Chinese drugs seen driving down generic prices

LONDON (Reuters) - A coming wave of Chinese pills is set to push down the price of generic drugs, as more low-cost finished medicines from the country win approval in major markets, according to a report on Tuesday.

Pharmaceutical information group IMS Health Inc said last year's first okay from the U.S. Food and Drug Administration for a Chinese generic -- a copy of AIDS drug nevirapine -- was a sign of things to come.

China is already the world's biggest producer of active pharmaceutical ingredients (APIs), the chemical raw materials needed to manufacture medicines, but to date it has not been a significant supplier of finished generic pills.

Now that is about to change.

Zhejiang Huahai Pharmaceutical Co Ltd won a U.S. green light last July to sell generic nevirapine, once the patent held by Germany's Boehringer Ingelheim expires in 2012.

At least 10 other Chinese companies are set to follow suit with other generic products, according to IMS. Some could be available as early as this year.

The result will be increased competition in a generic drugs industry that is already struggling with tumbling prices.

"In order to ensure their success in the market, the Chinese manufacturers are likely to undercut all others on price," IMS said in its annual Intelligence.360 report.

"Chinese policy will drive generic prices down still further, with far-reaching consequences for both R&D players and international generic companies."

The rise of Chinese generic drugmakers is expected to mirror that of Indian firms like Ranbaxy Laboratories Ltd, which also started out as an API supplier but moved into finished generic medicines a decade ago.

IMS believes China will seek to erode India's strong position in manufacturing by targeting the United States, Europe and key emerging markets.

One potential obstacle for China's emerging generics industry, however, may be its reputation for quality.

IMS said recent safety issues involving tainted heparin made with ingredients from China had put the country "on the back foot".

"India has had less publicity than China for manufacturing inadequacies ... and it is here where the competitive battle may be won or lost," IMS said.

Contaminated supplies of various brands of the blood thinner heparin have been linked to 81 U.S. deaths since January 2007.

(editing by Elizabeth Fullerton)