The concentration of the market on China and India:
1. There is a clear trend of increasing concentration of production in a few countries, namely China and India: The development of production concentration accelerated during the pandemic. Systemic trade risk indicators for China and India show sharp increases after 2018. These dependencies are not directly visible in import relationships but can be unravelled by tracing the production processes backwards along the antibiotics value chain.
2. The production concentration is more pronounced in upstream stages of the value chain (intermediaries and active pharmaceutical ingredients, APIs) rather than in downstream stages like unpackaged and packaged products. 76% of the manufacturing sites of intermediaries are located in China and India. 59% of API (active pharmaceutical ingredients) producers are situated in these countries.
3. Due to a higher production concentration in intermediaries and APIs, shocks affect APIs more strongly than packaged products. Hence, it becomes harder to find suitable substitutes when confronted with a shortage. In line with this observation, the estimated number of shortages that could be resolved by substitution halved in 2020. Negative impacts on patient care increased.
4. The data suggests a tendency towards market segmentation in which firms in European and North American countries developed an increasing dependence on Chinese suppliers. Indian producers trade mostly with local neighbours in Asia, Oceania and African countries.
2. The production concentration is more pronounced in upstream stages of the value chain (intermediaries and active pharmaceutical ingredients, APIs) rather than in downstream stages like unpackaged and packaged products. 76% of the manufacturing sites of intermediaries are located in China and India. 59% of API (active pharmaceutical ingredients) producers are situated in these countries.
3. Due to a higher production concentration in intermediaries and APIs, shocks affect APIs more strongly than packaged products. Hence, it becomes harder to find suitable substitutes when confronted with a shortage. In line with this observation, the estimated number of shortages that could be resolved by substitution halved in 2020. Negative impacts on patient care increased.
4. The data suggests a tendency towards market segmentation in which firms in European and North American countries developed an increasing dependence on Chinese suppliers. Indian producers trade mostly with local neighbours in Asia, Oceania and African countries.
SARS-CoV-2 led to reduced need for antibiotics:
1. When the pandemic hit, non-pharmacological interventions aimed at curbing the spread of SARS-CoV-2 also reduced the circulation of other pathogens. Consequently, both community and hospital demand and consumption of antibiotics dropped sharply during the pandemic (by approximately 20%).
2. Reducing contagion risks, hospitals restricted their services to non-COVID patients. Drug shortages in hospitals nearly halved during the pandemic compared to the frequency of shortages in 2018. This uncovered improvement potential in inventory management and demand forecasting.
3. In 2022, in an increasing number of countries, SARS-CoV-2 related containment measures ceased. As societies by and large “returned to normal” so did antibiotic consumption. Volatile demand and geographically concentrated production systems led to simultaneous shortages of antibiotics across many parts of the world.
2. Reducing contagion risks, hospitals restricted their services to non-COVID patients. Drug shortages in hospitals nearly halved during the pandemic compared to the frequency of shortages in 2018. This uncovered improvement potential in inventory management and demand forecasting.
3. In 2022, in an increasing number of countries, SARS-CoV-2 related containment measures ceased. As societies by and large “returned to normal” so did antibiotic consumption. Volatile demand and geographically concentrated production systems led to simultaneous shortages of antibiotics across many parts of the world.
Background:
1. Supply disruption of medications in general, and antibiotics in particular, are not a new phenomenon. Since 2014, they have steadily increased in frequency and severity. In the vast majority of cases, it was possible to resolve these shortages by finding suitable substitutes and thereby reduce negative impacts on patients.
2. The consumption of antibiotics declined in many European countries between 2011 and 2018. This is welcome as it reduces the build-up of antimicrobial resistance.
3. These trends in antibiotics demand coincided with structural transformations in the antibiotics production system. Overall, there is a clear trend of increasing geographic concentration of production. Production sites in China and India have benefitted from this trend.
2. The consumption of antibiotics declined in many European countries between 2011 and 2018. This is welcome as it reduces the build-up of antimicrobial resistance.
3. These trends in antibiotics demand coincided with structural transformations in the antibiotics production system. Overall, there is a clear trend of increasing geographic concentration of production. Production sites in China and India have benefitted from this trend.
