A Tale of Two Pharmaceutical Industries

I was in Asia last week, learning what I could about the evolving pharmaceutical industry there. In one country, the industry is growing with a keen eye toward the export market. In this country, standards, practices, machinery, raw materials, and packaging materials are all GMP-compliant and strive to meet the most stringent international quality standards.

Michelle Hoffman

The other country couldn't be more different. There, equipment manufacturers are happy if their products are good enough. The government in this country issues new guidances at roughly five-year intervals. They are still developing their regulations and are aware of international quality standards, but feel no compunction (as far as I could tell) to conform to them.

One country is building on inventions and lessons learned by more established pharmaceutical practitioners. The other country is developing its industry from the ground up, almost as though no other country has developed these systems and practices before.

The curious thing is that both of these countries reside in the same geographic space: China. On one hand, there's a cadre of pharmaceutical companies eager and able to produce high-quality goods to sell to Europe and North America. These companies are aware of quality standards, but to meet them, must purchase their manufacturing equipment and supplies externally—from vendors in the West whose goods are GMP-compliant.

As far as I could tell, Chinese manufactured equipment and supplies for use in the domestic Chinese market do not meet international quality standards. It is quite common for larger Chinese pharmaceutical companies to maintain two types of manufacturing plants: one with GMP-compliant equipment, supplies, and ingredients for export, and a second with Chinese produced, non-GMP-compliant materials for the domestic market.

The language barrier made it difficult to be precise about what people were telling me, and of course, I had only the briefest exposure to the Chinese industry, but I thought I could discern several reasons for the existing situation. For one thing, Chinese consumers are not yet demanding higher quality goods. In addition, the cost structure frustrates efforts toward improving the quality of goods for the domestic market. As one manufacturer explained, to make a profit, it has to keep down its cost of goods—so low in fact that it can't afford GMP-compliant equipment and supplies. In conrast, because they can make greater profits in the developed nations, Chinese manufacturers can afford to purchase high-quality equipment and raw materials.

Until the Chinese government mandates quality from all domestic producers, those who want to produce higher quality drugs operate at a disadvantage vis à vis their lower-cost, lower-quality competitors. If I understood correctly, it would be economic suicide for Chinese companies to produce GMP-compliant drugs for domestic use. It seems that the lack of government mandates for high-quality drugs actually discourages companies that want to produce better quality products.

Countries with well-developed pharmaceutical industries have done the work and research to determine what those standards ought to be. By not adopting agreed upon international standards, the Chinese government makes it more difficult for their manufacturers to compete globally. What does it say about the government's regard for the safety of its own people that it adopts lower standards for its domestic market than for the export market?

Several people who have experience working within the Chinese market suggested that the Chinese have a centuries-long history of maintaining a fierce independence from outside influences. I'm sure many of you are familiar with the story, likely apocryphal, about the Chinese mariners who discovered the New World before Columbus and Erikson. Supposedly, the sailors landed in the New World, looked around, decided there wasn't much to interest them, and went home. Perhaps the Chinese simply feel the same about the Western pharmaceutical industry.

Michelle Hoffman is editor-in-chief of Pharmaceutical Technology. Send your thoughts and story ideas to mhoffman@advanstar.com

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