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End of the line for European paracetamol

Published on 12/01/09 at 10:50am

The last European plant manufacturing paracetamol closed for the final time at the turn of the year, another sign that manufacturing of active pharmaceutical ingredients (APIs) may be shifting away from Europe.

Chemical company Rhodia closed its last remaining paracetamol facility, based in Roussillon, France, and conceded that it was unable to compete in a $800 million sector now dominated by low-cost producers in Asia.

The closure means that all paracetamol consumed in Europe will now be sourced from overseas, mainly from suppliers in India and China.

At its height Rhodia was the second-largest paracetamol producer in the world after US company Covidien, having boosted its market share with the purchase of BASF's paracetamol business in 2001.

But almost immediately after the acquisition the chemical company was forced to fight a rearguard action to protect the business, as Chinese manufacturers ramped up capacity and output, and prices for the ingredient plummeted.

Rhodia has never discussed paracetamol pricing issues with the press, but it is estimated that Asian producers were undercutting the French company by at least 30%.

Forced to reorganise the business, in 2004 Rhodia closed down a production line for the API in Louisiana, US, in favour of a multimillion-euro investment in paracetamol production at a facility in Wuxi, China. But despite contracting out the production of paracetamol intermediates and cutting costs by offshoring to China, the company failed to turn around the loss-making business.

A market research report published earlier this month by Chinese market research firm CCM International reports that China accounts for 30- 40% of the total global output of the ingredient. However, of late Chinese export volumes are starting to plateau, held back by reduced export tax rebates offered by China's government.

Aside from Covidien, the top players in the paracetamol API market now include Chinese companies such as Shandong Anqiu Lu'an Pharmaceutical, Zhejiang Conler Pharmaceutical and Hebei Jiheng (Group) Pharmacy, and Indian firms like Shri Krishna Pharma and Granules India.

One European company, German chemical distributor Univar, has tried to anticipate and prevent paracetamol shortages in the wake of the closure of the Roussillon plant by establishing a network of overseas suppliers.

Univar announced the scheme last October at CPhI - an annual pharmaceutical ingredients convention - saying that the objective was to identify vendors that could demonstrate both quality and consistency of supply.

Univar estimates that 115,000 tonnes of paracetamol are consumed each year, with 25% of production going to Europe. Demand for the API is growing at around 2% a year.

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