Snippa might have heard of this idea

Richard Murphy says:
March 6 2020 at 1:58 pm
Why can’t we make paracemtemol?

We can. But we don’t. It is cheaper to buy it from places where it is cheaper to make it.

This process is known as “trade”.

26 thoughts on “Snippa might have heard of this idea”

  1. I could make it in my shed if need be, indeed “hand-crafted locally sourced paracetamol” would probably go down a storm on Etsy.

  2. There may be a reconsideration perhaps not of the manufacturing of paracetamol, but of certain other stuff which may gain the status of ‘strategic’ (in corporates’ thinking) in the light of the current situation.

    Not so much because of this virus, which doesn’t look like it is going to be the big one, but as long-term planning for the ‘big, big’ one we may be due for.

  3. Bloke in North Dorset

    There was already a lot of thought in to re-configuring global supply lines because of the rising costs in China as it gets richer and the upcoming cold war between the USA and China. This just adds to the urgency.

  4. Who will buy the more expensive version made to “reconfigure” trade though? It’s a hopelessly optimistic idea, held by those who won’t have to pay.

  5. Well, let’s go beyond paracetamol, and ask ourselves, is it more expensive to always buy some stuff that’s not the cheapest to ensure that you have a diversified supply line, or is it more expensive to only ever buy the cheapest with the result that when you could really do with that diversified supply line you let rather a lot of people die of mundane stuff instead?

    I doubt I’ll be the only person here staring down the barrel of rather shit things happening if our now 100% Chindian active ingredient supply chain doesn’t get sorted out PDQ.

  6. I’ve noticed the efforts of others to produce the (non) rare earths that China seems to monopolise. The problem seems to be the disposal of the thorium waste. China doesn’t give a damn.

    We do have an aluminium smelter in Oz, but unreliable and expensive green energy means it’s on the verge of shutting down.

    Of course we used to export our rubbish to China for recycling until they decided that they didn’t want it either. I’ve wondered whether we could force the illegal immigrants to sort it under the lash. The Greens would love this, except that they’d want us to sort it and the illegals to wield the lash.

    So it looks as though there are real reasons why things are out-sourced to others. We’d have to send all the Greens to the gas chambers before we could fix the mess.

  7. I made paracetamol during A -level chemistry, the end product being a pale yellow powder I wouldn’t have touched with a barge pole.

  8. Spud has popped up on AccountingWeb about the corona:

    https://www.accountingweb.co.uk/community/blogs/richardmurphy/coronavirus-how-accountants-can-prepare-for-a-crisis?utm_medium=email&utm_campaign=AWUKINS060320&utm_content=AWUKINS060320+Version+A+CID_31139897b3c046e6ac8deac2d9cb14fb&utm_source=internal_cm&utm_term=Read%20more

    Even though this article wasn’t full of his usual bile, there was the odd snipe:

    “For example, is advertising expenditure really going to be useful over the next few months? ”

    For some reason, he hates advertising…

  9. “For some reason, he hates advertising…”
    Strange, seeing his entire raison d’etre seems to consist of promoting his dubious services to all & sundry

  10. Well, let’s go beyond paracetamol, and ask ourselves, is it more expensive to always buy some stuff that’s not the cheapest to ensure that you have a diversified supply line, or is it more expensive to only ever buy the cheapest with the result that when you could really do with that diversified supply line you let rather a lot of people die of mundane stuff instead?

    OK, let’s ask that. Now which people are the suckers that have to pay for the more expensive items so that you get your wish and we diversify? Do Waitrose just have to suck it up and be told that they have to buy more expensive European made Paracetomol? Or do we stiff Lidl?

    Perhaps you’d like government regulations that say 50% of all Paracetomol needs to be bought from outside China. Regulations like that never have unintended consequences — it wouldn’t lead to bureaucrats making insane choices to direct their largesse towards politically suitable targets!

    You need to supply a suitable method of obtaining the desired state of affairs. Good luck!

  11. @BiND

    He supposedly gets paid to write that generic twaddle. Like his previous article where he supposedly did some ‘trouble shooting’ it reads like something a 14 year old has copied from a textbook for homework.

    Still, he can’t control comments so he gets a deserved bit of a kicking.

