which is safely positioned as the largest pharma market. In 2019, Indian pharma was worth $38.8 billion, contributing significantly to the country’s economic growth.
“While the US market has been in the driver’s seat dictating valuations, the Indian domestic market remains the ever-reliable vertical for most Indian generics and is slowly gaining prominence,” says Balasubramanian.
While their growth will continue in the supply of generics, innovation has been given far less attention in India compared to China. Balasubramanian notes that most recent product launches in India have been “incrementally innovative”. India’s market growth will stem, instead, from the “commercial muscle of Indian generics”, she says.
According to the Indian Pharmaceutical Alliance (IPA), there are several challenges to the exponential growth Indian pharma could achieve. For one, an environment conducive to long-term investment decisions in the pharmaceutical industry has yet to be established. Other key challenges include lack of innovation, less access to skilled workers and stricter guidelines in quality compliance in international markets. The IPA reports there are about 29 skilled workers available for every 10,000 people in India, in comparison to China, where there would be about 41.
A noticeable dependence in India on external markets, including China, for intermediates and active pharmaceutical ingredients is an additional factor. However, analysts believe India will persevere and show growth in this sector.
“We remain optimistic about the growth prospects for the industry in the next four to five years and believe they will continue to be the largest contributor to profitability for Indian generic manufacturers,” says Balasubramanian.
All eyes remain on the Chinese as they climb the global market rankings, foreshadowing a possible change of leadership in new technology and life science.
Pharmaceutical power on a global scale
This clash of global pharmaceutical titans is ongoing. However, it begs the question of whether this race will result in the potential cutting of corners in manufacturing and approval processes, ultimately lowering standards?
“We can’t play with human health, so cutting corners would be the last thing to do,” says Rashid. “In the United States, the federal government heavily regulates innovative drugs. In other countries, regulation may not be as stringent and this will need to be discussed.”
The impact of the next pharmaceutical powerhouse may extend far beyond healthcare markets, spilling over into global influence and soft political power. China’s pharmaceutical companies appear to be playing a very different game to India’s and this strategy is likely to clinch the position of pharmaceutical supremacy.