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Ikigai Corporation is a Hong Kong company operating in China, which is known for its booming pharmaceutical industry. Due to lower production costs, many pharmaceutical giants have outsourced their API manufacturing to this region.

The Region

Advantages of Operating in Hong Kong
Many investors and entrepreneurs are setting up businesses in Hong Kong because they are finding it much easier to enter international markets. Our tax-friendly jurisdiction is a further advantage. Hong Kong scores high on workforce productivity, location, economic stability, legal system effectiveness, and infrastructure. All of these factors are crucial to businesses. The city is strategically located and offers a very appealing tax regime and a pro-commerce environment.

The Chinese Pharmaceutical Industry  
China has a thriving pharmaceutical industry, especially in areas with a stable macroeconomic background. There is a direct connection between macroeconomic strength and the industry’s growth rate.

The industry’s dynamic features remain steady. China conducts a regime of vertical drug supervision management to augment control over medicines. The government is setting up a drug management system with best practices, legal management, standard codes of conduct, and high efficiency.

Most Chinese pharmaceutical companies manufacture generic drugs. Ikigai Corporation also specializes in custom API manufacturing.

The Appeal of the Region to Western Corporations
Corporations such as Roche, Pfizer, GlaxoSmithKlein, AstraZeneca, and Novo Nordisk have set up R&D centers and commercial operations in China. Other international pharmaceutical companies have started joint ventures in the country. The global pharmaceutical companies present here have achieved full market entry. Many of them are now turning their focus on R&D, which has improved regional supplier and supply chain prospects.

Overseas companies are doing business in China mainly to up production while cutting costs. They benefit from less expensive clinical and medical drug trials, lower labor cost, and the vast science and technology research facilities available here. 

The Industry

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According to reliable pharmaceutical industry sources, impending pricing reform will lead to even more expanded outsourcing of API and other pharmaceutical components as well as cost pressure. Continued emphasis on reducing medication prices may compromise traditional pricing models. The U.S. Congress is likely to drive reform of pricing models in light of the upcoming 2020 election, which will impact drug development and possibly accelerate the release of biosimilar and generic pharmaceutical versions, of which Ikigai Corporation is a reputable and established supplier.  

In an effort to keep profits high, industry experts expect pharmaceutical companies to continue expanding the use of outsourced companies to reduce expenses. Most of the important operations in the channel of pharmaceutical distribution will continue to be outsourced by leading American and European manufacturers to Asian countries. Ikigai Corporation is uniquely positioned as a go-to partner and ally that not only operates as an API supplier but also takes responsibility for logistics and packaging. We apply our best-in-class capabilities to support increasingly profit-conscious international pharmaceutical corporations.

The global API market is segmented based on the type of business, synthesis, geographic location, and therapeutic applications. In terms of synthesis, the market is categorized into biotech API, synthetic API, and highly potent API. In 2018, synthetic API held the biggest share and is projected to experience consistent growth every year until 2025.

The primary business income of Chinese API manufacturing currently stands at what’s equivalent to USD 72.1 billion in local currency with an annual growth rate of approx. 15%. Our Chinese manufacturing partners reflect the country’s trend of advancing from merely a big industry player to global power. API export has reached USD 29.1 billion, growing by approx. 14% per annum.

Against the backdrop of another series of pharmaceutical supply reforms and economic adjustments, Asia’s pharmaceutical industry has taken another leap forward. Why? The ratio of imported to exported high-value biochemical drug products continues to increase in the western hemisphere. The unlimited potential and steadily advancing achievements show that China’s pharmaceutical industry is leading the way to healthy and sustainable development.

This fact is reflected in hard figures. According to data from the U.S. Congress, as much as 80% of APIs in the U.S. are produced in other countries. The vast majority enters the U.S. from China and India, while a large number of the API coming from India are made in China.

Ikigai Corporation is well-attuned to sector developments and aims to provide a significant return for its shareholders by acquiring and managing a portfolio of companies, products, royalty agreements, and debt facilities in the biotech, pharmaceutical and medical device industries.

Our Hong Kong company’s leadership in API, mediation, and organic and industrial chemicals is the outcome of a consistent focus of attention on innovation. We serve our clients’ requirements and needs, keeping this focus on our trademark. We have in-depth, unbiased insight into the regional pharmaceutical industry and source and supply API based on that. Our experienced team is able to meet customer demand within any preset period of time.  

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The Market

According to the most recent pharmaceutical market data, Asia’s API (active pharmaceutical ingredient) production market is worth over $32 billion. This market’s growth rate of 8% per year surpasses those of all other API markets. Asia’s share of the global API market reached 28% in 2011 and was valued at $50 billion in 2017.

China has the Biggest API Demand and a Vast Network of Suppliers
China not only has a huge demand for APIs, but also one of the biggest supplies. There are now more than 1,400 API manufacturers in China. Around 250 have registered their products with the U.S. Food and Drug Administration, the Japanese Pharmaceuticals Agency, and other international regulators.

Ikigai Corporation’s API manufacturing partners hold internationally recognized GMP certifications. In light of the significant number of quality issues at Chinese production facilities, product quality and safety are among our partners’ – and our – top concerns.

Legislative Safety and Quality Measures
China’s Food and Drug Administration (CFDA) took certain legislative measures regarding the registration of API production plants, the establishment of a DMF (Drug Master File) system to incorporate Chinese API, and the regulation of risky excipients, which are inactive substances serving as the medium of the vehicle for API. According to the most recent draft of these laws, DMF filings will be compulsory for APIs, excipients, packaging, and other auxiliary materials included in medication distributed in China. Exported drugs do not require filings at this time but in the future, all filings will be overseen by the CFDA’s Center for Drug Evaluation.

Representatives of the Center will not disclose sensitive DMF data to producers of pharmaceuticals, who will have to provide the DMF registration numbers for any API used in their completed products. This will make it possible for the CDE to obtain relevant data to evaluate the completed drug.

Draft regulations also require Chinese API manufacturers to conduct quality audits of their suppliers. As a supplier, Ikigai undergoes such on a regular basis and passes them with flying colors. Audit results are enclosed with the manufacturers’ DMF applications.

The Economic Potential of the Region
In light of all these facts, it is no wonder that so many western API companies are setting up manufacturing facilities in China and forming partnerships with local API producers and suppliers.

Western pharmaceutical corporations with production facilities in the region find a wealth of opportunity to sell high quality, fully certified APIs. Western API manufacturers may enjoy what is perceived as a quality advantage in selling finished medication to both foreign and Chinese companies, but Chinese API manufacturers are always able to leverage their price advantage.
Hong Kong’s Medical Market
Hong Kong’s market impacts and guides the pharmaceutical market in mainland China because it is advanced, sophisticated, and wealthy. Its medical market is smaller compared to most other Asian markets, but this does not affect its economic capacity and influence in any way. The pharmaceutical market is worth $2.3 billion with a projected growth rate of 6.5%. Hong Kong also has a buoyant medical device market valued at $620 million with a projected growth rate of 7.8%.


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