Firms Need to Be Cautious When Contracting With Chinese Firms, Expert Says

March 23, 2005

U.S. pharmaceutical companies looking to lower drug-development costs by contracting with Chinese drugmakers for active pharmaceutical ingredients (APIs) need to do so carefully, according to an industry expert, who warned that such partnerships are not always cost-effective.

"Once the true regulatory, compliance and product development costs are factored in, Chinese APIs are no longer inexpensive," said Steven Beagle, vice president of sales for API supplier Chemwerth, which represents numerous FDA-approved facilities in China. "An API development project without the right know-how will take at least five years and cost in excess of $500,000 to develop."

Among the major hurdles for U.S. firms, said Beagle, is finding a partner that is compliant with FDA current good manufacturing practices (cGMPs). "There is a big difference between actual cGMP-compliant facilities and facilities that Chinese companies believe are compliant," he cautioned.

Of the approximately 4,200 pharmaceutical plants currently operating in China, only 51, or 1.2 percent, have passed FDA inspections, Beagle said.

Even if a plant is FDA-approved, U.S. drugmakers still must be wary, Beagle said, because Chinese factories often do not stay up to code, particularly in the "ever-changing landscape of cGMP compliance." Chinese plants can often pass a preapproval inspection, only to fail a reinspection two years later, he said.