25 November 2003 16:39 [Source: ICIS news]
AMSTERDAM (CNI)--China and India will more than double their share of the pharmaceutical fine chemicals outsourcing market in the next three years, according to Enrico Polastro, an analyst at consultants Arthur D Little.
The growth comes as pharmaceutical companies are increasingly looking to hammer down their suppliers on price, he told delegates here Tuesday at the Fine Chemicals Conference*.
Polastro said the share of the outsourcing business undertaken by Chinese and Indian companies is currently 10% but by 2006 it would grow to 25%.
“Pharmaceutical companies’ expectations of substantial cost savings are starting to offset the fears associated with intellectual property leakage or of uneven quality.”
He added: “Price is becoming the main criteria applied by pharmaceutical companies in their sourcing decisions.”
“Pharmaceutical companies are not hesitating to pressure their suppliers for the last penny,” Polastro continued, highlighting the example of one industry major having recently pressured a contract manufacturer into making a 10% price reduction for an intermediate accounting for less than 0.1% of the end product price.
Polastro said that in addition to western drugs firms facing stiff price competition from new market entrants from Asia, there were other key issues too, such as the flow of new chemical intermediate (NCE) introductions “having reduced to a trickle”.
This has left many in the industry to challenge the ultimate financial returns associated with the surging investments undertaken by the pharmaceutical industry in new technology, he added.
The growth of generics was another key battleground for the fine chemicals sector. “Products representing over 30% of total US branded drugs sales are expected to lose their patent protection between 2002-07,” Polastro said.
* The Fine Chemicals Conference 2003, which takes place at the Crowne Plaza, Amsterdam City Centre Hotel, Netherlands, continues tomorrow. It is organised by CNI sister publications Performance Chemicals Europe (PCE) and European Chemical News (ECN) in association with Folio Event Management.
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|