A large population, unsuitable climatic conditions coupled with major government trusteeship over the public health expenditure have contributed towards making China second largest cephalosporin market in the world.
An Orchid presentation on the global cephalosporin retail market has pegged the Chinese cephalosporin market at $ 2.2 billion (Rs. 9,500 crore). Value-wise this corresponds to about 22.9 per cent of the global cephalosporin market.
Indian companies have been successful in tapping this lucrative market. "Indian pharma companies control a market share of Rs 1,425 crore in the Rs 9,500 crore Chinese cephalosporin market, which forms 15 per cent of the market. 50 per cent of Indian share is controlled by exporters from India and the other is by Indian companies who have set up joint venture manufacturing companies in China," said highly placed sources in Orchid Chemicals & Pharmaceuticals Ltd.
Four Indian companies viz- Orchid, Aurobindo Pharma, Lupin Labs, and Ranbaxy Labs are the main operators in the market. Orchid and Aurobindo have set up joint ventures in China to manufacture cephalosporins.
"Indian companies predominantly market in China first and second generation oral cephalosporins like cephalexin, cefradine, cefazolin, and cefuroxime axetil. Cefozolin and cefotaxime injections are also exported to the country," said D.S. Bhaskara Raju, vice president, Business Planning & Development, Orchid Pharmaceuticals. Government is the largest buyer of cephalosporins in China.
Companies from Europe, mainly from Italy and Germany and Korea are the other cephalosporin exporters to China.
According to the Orchid report, the North American (US and Canada) cephalosporin market is worth $ 2.85 bn (29.7 %), Europe $ 1.7 bn (17.7 %), Japan $ 1.8 bn (18.8 %) and India $ 300 mn (3 %).
Chinese cephalosporin market value is only second to the North American market. "High demand along with quality consciousness in a market with limited number of quality cephalosporin manufacturers has resulted in high pricing for cephalosporins in China and subsequently good margins for exporters," said analysts.
Despite India being the second largest populated country after China, value-wise its cephalosporin market is only one-tenth of China. Heavy commoditisation due to intense competition in the domestic market is attributed to this value decline, according to analysts.
Industry observers feel the future for exports will not be the same. Although 70 per cent of cephalosporin consumption in China is met through imports the number of domestic companies manufacturing quality cephalosporins are on the rise. The domestic manufacturing is growing at 15 to 20 per cent annually compared to an export growth of 6-10 per cent in China.
"Cephalosporin manufacture is picking up in China today as local companies have begun sourcing high-end technology. One day, domestic manufacturing will overtake exports. In such a scenario, Indian companies will benefit if they manufacture in China," said Raju.