This article was also published on PharmaPhorum
Asia’s active pharmaceutical ingredient (API) market is worth more than $32 billion, and it is growing more quickly than any other API market, at a rate of 8 percent annually. From 2007 to 2011, Asia’s portion of the world API market went from 24 to 28 percent. It should reach a value of more than $50 billion by 2017.
Compared to the rest of Asia, China’s API market is expanding at an even faster pace. Through 2017, it is predicted to grow at an annual rate of close to 18 percent. Such a fast rate of growth will make China’s API market — now valued at $7.5 billion — worth $16 billion by 2017.
In addition to China’s large demand for APIs, the country also has one of the largest supplies. In 2012, there were more than 1,400 API manufacturers in China. Close to 220 have registered their products with international regulatory bodies like the US Food and Drug Administration and Japan’s Pharmaceuticals and Medical Devices Agency.
Increasingly, Chinese API manufacturers are getting internationally recognized GMP certifications. But many production facilities still have significant quality issues. Independent audit firms have found fraud and misrepresentation at scores of Chinese API manufacturing facilities. Product quality and safety are among the top concerns. Some locally manufactured APIs, for example, are made out of unregulated bulk chemicals that are less than pharmaceutical grade.
Consequently, China’s Food and Drug Administration (CFDA) has in the past few years passed a series of new laws regarding the registration of API facilities, the regulation of risky excipients and the establishment of a Drug Master File (DMF) system that would cover APIs in China.
While there is no DMF system in China currently, there is a limited registration system for drug companies manufacturing their APIs in China and for foreign companies exporting APIs into China.
If a domestically manufactured API is part of any product sold in China, then the API must be registered. Registration requirements follow guidelines established by the International Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use (ICH).
Registration materials must include:
- The product name
- The product structure
- The manufacturing site name
- Manufacturing methods, including process control
- Quality control tests and data
- Specifications, test methods
- Stability tests and data
- Packaging methods
- Storage methods
- Dates of expiration
In China, API applications may be submitted together with applications for the finished drug product. When this occurs, the API application may pull clinical data and test results from the application for the finished drug product.
However, foreign manufacturers of finished drugs that are imported do not have to submit their foreign DMFs to the CFDA. If they so choose, they may provide information from foreign DMF filings to take the place of their CPP (Certificate of Pharmaceutical Product).
DRAFT DMF SYSTEM
The CFDA released a draft proposal in September 2010 for setting up a comprehensive Chinese DMF system. That draft was revised, and was followed by another draft that was released in November 2011.
According to the most recent draft, DMF filings would be mandatory for APIs and excipients (as well as for auxiliary materials like packaging) included in drugs marketed in China. Export-only drugs, on the other hand, would not require DMF filings for either their APIs or their excipients.
The CFDA’s Center for Drug Evaluation (CDA) would oversee all DMF filings. Similar to officials at Japan’s PMDA or the US FDA, CDE representatives would keep sensitive DMF information secret from finished drug manufacturers. These manufacturers would need to cite the DMF registration numbers for APIs and excipients used in their finished drug product, during product registration. This would enable the CDE to pull relevant information from the DMF for evaluation of the finished drug product.
Also included in the draft regulations are guidelines for change notifications. For example, whenever a change occurs in the API production process, that manufacturer would need to notify all finished drug product manufacturers using their product. These finished drug manufacturers then bear responsibility for auditing the API manufacturer to make sure that all changes are accurate.
Finally, the draft regulations also require that domestic API manufacturers periodically conduct quality audits of their suppliers. These audit reports would need to be included along with the DMF application.
FOREIGN COMPANIES IN CHINA
More and more Western API firms are setting up manufacturing in China. For instance, in November 2009, Novartis said that it would invest more than $245 million building an R&D and manufacturing center for APIs in a city just east of Shanghai. That center was completed in 2010, and it now focuses on APIs for drugs used to treat Hepatitis B and hypertension.
Aside from setting up production facilities in China, scores of Western pharmaceutical companies are also setting up partnerships with local Chinese API producers.
For example, in September 2012 Pfizer started a $295 million joint venture with the Chinese API firm Zhejiang Hisun Pharmaceuticals. According to the agreement, Pfizer owns just under 50 percent of the joint venture. The new company will develop, manufacture and also commercialize branded generics to treat cardiovascular and infectious diseases.
Foreign pharmaceutical companies that have production facilities in China should also discover many opportunities for the sales of certified, high quality APIs. Compared to most local production, the processes at foreign facilities are quite often GMP compliant. Even though Chinese API manufacturers will continue to maintain their price advantage, Western API manufacturers will often have a quality advantage in selling to both Chinese and foreign finished drug manufacturers.