Chemicals & R a w M a t e r i a l s
EasT vs WEsT in
ThE baTTlE For aPis
T
he results of the Chemical Pharmaceutical Generic
Association’s study Competition in the World APIs Market
make interesting reading. On one hand, the market shares
held on a worldwide scale by Western API producers (Italy in
pole position, followed by Spain, traditionally the two world-
leading producers of generic APIs; see p73) are progressively
decreasing. On the other hand, APIs sales by Asian competitors
(in particular India and China) are growing.
The following figures are clear evidence: total market share
held by both Italy and Spain in the world generic APIs market
fell from 27.4 per cent in 2004 to 24.2 per cent in 2005, and is
forecast to further decrease to 15 per cent by 2010. Similarly,
Italy and Spain’s share in the total APIs market (which includes
both generic and branded/innovative APIs) decreased from 15.3
per cent in 2004 to 13.6 per cent in 2005, and is projected to
further decrease to a modest 9.5 per cent by 2010.
On the contrary, market shares held by Asian API manufacturers
are quickly increasing, as shown by the following figures. In 2004
market share held by India and China together in the world
market for generic APIs was 42.4 per cent; this grew to 44.6 per
cent in 2005 and is projected to reach approximately 60 per cent
by 2010. Likewise the penetration by the two countries into the
total APIs market (generic and branded/innovative APIs) shows
a substantial growth trend: both India and China held a share of
19 per cent in 2004, which grew to 20.7 per cent in 2005, and is
forecast to reach 32 per cent by 2010.
World Pharmaceutical Frontiers • Providing a global perspective on the pharmaceutical industry • www.worldpharmaceuticals.net
WPF010_060 Mangia.indd 72
A study by the CPA, in cooperation with Studio
Tamburini, produced a detailed analysis on the
fierce competition among the major countries
producing APIs, writes POLI Industria Chimica
and CPA president Dr Alberto Mangia.
Author
Dr Alberto Mangia has been MD and general manager of
Poli Industria Chimica SpA since 1996. His first years in the
chemical and pharmaceutical industries were spent with
Pierrel, and he has held management positions with the Italian
subsidiaries of Swedish and Dutch multinational companies.
Mangia has been president of the Chemical Pharmaceutical
Generic Association (CPA) since 2003. The CPA is the chemical-
pharmaceutical industries’ strategic consultant, offering services
to researchers, scientists and experts. Studio Tamburini is
a Milan-based marketing institute specialising in industrial
market searching.
Western market
The penetration of the market by Asian API manufacturers,
however, changes from one geographical area to another. Thus,
for example, in the Western European market for generic APIs,
market share held by Indian and Chinese manufacturers is
forecast to increase from approximately 57 per cent in 2005
to about 67 per cent by 2010, while India and China’s share in
the USA is expected to rise from almost 16 per cent in 2005 to
approximately 25 per cent by 2010.
This different penetration rate between Western Europe and the
USA by Asian manufacturers is mainly related to the fact that it
is easier for an Asian company to enter the EU market than in
the USA, where a more stringent regulatory system (in terms of
inspections and approvals) is in force compared with the EU.
Eastern sales
Globally, Indian API sales are lower than China’s. However, this
is expected to show the fastest growth rate during the next few
years (over 19 per cent yearly average for 2005–10), with export
sales growing faster than sales to India’s domestic market.
The penetration by Indian API competitors into the USA is
expected to be strong and, within the next five years, market
share will treble (despite the fact that Indian companies
usually implement sales of finished dosage forms, with the
API incorporated; this means the erosion of market shares for
Western competitors).
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 C h e m i c a l s & R a w Materials

A clear example of this is the comparison of labour costs: if

Value of API production and export by major
the average wage index for a typical Western API company
API-producing countries, 2005
is 100, the average wage index is approximately ten for a
typical Indian API company and approximately eight for a
Country Total API production Generic API production Total API exports
Italy $3,200m $2,450m 99%
typical Chinese company. Not even the higher productivity
Spain $1,020m $820m 90% (turnover/employee) of a Western company (due to the
India $2,000m $1,820m 75% higher average automation level of the manufacturing
China $4,400m $4,200m 77%
processes) can annul the labour cost difference, it can only
partially compensate it. In addition, India’s use of advanced
Threat or opportunity computerisation systems for the management of work
India’s astonishing growth rate into the USA is much higher resources is rapidly spreading.
than the average 12.2 per cent yearly sales growth forecast
for the same period by Chinese API competitors. India, due From an analysis of the penetration by major therapeutic
to a series of factors (technological background, marketing classes, the study shows that Italy still remains world market
network, increasing focus on intellectual property rights), is the leader in APIs destined to sectors such as cardiovascular or
most aggressive competitor in the world generic API business, central nervous system. China, apart from the traditional
surpassing even China. However, it is worth noting that due to sector of anti-infective APIs (where it holds a world market
these factors, coupled with general lower costs in comparison share of approximately 43 per cent; China and India together
with Western competitors, India is considered either a ‘threat’ reaching approximately 57 per cent), is already market leader
or a ‘globalisation opportunity’. in other sectors and is quickly increasing its penetration,
along with India, in several therapeutic areas, in which, until
The study also compares several cost voices (environmental now, the presence of Asian APIs manufacturing companies
and labour costs) between Western and Asian API companies, has not been particularly meaningful. In addition, both China
with the results being more favourable to Asian companies. and India have high potentiality in biotechnology. END

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