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The Growing Concern over China’s Dominance in Pharmaceuticals
China has become a drug manufacturing powerhouse over the past 20 years, as lax environmental regulations and cheap labor have allowed it to dominate the pharmaceutical manufacturing sector, giving it leverage over its European competitors.
China’s Domination in the Pharmaceutical Industry
China is a major producer of old generic drugs that are routinely used in hospitals. Antibiotics, for example, are increasingly being exported in Asia, under Chinese control.
The country has also captured the market because it has the main ingredients needed to make penicillin, and China is a major exporter of other categories such as blood pressure drugs or pain relievers.
Concerns of Europeans
All of this has raised the concerns of Europeans, who have warned of an outbreak of conflict between China and Taiwan and what could have a catastrophic effect on China’s supply of vital medicines to Europe, especially as Beijing supplies the pharmaceutical industry in Europe with the basic ingredients used in the production of a variety of medicines, according to a report by Politico.
To what extent can Europe be involved?
In this regard, Roberta Pizzocaro, president of “Olon”, a Milanese company that produces about 300 different pharmaceutical ingredients that go into ready-made medicines, revealed that “a crisis in Taiwan could cause a complete shortage of some medicines”. noting that the situation will be tragically.
Many pharmaceutical ingredients are now produced only in Asia and some exclusively in China, Pizucaro added, noting that his company could last “for a while” with existing inventories, but it won’t be long before shortages start to bite.
Observers also raise an open question about the measure in which Europe could be involved in any future conflict, especially since the continent’s supply chains are unlikely to remain intact.
Sanctions and the Pharmaceutical Market
The 180-kilometer-wide Taiwan Strait separating the two countries is one of the busiest shipping lanes in the world and a route for transporting medicines and pharmaceutical ingredients.
And the prospect of sanctions of the kind imposed on Russia after the invasion of Ukraine worries people.
In turn, Gianpaolo Negresoli, CEO of the pharmaceutical group Flama Group, said: “If China attacks Taiwan … and we impose sanctions on it as we did with Russia, the pharmaceutical market will turn upside down.” “Everyone knows—they probably don’t tell,” he continued. “We don’t have many alternatives,” he added.
Europe’s Dependency on Asia
Industry data shows that Europe currently produces only a quarter of the world’s active pharmaceutical ingredients, compared with half of 2000, and is increasingly dependent on imports.
Meanwhile, China and India produce more than half of them, while India depends on China for its inputs.
One studio conducted by market research firm IQVIA for the European Fine Chemicals Group estimated that Europe relies on Asia for three-quarters of its pharmaceutical ingredients and primary chemicals, and that China is responsible for most of these, about 70%.
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