Europe’s last paracetamol plant shuts as China, India prevail

Europe’s last paracetamol plant shuts as China, India prevail

Paris: The last Made in Europe paracetamol, the painkiller sold as Panadol and Tylenol, will roll off a conveyer belt in France on Wednesday.

Rhodia SA, the world’s second largest paracetamol producer, will close the 43-employee factory in Roussillon, southern France, because of competition from China and India, leaving Europe reliant entirely on imports of the drug. For Lelia Foata, a 32-year-old mother of two who lives near Paris, that’s a worry.

“After the contaminated baby-milk scandal in China, it makes me shiver," she said. “I use paracetamol-based syrups very often for the boys. Not being able to produce it here, in Europe, sounds a little crazy."

Rhodia, based outside Paris, is getting out of the $800 million (about Rs3,880 crore) paracetamol business after failing to compete with Asian producers, who export the 130-year-old chemical element at two-thirds the cost to the French company.

China has become the world’s largest supplier to the drug industry of active pharmaceutical ingredients, known as API, raising concerns about quality and security.

The relocation of API-making plants outside Europe may pose quality and supply issues, Marc Stoltz, inspections director at the French drug agency Afssaps, said in a phone interview. “We detect more quality problems during our inspections in China and India than in France, even if they’re for the most part minor. And Europe is becoming vulnerable to surprise supply disruptions."

In Roussillon, about 55km south of Lyon, paracetamol is produced in metal buildings, which are part of a complex where poisonous gases used to be made. Minimal human contact is involved: Grinding machines, barrels and tubes synthesize, purify, dry and filter the powder.

The Chinese and Indians have mastered production of chemicals such as paracetamol, an element that was first synthesized in Germany in 1878 and is easily replicated.

There hasn’t been a major issue with imported paracetamol and drug makers are no longer willing to pay a premium for the decades-long record of contamination-free shipments provided by European manufacturers, said Jacques Gallucci, Rhodia’s Roussillon plant director.

Clients know what’s right, Gallucci said. “After all, they are the ones bearing the ultimate quality risk."

France’s largest drug maker, Sanofi-Aventis SA, sells paracetamol under the Doliprane brand and bought Roussillon supplies for its Lisieux plant. “Sanofi regularly monitors the quality of its suppliers," said Jean-Marc Podvin, a Paris-based spokesman for the company.

Quality is our No.1 care, Podvin said, declining to provide details about the company’s current supplies.

“While keeping high-end products in-house, drug makers increasingly outsource the manufacture of easily standardized molecules like paracetamol and aspirin to low-labour-cost countries," said Philippe Lanone, an analyst with Natixis in Paris.

China’s drug-manufacturing industry had estimated sales of $4.4 billion in 2005 and may grow 18% annually to $9.9 billion by 2010, estimates Jinsong Du, an analyst at Credit Suisse in Hong Kong. India ranks third after Italy, Du said.

The two emerging economies produce about 115,000 tonnes of paracetamol per year, or about 70% of global capacity, up from 50,000 tonnes in the mid-1990s and 80,000 tonnes in 2001, Gallucci of Rhodia estimated. The ingredient is exported and sold at French ports at about €3 (Rs204) a kg, about 30% less than Rhodia’s cost, he said.

Covidien leads

The US’ Covidien Ltd, the world’s largest paracetamol maker with an estimated 30,000-tonne annual production capacity, is the only Western manufacturer remaining in the game. Covidien, based in Mansfield, Massachusetts, is the medical-instruments maker spun off from Tyco International Ltd last year.

Rhodia tried to adjust. In 2006, it started outsourcing the manufacture of an intermediate molecule to China to cut costs. The French company also doubled Roussillon’s capacity to 8,000 tonnes and built a 7,000-tonne plant in Wuxi, China, 128km west of Shanghai.

“Rhodia still lost €2 million a year," Gallucci said, and now is seeking a buyer for the Wuxi plant.

Rhodia, also the world’s largest producer of aspirin, is trying to sell all its aspirin-making plants.

Cases of flawed products from China have prompted the US and European drug agencies to intensify controls of imports.

Earlier this year, after 81 people who took the blood thinner heparin died in the US, the US Food and Drug Administration announced plans to upgrade its technology to better track imports and said it will permanently station about a dozen employees in China.

China has 714 plants registered to ship medications to the US, more than any other country. The heparin was contaminated by an ingredient made from pig intestines and exported by a Chinese maker to pharmaceutical companies such as Baxter International Inc.

Also this year, as many as six babies may have died and at least another 54,000 were hospitalized after dairy farmers added melamine, used in plastics, to watered-down milk to artificially boost protein level readings, the Chinese government said.

European countries rely on a network of national agencies that coordinates inspections. Afssaps, the French agency, performed seven inspections in China and eight in India in 2007.