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China’s growing presence in the global supply chain

corresponding

SHANNON BENNETT
API Intelligence Thomson Reuters, 215 Commercial Street, 5th Floor Portland, ME 04101, USA

Abstract

China has become a top sourcing destination for low cost commodity products. Through supply agreements with foreign companies Chinese – made APIs and intermediates have been integrated into the global supply chain. Contrary to a popular misconception, finished dose products from China are only just beginning to arrive on the USA market. In an effort to improve quality, environmental protection and market growth, the Chinese government has taken action by implementing new GMP and environmental regulations. However, these initiatives come with increasing costs that may impact the advantages of sourcing from China.


SOURCING ADVANTAGES

China has become an increasingly important player in the global pharmaceutical supply chain. The availability of a wide variety of intermediates, low cost base, large talent pool and good infrastructure has made China a preferred sourcing destination for low cost commodity products for a number of pharmaceutical companies.
Foreign companies in pursuit of cost advantages and access to local and emerging markets are partnering with China-based companies. Janssen has had a supply arrangement in place with Chongqing Huapont since the early 1990s; additionally, supply agreements exist between Boehringer Ingelheim and Hisoar (2008) and Novartis and Zhejiang Huahai (2011) for active pharmaceutical ingredients (API) and intermediates. Through