China to suspend exports of all HAZ chemicals for 2 months from mid July

The Chinese government is likely to suspend the export of all the hazardous substances including pharmaceutical chemicals for the two months starting from mid July to mid September, in connection with Olympics 2008. The decision is likely to create a major crisis situation for the Indian pharmaceutical industry.

According to industry sources, the Chinese government's decision is to suspend the movement of any hazardous substance, including pharmaceutical chemicals, in the region from one month prior to the beginning of Olympics. The restriction is expected to last till 15 days after the Olympics. For the next two months, therefore, the companies in India would find it difficult to import any chemical substances including bulk drugs and intermediates from China.

"This will have a double effect on the Indian pharmaceutical industry, as almost 20 per cent of the bulk drugs and around 70 to 80 per cent of the intermediates in the country are imported from China. Most of the companies are now collecting stocks as much as they can with their financial and storage capacity to meet the situation. The price increase of Chinese raw materials is already posing a problem for those who have to buy large quantities.

However, the sources informed that the restriction is only around Beijing, where the Olympics 2008 is to be held, and the supplies from other parts of China will be continued though the prices will be very high. The prices are expected to shoot up with increase in demand as the companies from Beijing and its outskirts cannot supply products to its customers.

The prices of active pharmaceutical ingredients (APIs) and intermediates imported from China have already gone up from 50 per cent to 200 per cent in the last couple of months. Further, the Chinese government has ordered closure of several major API manufacturers as the environment rules were made stringent prior to organising Olympics

Daiichi acquires Ranbaxy

Daiichi Sankyo Co. will buy a controlling stake in India's Ranbaxy Laboratories Ltd. for up to $4.6 billion to enter the generic-drug market, where sales are growing twice as fast as branded medicines.

Daiichi Sankyo, Japan's third-largest drugmaker, will acquire more than 50.1 percent of Ranbaxy, India's biggest pharmaceutical company, for 737 rupees a share.The purchase propels Daiichi Sankyo into the top 10 companies in the $120 billion generic-pharmaceutical market, which grew 11 percent last year, compared with 6 percent for all drugs.

Daiichi Sankyo is paying about 4.7 times Ranbaxy's sales in the acquisition.That compares with 2.7 times that Mylan Inc. paid last year when it bought Merck KGaA's generic unit for 4.9 billion euros ($7.6 billion).

The acquisition will allow Daiichi Sankyo to have a better reach into emerging markets, including India, China and Eastern Europe,'' where the pharmaceutical market is growing at a rate of more than 10 percent, the company said in a statement.

The Japanese pharmaceutical market will grow 1 percent to 2 percent this year. Global industry growth will be 5 percent to 6 percent next year.India's pharmaceutical market may expand by more than 12 percent a year.

The Ranbaxy purchase gives Daiichi a company that manufactures and sells drugs in 56 countries from the current 21. It follows Daiichi's takeover of German biotechnology company U3 Pharma AG for 150 million euros on May 21 to gain cancer treatments.

Ranbaxy has purchased seven companies in the past two and a half years, including Romania's Terapia SA. The company has been built over the past three decades by copying blockbuster drugs such as Merck & Co.'s Zocor cholesterol treatment drug and selling them for a fraction of the price in countries including France, Germany and the U.S.

Medical costs will swell 70 percent to 56 trillion yen by 2025 from 33 trillion yen in 2005, the government estimates. Japan wants generics to account for 30 percent of prescriptions by 2012 from 17 percent to save about 500 billion yen.

Policies favoring the use of generic drugs are also luring foreign companies, including Teva and Mylan Inc. Petah Tikva, Israel-based Teva, the world's largest generic-drug maker, is hiring as many as 193 people in Japan this year.

Bloomberg