Big pharma, made in China
Chinese biotech firms are key players on the international pharmaceuticals market. They produce substances needed to make crucial medicines. That means China has an edge when it comes to both raw materials and technologies.
Transcript
00:00 China's clear goal to become the world's number one, also when it comes to its domestic
00:07 pharmaceutical industry.
00:08 The world is becoming ever more dependent on medicine from China.
00:12 The Chinese have been very clever.
00:15 Will the world soon be completely dependent on China for medical supplies?
00:19 Will pharmaceutical exports then be used as political leverage?
00:26 Always be cheap.
00:27 With this motto, the Chinese pharmaceutical industry has grown rapidly, and the West has
00:32 helped a lot.
00:35 The background to this is that we don't want to spend much money on medicine, even though
00:42 it's the cheapest form of therapy, and therefore production costs must be reduced.
00:51 And the easiest way to do that is to go to countries that have low labor costs, fewer
00:56 environmental regulations and lower costs for energy and the like.
01:03 A single pill now costs 6 Euro cents in Germany, as much as a stick of chewing gum.
01:09 Experts say that China now produces 40 percent of all active ingredients in the world, that
01:15 is the part of a drug responsible for its therapeutic effects.
01:19 And sometimes China is involved even if it doesn't seem so.
01:28 For example, the popular painkiller ibuprofen is produced at these locations around the
01:33 world.
01:35 It was in short supply during the pandemic.
01:40 It was also produced in India.
01:43 But the diversity is deceptive, as India imports almost all of the active ingredients it needs
01:49 from China.
01:52 The Chinese have a key competitive advantage over the others.
01:56 They now also produce most of the raw materials for the drugs, and they do so very cheaply
02:01 due to economy of scale.
02:03 Thanks to its price advantage, China is squeezing out foreign competitors, as in the case of
02:08 cephalosporins, which are antibiotics.
02:12 Even a German manufacturer with state-of-the-art production technology had no chance against
02:17 China.
02:19 Remarkably, only a few years ago we produced cephalosporins at the company Höchst.
02:26 But that's no longer the case, as the Chinese have been very clever.
02:31 They always undercut the price that Höchst was charging, until the then owner of Höchst,
02:36 a private equity company, eventually said it's not worth it, we'll stop production.
02:45 What were the consequences?
02:49 If you take a closer look at cephalosporins, there is a key base material, aminocephalic
02:54 perenoic acid, which is produced exclusively in China.
02:58 So if the Chinese decide that they no longer want to supply it to Europe, if we were to
03:03 side with Taiwan in the event of war, then we would be left empty-handed, so to speak,
03:08 in terms of cephalosporins.
03:11 Antibiotics are life-saving drugs.
03:17 And China wants even more.
03:19 It wants to be at the forefront of new medicines.
03:23 Experts say that China is now researching every tenth drug in the world that's in the
03:27 development phase.
03:29 I think they are much more innovation-friendly.
03:34 And I think that ultimately these bureaucratic processes, if they want to implement something,
03:40 then they will.
03:41 So the bureaucratic processes are much faster than ours.
03:45 And on the other hand, money, support and funding flows into what are referred to as
03:49 core industries.
03:55 Europe wants to bring back pharmaceutical production.
03:58 Here in France, a plant for paracetamol, a painkiller, is to be built to cover a third
04:04 of European demand.
04:05 But this is only possible thanks to high subsidies.
04:12 I think we first have to reach a consensus on which active ingredients we consider to
04:16 be important.
04:17 There are a lot of lists and many different active ingredients floating around.
04:22 I think we also have to be honest and acknowledge that it'll be more expensive and we'll have
04:28 to agree to pay X amount.
04:34 A single pill would probably be 10 to 20 Euro cents more expensive in Germany if it came
04:39 from Europe instead of China.
04:41 It's unknown whether patients anywhere in the world would be willing to pay more for
04:46 more independence from China.
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