OEM international standards raise challenges for Chinese domestic pharmaceutical companies

- Jul 17, 2018-

With the globalization of the pharmaceutical industry, contracts or commissioned production (OEM) are becoming more frequent. Recently, US FDA official Brian revealed for the first time in public that the FDA will revise the cGMP guidelines, focusing on clearing the issue of responsibility division in OEMs to further strengthen market supervision. Although this is a news from the other side of the ocean, it has attracted the attention of some Chinese companies. "OEM is no stranger to China's pharmaceutical 4255-62-3


industry. In recent years, due to the obvious shift of pharmaceutical production to low-cost regions and the rapid growth of the global generic drug market, coupled with the vacancy rate of pharmaceutical plants in China after GMP transformation, OEM business It has become a new target for many companies. "Guo Rongfu, a senior consultant of Sinopharm Holding, said. The threshold is getting higher



It is understood that more than 80% of APIs in the United States are imported, and most of them are not produced in the United States. Brian said that in order to ensure the quality and safety of pharmaceuticals, OEM companies no longer only supervise their own production, but also need to provide contract production address, plant, equipment and contract production of drugs and their use instructions, provide regular cGMP audit report and may Influencing drug adverse events and other content for the FDA to implement management. "This is a very obvious signal, which means that the demand for OEM business in the United States will continue to rise in the future. If WHO, Japan and the European Union are also following the requirements of improving OEMs, this will be for companies that are trying to get involved in OEM business in China. A big challenge. "Ouyang Qing, general manager of Shenzhen Lijian Pharmaceutical Co., Ltd. believes. According to data from the SFDA Southern Medicine Economic Research Institute, after GMP transformation, the capacity of 4696 pharmaceutical companies in China increased by more than 75% overall, but the overall equipment utilization rate was only 55.4%. Ouyang Qing bluntly said that many enterprises are faced with development problems such as repayment of loans, drug price reduction, and idle capacity after the GMP transformation. Although the OEM's profit margin is not high, it avoids the risks in R&D and marketing, and can obtain some fixed income. "It is imperative to find a husband's family for the production line. The production and operation pattern of China's pharmaceutical industry is changing. The international quality assurance of pharmaceuticals has risen to the level of quality system management. Relevant enterprises should pay close attention to this trend." In fact, the traditional profits of China's pharmaceutical industry The distribution model has slowly changed. Gan Rongfu said: "With the intensification of competition in retail pharmacies in China, the profit of drug distribution in recent years is less than 1%. Most of the



distribution companies are in a state of loss. OEMs have undoubtedly provided a shortcut to promote the rapid integration of upstream and downstream industries. Under the influence of such internal and external factors, it is very important to thoroughly study the new trends of OEMs at home and abroad. In addition, OEMs who want to make foreign drugs must first get tickets. "However, there are only a handful of Chinese pharmaceutical companies that have obtained international certification. This is the first hurdle that domestic enterprises must face in advance to carry out OEM business." Yu Mingde, president of China Pharmaceutical Enterprise Management Association, said that drug competition is currently at the product level. Ascending to the business model level, companies should first recognize this in competitive thinking. In particular, the key elements of global technology, talent, capital, and equipment are all flowing, which tests the survival wisdom of enterprises. Yu Mingde analyzed that the certification of raw materials, the provision of regular cGMP audit reports, etc., many details of management is precisely the weakness of domestic enterprise development. Although companies such as Haizheng and Xinyi are already doing OEMs for foreign drugs, after all, there are still a few companies that can use resources to "live". Curve save the country? China's pharmaceutical OEM business has existed for a long time, but it has been relatively "hidden" in the past. With the increasingly standardized pharmaceutical industry and the vacancy rate of GMP post-pharmaceutical plants, the OEM business is more enthusiastic. However, domestic pharmaceutical OEMs are still in the water testing stage, which brings new challenges to policies and regulations, regulatory methods, and corporate self-discipline. "For example, the international drug administration implements the marketing licensing system, and all the responsibility for entrusting production is the responsibility of the entrusting party. However, China's drug management adopts the drug production approval document number model, and the production enterprise is responsible for the product quality." Rongfu analysis said that the requirements for OEMs at home and abroad are different, how to divide responsibility, and lack of legal basis. China's "Regulations on the Administration of Recording of Pharmaceutical Products Entrusted by Overseas Pharmaceutical Manufacturers" is clear: pharmaceutical companies with corresponding GMP qualifications in China can entrust processing of medicines for overseas enterprises, and the processed medicines must not be sold in China. If the raw materials needed for processing drugs are from overseas, there is no need to go through import registration and import filing procedures. Even so, analysts believe: "How does the OEM business protect the rights and interests of both parties? This problem has not been solved, and OEMs will be unable to do anything." Of course, expanding the commissioning of overseas pharmaceutical products is not only conducive to the idle production capacity of the domestic pharmaceutical industry. It works, and it helps the powerful Chinese pharmaceutical companies to find development opportunities in the global economic chain. "In this respect, India is worth learning. It has acquired a lot of internationally advanced pharmaceutical preparation technology through a large number of international OEM business, and it has won time for generic drugs to be listed at the time of patent expiration," Yu Mingde said. It is a good way for Chinese pharmaceutical companies to expand their OEM business by carrying out international certification, and finally realize the preparation to go out. Yu Mingde believes: "OEM is not necessarily the only way to solve the problem of overcapacity in China, but it can pave the way for Chinese preparations to go out."

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