DThe outbreak of the novel corona virus not only paralyzes China as a workbench for the globalized economy. The second largest economy in the world has also become the world’s pharmacy in recent decades.
The active ingredient production for many medicines takes place to a large extent in China. About 60 percent of the worldwide paracetamol production comes fromChina. For some important antibiotics, this proportion is sometimes even higher.
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Bottlenecks in pharmaceuticals – – – – –
Accordingly, experts are concerned about the rapid spread of the virus and the consequences that the measures to contain the disease have on local production and the sensitive global supply chains. “We have had supply bottlenecks here in Germany and Europe for some time now, and for less important reasons than a virus outbreak. However, the new corona virus and its consequences are now exacerbating this crisis, ”warns pharma expert Morris Hosseini from management consultancy Roland Berger.
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The entrance area of a residential complex in Tianjin (China) disinfects every resident upon entry
Source: REUTERS
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The supply can still be compensated by the inventories of the manufacturers. “But if the situation in the Chinese production facilities doesn’t relax soon, we will have a serious problem with the supply of important medicines here in Europe in a month or two. Widespread antibiotics such as penicillin and cephalosporins, most of which are manufactured in China, could then become scarce. ”
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However, the virus outbreak is only a symptom and not the cause of the misery, said Hosseini. “We have long warned that Germany and Europe have become dangerously dependent on Chinese drug production. This becomes particularly clear in a crisis like this. ”
According to official information, around 43,000 people have now become infected worldwide. Over 1,000 have died of lung disease, almost all of which are in mainland China. But from the perspective of the WorldHealth Organization (WHO), which this week ordered experts from all over the world to come to Geneva for a special summit because of the new epidemic, the figures reported are probably only the “tip of the iceberg”.
If the situation worsened and China decided, for example, to stop delivering active ingredients in order to use the production of urgently needed medicines in its own country, the rest of the world would have a big problem.
There are certainly large pharmaceutical production facilities in India. However, Hosseini warns that it will not be possible to start up production there quickly, even though some of the factories are only under 40 percent capacity. “In the past few years, China has carried out such price dumping that even India can deliver many active ingredients from there. To change that again won’t happen overnight. ”
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China reports well over 1,000 coronavirus deaths
For fear of the corona virus, more and more countries are tightening their protective measures. In China, the number of deaths has now risen to more than 1,000. The WHO invites to the expert summit in Geneva.
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It is all the more important that the federal government now finally reverses. “Three years ago, we calculated that relocating antibiotic production would be economically unprofitable. It won’t work without government support, ”says the expert.
Roland Berger has calculated that Germany would have to use around 55 million euros annually to maintain production capacities for cephalosporins: “This would cover one of the decisive antibiotic classes. And the sum can be put into perspective quickly if you put it in a ratio: it would be just 0.25 percent of the total expenditure on medication. ”
Concerns about the economic consequences of the coronavirus epidemic are growing in China. Several companies have already announced job cuts, although China’s President Xi Jinping previously assured the public that mass layoffs should be avoided. “The outbreak of the corona virus has fundamentally changed the dynamics of the Chinese economy,” say JP Morgan analysts. The US investment bank has therefore lowered its forecasts for Chinese economic growth this quarter.
China’s growth is slumping
Oxford Economics experts also fear a sharp slump in China’s growth. They reduced their forecast from 6.0 percent to just 3.8 percent.
A decline in this amount should also put a noticeable damper on the global economy. Global growth will decline to 2.3 percent this year, the analysts warn. That is the weakest growth since 2009.
Since the outbreak of the corona virus, several million cities in China, including the provincial capital Wuhan, have been virtually isolated from the outside world. The first companies have now started operating again, but the companies are having trouble returning to normal operation.
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Hundreds of Chinese companies said they needed it loansto stay afloat. The Chinese media group Xinchai Media has announced that it will cut around 500 jobs, which is a little more than a tenth of its workforce, in order to “secure its own survival”. In view of the growing problems, Beijing therefore announced further measures to stabilize jobs in addition to the interest rate cuts and fiscal incentives already announced.
However, analysts at Japanese investment bank Nomura also expect the virus to have “devastating effects” on the Chinese economy in January and February. “We are concerned that global markets have so far underestimated the extent of the impact,” they write.
In fact, many important stock market barometers have so far been unaffected by the virus and its consequences. The Dax Despite the global health crisis, reached a new record high on Tuesday with 13,660 points.
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