All Eyes on China Drug Safety (China)

The execution of Zheng Xiaoyu, the former head of China's State Food and Drug Administration (SFDA) who was convicted of taking bribes to approve drugs, signals the government's intent to crack down on illegal activity in pharmaceuticals. Those involved in the pharmaceutical sector are hoping that the crisis over product safety will produce a more effective regulatory environment. "Is all of the adverse publicity from these safety concerns enough to push things over the edge?" said Ray Hill, general manager of global consulting at health industry consultancy IMS. "The government is under huge pressure and, from what I have seen, it seems they will crackdown on the [pharmaceutical] manufacturers," Hill added. "There are so many different players at regional and national level that the coordination is often counterproductive," said Eric Zwisler, CEO of Zuellig Pharma China, which distributes pharmaceuticals in China for multinationals (MNCs). "It is very difficult to enforce standards as this has to be done at local level," he added. According to IMS, there are 10,000 drug distributors, 230,000 pharmacies (of which 3,000 are properly certified) in China as well as countless manufacturers. Despite all this, major firms are investing heavily in China. Spurred by strong economic growth and a richer, older, and more urban population, IMS calculates the market was worth $13 billion last year and is set to reach up to $25 billion by 2010. Zwisler suggests that Beijing's anti-corruption drives have steered doctors away from prescribing risky drugs toward more reliable MNC products, while price reductions on a general level have hit generic manufacturers hard. Tighter controls have also been placed on hospital spending and, while demand for generic drugs isn't falling, the market model has been tweaked in favor of MNCs. "Hospitals are now limited to just two brands for a particular pharmaceutical chemical compound," said Zwisler. "This tends to be the MNC that created the original and one generic manufacturer." For foreign pharma firms in China, developing the right product is just part of the challenge. The fragmented distribution system means that getting the product to the customer is not easy. "We have people asking us, 'How do I get my representatives when the sales force turnover in China is 30%?'" said Hill. "The whole supply chain side of things is very complex." (Click here for more - May Require Paid Subscription