Chinese generic drug firms face stiff competition from Indian drugmakers

They offer lower labour costs and stronger R&D capabilities.

Generic drug companies in China with weaknesses in R&D, production capacity or integration of active pharmaceutical ingredient (API) and finished drug production may die out in the next few years as competition heightens from more established Indian pharma firms, UOB Kay Hian reports based on a forum in Hangzhou.

Indian pharma players lead the global generic drug market, being ahead in globalisation efforts and strong capabilities in generic drug development. The firms also operate with low labour cost and advanced IT and related technologies.

Indian drugmakers have been actively expanding to China through joint ventures. In July, Cipla announced that it has entered into a joint venture with Jiangsu Acebright to set up a manufacturing plant for respiratory products. Aurobindo Pharma is building a new plant in the country and Sun Pharmaceuticals has entered into a 15-year licensing agreement with a subsidiary of China Medical System Holdings.

“Generic companies [in China] have to quickly enhance R&D capability, carefully select products and focus areas, lower costs and improve efficiency,” analysts Carol Dou and Michael Cheung wrote.

A separate UOB Kay Hian report found that the entrance of Indian pharmas 25-province Group Purchasing Order (GPO) programme could cut prices further by 30%.