No time to relax the rules

Two of the people deemed responsible for China's contaminated milk scandal have been sentenced to death and another has been given life imprisonment.

The adding of melamine to milk to make it appear higher in protein led to product recalls around the world and cast further doubt on China's ability to manufacture safe and reliable products.

What is particularly alarming is not so much that the contamination was deliberate, but that supplies were allowed to continue to leave the factory even once those running the company were aware of the contamination and the damage it caused.

The death penalty is clearly not the deterrent it's cracked up to be.

Prime Minister Wen Jiabao gave a rare public apology for failing to prevent the crisis, but no government official or health inspector has been prosecuted. Strict laws are useless if enforcement is poor. And without transparency and public accountability, it is likely that a similar incident will occur again.

Ironically, the sentences were passed just as the US FDA announced a voluntary two-year pilot programme to help promote the safety of drugs and APIs produced outside the US. The aim is to develop a secure supply chain programme that will allow the FDA to concentrate on foreign-produced drugs that may not comply with the criteria laid down in that programme.

In the pharma sector the low-cost economies have benefited hugely from the strong growth in outsourcing requirements in the US and Europe, but with recession starting to hit it is unlikely that this demand will continue to increase at the same pace, with an inevitable knock-on effect on economic growth in countries such as China and India.

As the credit crunch continues to bite across the globe, further cost-cutting and operational efficiencies will be at the top of the agenda for many companies. The temptation for some will be to cut corners.

The other likely casualty of an economic downturn is r&d, a major area of expenditure that doesn't yield a short-term - or all too often a long-term - positive effect on the bottom line. Innovation is a strong economic driver, not only in the pharma sector, and governments may feel tempted to relax regulatory requirements in an attempt to stimulate growth.

Regulation is expensive to initiate, to satisfy and to enforce, but it is not something we can afford to cut back on.