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CPhI then and now
Like many readers of this article, I spent the first few days of November walking around the CPhI and ICSE exhibitions in Madrid. I imagine that like me, many readers also found themselves at the end of the day with sore feet and aching joints from all the walking around. Add to this all the weight of giveaways and literature that we pick up during the exhibition and it is not surprising that we reach the end of the exhibition feeling that we have run or walked a marathon and feeling ready to collapse.
It seemed to me that part of the problem is that the exhibition appears to be growing significantly larger each year. I therefore thought it worthwhile to look back at previous years’ exhibitions to determine whether this is just a case of me growing old and feeble or whether CPhI had really expanded significantly.
The good news is that I am not growing as old as I feared, but rather that the statistics show that CPhI itself has really grown. Since I have the CDs from 1997 and 2001 that the organisers used to issue, (and which I personally find more convenient than the on-line catalogue) I was able to find some figures to compare to those for 2005.
It is of course possible that my database queries did not produce accurate results, but they seem to show that exhibitor numbers have changed as follows:-
|
Country |
1997 |
2000 |
Change 97-2000 % |
2005 |
Change 200-2005% |
|
Total |
680 |
932 |
+37.1% |
1,508 |
+ 61.8% |
|
China |
39 |
222 |
+469.2% |
578 |
+160.4% |
|
India |
59 |
75 |
+27.1% |
163 |
+117.3% |
|
Italy |
68 |
55 |
-19.1% |
77 |
+40.0% |
|
Korea |
1 |
16 |
+1.500% |
35 |
+118.8% |
|
Spain |
24 |
25 |
+4.2% |
52 |
+108.0% |
Firstly, exhibitor numbers have grown over 8 years by 122% from 680 in 1997, to 1,508 in 2005. I do not know what the comparable figures were in 1997, but the organisers say that over 20,000 visitors attended the exhibition this year. The significance of this is that the exhibition was originally set up to provide a forum where suppliers of APIs to the generic industry could meet. Thus, the growth in exhibitor numbers must be seen as reflecting the growth in both the size and importance of the generic industry itself.
Secondly, parallel to the growth of exhibitor numbers overall is the almost explosive growth in the numbers of suppliers from China, India and Korea. At the same time, the numbers of suppliers from the more traditional API source countries of Italy and Spain has remained almost stable or at best increased slightly. This must be very convincing evidence of the movement of the focus on manufacture and supply for APIs and to a degree generic formulations, from Western Europe to the Far East.
In choosing the example countries to use for these comparisons, my main criterion was countries that are associated with the supply of APIs to the generic formulation industry. While it is true that, in percentage terms, the Italian and Spanish presence has grown, their numbers are still very small compared to those of the new API source countries.
Trying to extrapolate from previous trends in order to predict future trends is always risky. I will nevertheless risk predicting that formulations manufacturers in the newer API source countries will try to act in the same way as many Italian and Spanish API manufacturers who have moved on into producing formulations to benefit from the better margins and higher value.
The phase has clearly started as shown by the many Indian generic companies establishing their presence in Europe and the USA. Many of them started by producing APIs, then built formulation plants. They used these initially to carry out contract manufacturing for Western firms and then started to sell their formulations directly into the generic market places.
It is probably a fairly safe bet to assume that the Korean and Chinese API manufacturers who have seen this happen will also want to emulate them and follow the same path. This in turn raises two significant questions.
1 – when will this happen? and
2 – what will be the effect on prices in the Western generic markets?
With regard to when, there is something of a consensus that China is about 10 years behind India but Korean firms may well be closer to India because the political and economic systems are more open than in China. This in turn is likely to give Western customers for formulations a little more confidence, but there seems little doubt that eventually Chinese formulations will appear in European pharmacies.
Looking still further ahead in the evolutionary cycle of the generic industry, where will generic companies turn after China in their search for still cheaper supplies?
If you have any comments or questions on this article,
please feel free to contact me
peter@interpharm-consultancy.co.uk
www.interpharm-consultancy.co.uk
