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China Emerges As A Major Obstacle In Japan’s Quest To Triple Stockpile Of Abe’s “Miracle” COVID-19 Drug

Courtesy of ZeroHedge View original post here.

Many Americans probably don’t realize this, but President Trump isn’t the only world leader with a “favorite” experimental drug intended to treat COVID-19.

Japanese Prime Minister Shinzo Abe has been pushing a medication called Avigan, which, like remdesivir and hydroxychloroquine, has shown some efficacy in treating the worst symptoms of COVID-19, especially administered early.

As a reminder, he’s a reminder of all the potential therapies and vaccines in the works to try and treat COVID-19, courtesy of Reuters:

  • Remdesivir
  • Hydroxychloroquine / chloroquine
  • Actemra (tocilizumab)
  • Kevzara (sarilumab)
  • Jakavi (ruxolitinib)
  • mRNA 1273
  • Convalescent plasma
  • Kaletra (lopinavir/ritonavir)
  • NKG2D-ACE2 CAR-NK cells
  • NVX-CoV2373
  • RhACE2 APN01
  • Lentiviral Minigene Vaccines (LV-SMENP)
  • BCG tuberculosis vaccine
  • INO-4800
  • Camostat mesylate
  • IFX-1
  • AD5-nCov
  • Aspirin, Clopidogrel, Rivaroxaban, Atorvastatin, Omeprazole
  • ChAdOx1
  • Serology / Antibody Testing

And, unfortuantely for Japan, Abe and his government are quickly discovering that widely distributing the drug to the population to try and stave off a brutal resurgence of the virus that could pose a serious problem not just for Japan’s elderly population, but for its neighbors in Asia who have resorted to extreme measures to keep the outbreak from spreading.

The government has taken steps to ramp up production of some ingredients for the medication as it seeks to triple its stockpile of the drug as quickly as possible. These steps have included enlisting Fujifilm, a diversified Japanese conglomerate, to effectively conscript other Japanese corporate giants into producing some of the ingredients needed to make the medication.

Here’s more on that according to Nikkei Asian Review:

Japan’s push to triple its stockpile of anti-flu medicine Avigan for coronavirus treatment has proven a challenge as the lack of a raw ingredient from China forces Fujifilm Holdings to switch to a domestic supplier.

The frantic scramble for a production boost has highlighted Japan’s heavy reliance on foreign-sourced ingredients as well as the nation’s slow drug approval process — issues both the government and pharmaceutical sector will have to grapple with.

As patents for Avigan have expired overseas, China has already begun producing generic versions for domestic use, making it impossible for Fujifilm to continue sourcing a chemical called malonic acid from that country.

Few doubt the efficacy of the drug to treat at least some patients. However, one problem is that for a successful course of treatment, patients often require triple the amount of Avigan as compared with Tamiflu, the prescription medication used to treat the flu virus (and, for some readers, commonly confused with the over-the-counter medication Theraflu).

Reports suggest Avigan can prevent the replication of the new coronavirus inside the body. But treating a coronavirus infection appears to require three times more Avigan than the flu, which means the country’s stockpile designed for 2 million flu patients covers only 700,000 COVID-19 patients.

While Japanese firms are working diligently to fill the orders, they’re running up against a shortage of essential raw ingredients produced – guess where?

Fujifilm has asked Japanese chemical company Denka to manufacture the acid domestically, aiming to boost local Avigan production starting in July. Denka retreated from malonic acid production in 2017, but the company retained its manufacturing sites and can resume output once enough workers are secured.

Kaneka, a Japanese chemical company, also announced on Thursday that it will start manufacturing pharmaceutical ingredients that go into Avigan for supply to Fujifilm in July in response to a request from the latter. Kaneka will strengthen its domestic plant  capacity through capital expenditure and securing employees to prepare for production.

The government, eager to build a supply chain at home, acted as a go-between to prod Denka into resming production. Denka says it does not plan capacity increase at this point and will makes future plans based on the production volume of Avigan.

As explained in one of the above quotations, the recent expiration of a patent on the medication has led China to start ramping up production of generics, consuming much of the global supply of a chemical called malonic acid, which China sources domestically. With demand higher in China, those companies get preferred access thanks to the No. 2 economy’s widespread rigging of markets in favor of domestic firms. In Japan, meanwhile, the scramble continues to simply produce more of the stuff in Japan, or rely on sources outside of China.

But all of those things will take a while. It’s difficult to say exactly how long. It’s just another reminder that the US isn’t the only country struggling with sudden export restrictions imposed by China and India on essential materials, drugs and medical equipment.

It’s important to remember that one of the reasons producing these resources has moved abroad is that synthesizing some of these ingredients creates toxic waste that must be subjected to special treatments to dispose of it. These treatments cost almost 10x as much in Japan as they do in China and India, according to Nikkei.

Manufacturing costs are expected to surge as well.

Tablets and other nonprescription drugs are produced through chemical syntheses, necessitating the costly treatment of toxic gases and contaminated water.

Processing water discharges for medicines in Japan costs tens or even hundreds of yen per kilogram, reportedly 10 times higher than in China and India. As a result, producing 50 yen (46 cents) worth of drug in Japan could actually cost over 100 yen.

Japan’s generics industry simply can’t compete with the raw material prices abroad, and because of this massive discrepancy, only roughly 30% of Japan’s supply of generic Avigan is produced using materials 100% produced in Japan.

Producing drugs to treat 2 million patients is achievable as long as the raw material is produced at home. But the government will need to set a price consummate with manufacturing costs and keep it at that level.

Leading anti-flu drug Tamiflu carries a price of about 2,700 yen for two doses daily over five days. If Avigan is priced the same as Tamiflu, a patient will have to pay 8,100 yen because the drug needs to be administered three times more often. For 2 million people, the cost would be 16.2 billion yen, or about $150 million.

Japan’s reliance on foreign-made materials is a structural problem. Generic drugs made entirely of materials produced in Japan accounted for only 30% of total shipment value, according a health ministry survey in 2013, while the remaining 70% relied on at least some imported ingredients.

Of the imports, 30% came from India, along with 24% from China and 26% from South Korea. As Japan moves to further reduce government-set drug prices, the percentage of ingredients sourced overseas is expected to increase even further.

The US isn’t the only country that’s learning the hard way what happens when corporations apply the principles of ‘comparative advantage’ to critical strategic assets like drugs and medical products, as we are learning. That being as it may, it’s still unclear to what degree changes can be made for the long-term, especially when sustainability – not just financially, but in terms of natural resources as well – is taken into account.


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