August 2008
Edited
by:
Dennis Scott BVSc MACVSc
Ethical
Agents Ltd 54 Hobill Ave Wiri, PO Box 97-110
Manukau City 2241
Ph 09-262-1388
Fax 09-262-1411 Freephone
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Inside this issue:
The Olympics are in full swing and we are constantly told of the extraneous issues, such as pollution, the host nation’s record on human rights, Internet access for media and all sorts of things. There is also the big issue of drugs.
While most media attention is upon the misuse of drugs by the athletes and how to combat it, there is a more pressing issue as far as the pharmaceutical world is concerned and that is the effect of the whole games scenario on the production and supply of pharmaceuticals.
The vast majority of the active ingredients for pharmaceuticals are produced in China and India.
When one considers the effect of a drought in little old New Zealand on the world commodities market for dairy products then any
sort of hiccup in the Chinese production of raw materials for pharmaceuticals is going to have a dramatic effect on world supply and demand.
With China’s massive drive to clean up pollution while the Olympics are on, many factories have simply been shut down for the last few months and for the duration of the games. While the effect on pollution appears negligible, from our couch potato perspective, the effect on raw material production for pharmaceutical drugs, and many other chemicals, has been dramatic.
A worldwide shortage has been created, dramatically driving up prices, and also causing product shortages.
The flow on effect has compounded into the finished product formulation so that, just as in the oil industry, prices have risen markedly due to a shortage of base product.
The high fuel costs of recent months have also impinged on costs in all industries, and China is no exception.
Unlike countries like New Zealand, China subsidises oil costs for industry, which does keep production costs artificially low, but acts as little incentive for producers to be more fuel efficient.
Thus there is a classic Catch 22 situation for a western world wishing for China to reduce carbon footprints while, at the same time, keeping raw material prices low.
Just as the oil price has stabilised and come back a little, so should the price of pharmaceuticals but, as with oil, it will never be as low as it was in recent times. For now, just enjoy the games!