  12. Well, let’s go beyond paracetamol, and ask ourselves, is it more expensive to always buy some stuff that’s not the cheapest to ensure that you have a diversified supply line, or is it more expensive to only ever buy the cheapest with the result that when you could really do with that diversified supply line you let rather a lot of people die of mundane stuff instead?

    It’s like some businesses have never heard the term ‘risk assessment’. “If you think insurance is expensive, try having an accident.”

  13. When it is said that something is cheaper, it is worth asking, for who? The cost of the tablets for drugs like paracetamol and aspirin is a rounding error, the retail price of such drugs is almost entirely packaging and handling, plus advertising for the branded option. If the price of the pills themselves doubled you wouldn’t notice. It is the company buying paracetamol by the ton that sees the saving, not the end consumer.

  14. Chester, perhaps we could use Tom’s preferred method of a Pigou tax. At a rate inversely proportional to the number of suppliers you use for your essential active ingredients and proportional to how bad it would be to be unable to supply. Not saying I have a solution, but even this rabid free marketeer can foresee a scenario which the market isn’t, and cannot be, prepared for. There is never a good excuse for running out of (most) simple drugs for chronic conditions, and definitely not “the only factory that makes this stuff closed because: precautions”.

    BniC, it’s mostly labour costs as Chindia is (theoretically) subject to the same regulations and inspections if they are exporting to the west. Whether that applies to the disposal of nasty waste products, I’ve no idea (but would doubt it).

  15. Roue — you and I might barely notice a price difference, but the supermarkets would. They have thin margins and compete ferociously.

    Nor would they like doubling their list of suppliers.

    You can make them diversify or leave them be.

  16. @Chester

    +1 UK Supermarkets profit is 2-4% of turnover

    RyanAir’s profits are from selling “extras” before and on flight

  17. “it’s mostly labour costs as Chindia is (theoretically) subject to the same regulations and inspections if they are exporting to the west.”

    Not like you to be so naïve. Our fascist handlers hide behind the mirage of labor cost to protect themselves.

    Fierce regulation in the West is hardly on the product itself.

    U.S. businesses are harassed by OSHA, EPA, EEOC, CPSC, USDA, BIS, BSEE, CSB, USCIS, DOC, OoC (Mark Steyn used to joke about this one), ODEP, EBSA, ETA, SSA, FERC, FLRA, FMSHRC, FMCSA, FTC, FTA, FDA, FNS, FSIS, FE, GIPSA, ICE, BIS, DOI, IRS, DOL, BLS, MSHA, NIOSH, NIST, NLRB, NTSB, NRC, OSHRC, ODEP, OEM, OFE, OLHCHH, OMHP, ONE, OPM, OSTP, OSMRE, PTO, PBGC, PHMSA, PA, RRB, RITA, BSEE, OSTP, SIP, SEC, SBA, DOT, TSA, USAOC, USCSB, USCIS, DOE, CERT, WMD.

    Few stand out as having to do with the product itself.

  18. Gamecock,

    The FDA harrasses pharma companies in China too. I was once actually at one in Beijing during one of said harrassments. The names of the domestic three-letter agencies differ but if you believe China is some kind of regulation-lite free-wheeling anything-goes place, that just shows how little attention you have been paying.

  19. I think Trade was in term two of his undergraduate economics course – he walked out in Term one

  20. My point is that it is not labor cost that drives business to China.

    Regardless of commie controls. And I do not believe the commies care about how many blacks are working in a factory. Nor the water quality of their effluent. Nor what shit they put in the air. Nor somebody falling off a ladder in Nanjing.

    “The names of the domestic three-letter agencies differ but if you believe China is some kind of regulation-lite free-wheeling anything-goes place, that just shows how little attention you have been paying.”

    That’s going to be a hard sell. I’ve seen pictures.

  21. Opportunity cost. A pharmaceutical manufacturing facility, is capital intense, high overheads and expensive to run because of variety of factors. They are automated. The production line and bulk mixers have to be carefully cleaned to avoid contamination of a previous batch or compound with the new. This means large batch/product runs are needed of high value products to give best returns.

    While a production line is tied up in production of or preparation for one thing, it cannot be used for something else.

    Big Pharmas outsource production of short-run or low value products to contract manufacturers or often sell off product out of patent or declining market, so their production lines can be used for high value, large volume compounds.

    Simple compounds, out of patent which because of competition have low sales value are just not of interest to many big companies or even contract manufacturers.

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