Pharmaceutical companies in Mainland China, including Roche and Sinopharm, are increasing production of respiratory illness treatments in response to a surge in demand. This includes stockpiling raw materials, ramping up manufacturing, and enhancing distribution networks. Future strategies may involve diversified raw material sources and more responsive logistics systems. Increased competition from international drugmakers is expected, and the government is likely to invest in healthcare infrastructure to meet growing demand.

Latest Development: On January 22 2024, major pharmaceutical companies, including Roche and Sinopharm, have ramped up production in response to a sharp increase in the demand for respiratory illness treatments across Mainland China. Data from the online healthcare service JD Health revealed that in the initial 12 days of January 2024, sales of flu medications skyrocketed by 340%, whereas sales during the same timeframe in November 2023 and December 2023 rose by 13%. Additionally, the digital healthcare platform 111 reported that the commencement of 2024 witnessed a substantial uptick in the sales of cold remedies, pain relievers and cough suppressants, with each category experiencing double-digit growth compared to the final week of the previous year.

Implications: In anticipation of the escalating incidence of severe infectious respiratory conditions, pharmaceutical companies have been proactively revising their production strategies and enhancing supply chain tactics. This includes preemptively stockpiling ample supplies of raw materials for the manufacture of medicines. Sinopharm’s subsidiary, the Taiji Group, produces popular respiratory treatments such as Jizhi Syrup and Sinusitis Oral Liquid. The company is striving to ensure uninterrupted production by operating its manufacturing lines 24 hours a day and 7 days a week, achieving a daily output of 6,500 boxes of Jizhi Syrup and 1,000 boxes of Sinusitis Oral Liquid. In addition to bolstering production, Sinopharm will leverage its extensive national pharmaceutical distribution network to expedite the delivery process and improve inventory management, aiming to prevent any potential supply gaps. Simultaneously, the international drugmaker Roche, known for its innovative flu medication Xofluza (baloxavir marboxil), has responded by activating global supply chains to maintain consistent supply within Mainland China. Roche is actively working to broaden Xofluza’s stock across hospitals in Mainland China, and is collaborating with online healthcare platforms like JD Health to ensure that the medication is readily accessible to consumers. Currently, Xofluza is available in over 1,600 hospitals throughout Mainland China, signifying a significant expansion of its availability to patients in need.

The necessity to mobilise and stabilise supply chains will lead to improvements in supply chain management, thereby enhancing drugmaker resilience to disruptions and will enable greater agility in operations. Moreover, collaborations with healthcare platforms and distribution networks underscore the importance of strategic partnerships in Mainland China. Such alliances can provide drugmakers with competitive advantages in terms of market access and customer reach. However, while these measures can significantly mitigate the impact of drug shortages, they may not completely resolve the issue if demand continues to outstrip supply or if there are other unforeseen supply chain disruptions. For instance, in 2022, the country witnessed inadequate supply and drug shortages due to years of strict viral control policies. As such, flexible response strategies such as having contingency plans for alternative distribution methods or sourcing from multiple suppliers will be needed to enhance resilience.

What’s Next? We believe pharmaceutical companies will revise their supply chain strategies to become more resilient against future disruptions in Mainland China. This could involve diversifying sources of raw materials, investing in local production capabilities and developing more responsive logistics systems. However, international drugmakers will increasingly enter the market to capitalise on the increased demand, leading to more competition. We expect the government to reassess healthcare infrastructure and capacity particularly in regions where demand outpaces supply, leading to investments in healthcare systems to better cope with similar challenges in the future.

Source : Quick View: Medicine Production To Increase In Mainland China In View Of Flu Season

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