Can the anti-monopoly guidance issued by the General Administration of Market Supervision for APIs curb monopoly behavior?

- Nov 23, 2020-

On October 13, the State Administration for Market Regulation issued the "Guidelines for Anti-monopoly in the Field of APIs (Draft for Solicitation of Comments)" to solicit public opinions. It is hoped that this will prevent and stop monopolistic activities in the field of APIs and guide operators in the field of APIs to operate in compliance with laws and regulations. However, there are different voices in the industry regarding the value of this guidance.

01.   Anti-monopoly of APIs goes a step further

For API manufacturers, the "Guide" points out that they should avoid reaching joint production agreements, joint procurement agreements, joint sales agreements, joint bidding agreements, etc. with other API manufacturers that have a competitive relationship to negotiate the production volume, sales volume, and Sales price, sales target, etc. are the main content of the agreement

For API distributors, they should avoid reaching and implementing horizontal monopoly agreements such as distribution cooperation agreements and purchase cooperation agreements with other API distributors that have a competitive relationship with them on the purchase quantity, purchase object, sales price, sales quantity, sales object, etc.;

02.   Can severe penalties solve the fundamental problem?

On April 14 this year, the General Administration for Market Regulation issued an administrative penalty decision on three calcium gluconate raw material drug distribution companies for abusing market dominance violations and imposed a total fine of 325.5 million. This is the largest fine in antitrust cases in the field of APIs since the implementation of the Anti-Monopoly Law.

After the document is released, the regulatory authorities will take the initiative or rely on the form of reporting, It is still unknown whether the companies that have profited from the monopoly of APIs can stop the monopoly. Some people in the industry have also called for breaking the monopoly of APIs, in addition to strengthening supervision, it is also necessary to lower the entry barriers for API market and broaden the supply channels of pharmaceutical ingredients.