Taking advantage of the high costs of modern diseases in developing, populated economies like China and India, Chinese drug companies are manufacturing counterfeit Cancer and HIV drugs which are being sold at much lower rates in the two countries. The ineffective drug racket was recently busted in China’s Eastern seaboard after the Hangzhou Food and Drug Administration was alerted in September 2008.

According to the police, a crime syndicate based in Hangzhou (Zhejiang province) for years sold counterfeit and ineffective drugs, with patent rights held by Bayer, Nova, Roche and AstraZeneca, worth tens of millions of yuan.

The group posted sales information online claiming the drugs had been smuggled in from India and Peru, countries where the real drugs can be manufactured without paying patent duties, and then sold them for one-tenth the original price. In reality, the drugs were fakes, made in China in places like Yixing (Jiangsu), and both ineffective and unsafe, albeit not lethal.

Coming just a few years after news of melanin tainted milk led to the death of several children and toxic paint on toys sickened many more, the recent drug bust has led the Indian drug controller general’s (DCGI) office to send a team of drug inspectors to check Chinese units for good manufacturing practices (GMP) compliance. The team which will leave for China soon, was sanctioned post the cancellation of several import licences of local agents of overseas units. All the cancelled certificates were from China — from Zhejinag, Jingsu, Henan province and Chongquing. Similarly, several cases of imported kits of HIV which originated from Zhejiang and Fujian provinces were declared to be not of standard quality by the government laboratory.

While fake drugs are rampant in China, the middle kingdom is set to accelerate a US$2-billion reform in its healthcare sector in coming months. Officials from China’s State Food and Drug Administration led by Mr. Zhang Mao, Vice Minister of Health recently visited India and met health ministry officials as well as executives from pharmaceutical and drug manufacturing companies as well as people involved in rural healthcare and health policy planning. A reciprocal delegation of Indian pharmaceutical companies is scheduled to visit China in March.

While China is strides ahead in administering rural healthcare and healthcare administration in urban and rural centers, collaborations with low-cost drug manufacturers is a massive opportunity between the two countries. Drugs for foreign diseases such as cancer and Aids are extremely expensive in China, sometimes four times the price, thereby rendered unattainable for China’s masses. Lastly with an ageing population, India’s role in low cost drug manufacture is vital for China to sustain a competitive healthcare regime. Moreover, both governments have been actively working together to ensure smooth trade and collaborations between the two countries in the pharmaceutical space.