Regulatory face-off or middle path?

The Chinese pharmaceutical market seems to be putting the ignominy of having to award capital punishment to the highest ranking official of the State Food and Drug Administration (SFDA) in July 2007 for corruption. With a revamp of the Chinese healthcare system on the anvil, our Market Cover looks at this promising market. However, events on the 20th anniversary of the Tiananmen Square massacre on June 4, like the blacking out of networking sites like Twitter and TV channels mentioning the occasion, is a blot on China's image in the eyes of the Western world.

China has worked hard to put the past image of a harsh Communist state behind it and has emerged a superpower after a long struggle; will it be able to go forward inspite of the specter of incidents like the Tiananmen Square massacre coming back to haunt it from time to time? India's interests undoubtedly lie in a strong China. Chinese manufacturing muscle and India's chemistry skills could make a powerful adversary for certain countries and companies who seem threatened by the increasing power and influence of emerging nations. India also needs to ensure that unscrupulous Chinese manufacturers are prevented from labeling fake drugs made in China with the 'Made in India' label, as was done recently in Nigeria. Health activists warn that this could start a blame game between the two nations which would only harm both countries' interests.

However, when it comes to implementing new European Guidelines for the import of chemicals (called REACH Regulations), for once, developed and developing nations seemed to be on the same side. At a recent meeting in Helsinki, I felt that though developing nations seemed to be caught in the crossfire between regulators and their client companies in the European Union (EU), stakeholders across the value chain generally seemed to be frustrated and upset with the slow and unsatisfactory response of the regulating body, the European Chemical Association (ECHA), to their queries.

As deadlines draw near, many companies/countries agree that safe chemistry as a goal is necessary, but not all agree on the route to this goal. Associations representing the interests of Indian manufacturers like the Indian Chemical Council (ICC) and Chemexcil already have their action plans drawn up and one hopes that the dogged determination of the Indian entrepreneur will see him through this barrier. ECHA too seems more than willing to listen and streamline processes.

There is already a debate that these high regulatory barriers might make the EU unattractive as a market, causing some chemical exporters to drop the EU from their plans. This could lead to shortages of certain chemicals and therefore rising prices within the EU. Who will blink first: regulators or the industry? Or is there a middle path?

Viveka Roychowdhury
viveka.r@expressindia.com