India is also known as the “Pharmacy of the World” due to the large amount of medicinal materials delivered to the world. In recent times, the sudden outbreak of the epidemic in India has led to the near collapse of the “world pharmacy”, and countries in Europe and the United States have begun to worry whether there will be a shortage of drug supplies. German Chancellor Angela Merkel also expressed her concern about the supply of drugs.
India and China are the two major producers in the international pharmaceutical market, as the EU Parliament describes on its website.
-80% of the active pharmaceutical ingredients are produced in China and India
-40% of the finished medicines sold in Europe come from China and India
-60% of the world’s paracetamol comes from China and India
-For Penicillin, the figure is 90%.
-50% for Ibuprofen
India has a particularly large share in the production of so-called generics (i.e. copies of drugs whose patent protection has expired). According to a study by the German generic drug association Pro Generika, about 41 percent of the generic drugs prescribed in Europe last year came from India. The stronghold of its production is the Marahastra region, where the CCP virus (Wuhan pneumonia) is currently wreaking its greatest havoc. In Germany alone, generics accounted for about 78% of the total drug supply in 2019.
What is clear is that industrialized countries, including European countries, find themselves in a state of extreme drug dependency. “Especially when it comes to essential ingredients, our production base is extremely reduced to just a few.” Morris Hosseini of Roland Berger Strategy Consultants analyzes.
For international drugmakers, this situation means that the basic ingredients for different antibiotic formulations may simply come from the same plant. Ulrike Holzgrabe, a professor of pharmacy at the University of Würzburg in Germany, said, “Concentration on one producer is dangerous and we must not take this as normal.” The supply chain will thus become vulnerable, both to the risk of natural disasters and to technical failures.
Wolfgang Späth, president of the Pro Generika Association, takes a similar view, saying in a speech last October that although there were no supply bottlenecks for drugs in Germany during the peak of the first wave of the CCP virus (COVID-19), we cannot be lucky and rely only on everything going well next time.
What does it look like when everything doesn’t go well, and how fragile is the international supply chain? In the fall of 2016, a major explosion occurred at a plant in Jinan, China, and many countries experienced supply shortages for weeks or even months because the antibiotic piperacillin (Piperacillin) was produced there.
As in many other industries, the main reason for the outsourcing of production was the relentless price war between pharmaceutical manufacturers. As is often the case, those who can produce and buy at the lowest cost have an advantage, as is the case in India, for example. In addition, there is an industry-specific phenomenon where so-called discount contracts are common between health insurers and pharmaceutical companies, which further exacerbates the price war.
This dependency has suddenly caused a stir in German politics as well. Germany had already felt the pinch on the mouthpiece issue before. Federal Health Minister Jens Spahn said last October that it was necessary to consider “which methods we can use to stimulate the production and supply of medicines in Europe again”.
According to pharmacy professor Holzgeber, a quick solution is unrealistic and the interests of the various groups are too different. States, pharmaceutical groups and health insurers must first agree on whether they want to produce in Germany or Europe and which drugs to produce.
“Only with such a basic agreement can we move forward and possibly create the necessary infrastructure through incentives.” Holzgeber said, however, that there is still a long way to go.
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