China's API industry shows a certain warming trend

Medical Network April 19 News China's bulk drug industry showed a certain warming trend.

According to the latest data, in 2017, the main business income of China’s manufacturing of chemical raw material drugs reached 499.1 billion yuan, an increase of 14.68% year-on-year, an increase of 6.28 percentage points from the growth rate of the previous year; and the export of APIs reached 29.1 billion US dollars, a year-on-year increase. 13.7% returned to positive growth after two years of minor adjustments.

Regarding the situation in the first few months of 2018, the Medical Insurance Association learned from some API companies that most of the production and business activities were carried out except for a few products that were delayed due to price increases or out of stocks in the upstream basic chemical raw materials.

The existence of global rigid demand is the biggest driving force for maintaining the development of China's API industry. At present, the global market for raw material drugs is approximately US$150 billion, and will continue to grow at a steady rate of about 5%. The rigid demand for API market is also reflected in In terms of the export of raw material medicines in China, in 2015 and 2016, although the export volume of raw materials in China decreased by 0.91% and 0.06% year-on-year respectively, the export volume increased by 4.44% and 13.04% year-on-year, respectively, and the export volume hit a record high. In 2017, it continued to grow 8.33% to 8.961 million tons.

It is undeniable that China's API industry still suffers from the disorderly competition of large-scale overcapacity and monopoly price hikes for small varieties. In recent years, the country has vigorously promoted structural reforms on the supply side, relied on supervision and guidance to gradually eliminate backward production capacity and encourage raw materials. The pharmaceutical companies have undergone transformation and upgrading, and at the same time, they have increased their efforts to regulate the API market and crack down on illegal price increases and malicious control.

On the one hand, through the rational improvement of environmental protection standards, the leading enterprises will be encouraged to upgrade their technological level to enhance their competitiveness, and the high-pollution and non-compliant enterprises will be withdrawn from the market to reduce the low-cost competitors in the raw material medicine market. On the other hand, “drug shortages and raw materials” will be issued. Guidelines for Price Behavior of Pharmaceutical Operators, which penalizes malicious manipulation of raw material drug prices.

The integration of production capacity, upgrading of technology, and maintenance of reasonable profits will continue for the future of China's bulk pharmaceutical industry. health Development lays a more solid foundation.

In recent years, domestic and foreign pharmaceutical regulatory policies and institutions have undergone major changes.

The implementation of the Chinese version of the DMF filing system means that the supervision of APIs is not 'relaxed' but rather 'more stringent'; drugs between the United States and the European Union GMP The inspection and mutual recognition agreement has begun to operate. This will increase the threshold for inspections for Chinese API companies that are applying for European and American certification. India has increased the on-site inspection of Chinese APIs since last year and can foresee exports to India. In the future, APIs will face more stringent regulation. Last year, the new FDA director assumed office, and the industry expects that the FDA will reform regulatory regulations, new elemental impurity requirements, and guidelines for the classification of pharmaceutical eutectic supervision.

All these types of substances put forward higher requirements for APIs produced in China, whether they are APIs for domestic sales or APIs for export.

In addition, international trade protectionism has intensified and become the biggest uncertain factor in the development of international pharmaceutical raw materials in China. US President Trump recently signed a memorandum, which will impose large-scale tariffs on imports from China based on the results of the '301 investigation'. The proposal issued thereafter contains a list of products subject to high tariffs in China, which involves some APIs and drug.

From the perspective of China’s export structure of western medicines to the United States, in 2017 API exports reached US$3.92 billion, which accounted for 82.5% of China’s total exports of US and Western medicines. This may be affected by taxation. India has been supporting the country in recent years. In the development of raw material drug industry, anti-dumping investigations have been initiated for raw material medicines such as gliclazide, amoxicillin and ofloxacin produced in China, and anti-dumping duties have been levied, which has affected the export of raw pharmaceutical products to India to some extent. It is expected that similar anti-dumping investigations will continue to appear in India in the future.

China's bulk raw material drug production capacity and production ranks first in the world, which is inseparable from China's solid chemical fermentation base and a sound upstream and downstream industrial chain. Even if more stringent environmental protection regulations are encountered, some small and medium-sized APIs Enterprises have been or are being eliminated, China will continue to occupy an advantageous position in the global raw material medicine market, and it is difficult to shake in the short term.

However, with the advancement of structural reform on the supply side, the production of bulk APIs in China will become more concentrated and the process will be further enhanced. It can be predicted that the capacity and production of bulk APIs in China will decrease in the future, and the relationship between supply and demand will increase. In balance, prices and profits will gradually return to a more reasonable range. In the past, the era of low prices will never return. Individual API varieties may even lose their price competitive advantage and may be transferred abroad.

The specialty APIs represented by the cardiovascular, antiviral, and antitumor categories are targeted at the imitation of raw materials for patents that have expired at the end of the patent period. They have higher technological content and more lucrative profits. They have been developed in the past decade in China. Active raw pharmaceutical sector, once Huahai Pharmaceutical, Chuangnuo medicine , Jiangbei Pharmaceutical etc. enterprise The rise has made a lot of contributions.

In 2016, the export volume of APIs in our country reached US$3.53 billion, accounting for 13.8% of APIs. With more than US$194 billion worth of original research drugs in the next five years, patents will soon expire, and more and more domestic companies will Focusing on the corresponding specialty APIs, and starting the research and development and production preparation work in advance, it is expected that the future production and export scale of APIs in China will continue to expand and grow.

Under the increasingly close global environment in the pharmaceutical industry, some multinational pharmaceutical companies have chosen to abandon the original full-industrial chain model, shift their focus to market operations, and reduce costs through outsourcing through R&D, clinical, and production processes. Patented raw material medicine came into being.

The API companies are entrusted by pharmaceutical companies to provide specialized services in the development and production of APIs and key pharmaceutical intermediates (ie pharmaceutical contract manufacturing organizations, CMOs), such as China's Boten Pharmaceutical, Kailaiying Pharmaceutical, and the entire pharmaceutical company. Industry, Jiuzhou Pharmaceutical, and foreign companies such as Catalent, Lonza Group, DSM, etc., all walk in the forefront of the industry.

It is estimated that the market size of China's CMO has reached about 5 billion U.S. dollars, and it will grow at a rate of 20% to 30% in the future, among which the patented raw material drugs account for a large proportion. As a new hot spot in the field of raw material drugs in recent years, the patented raw pharmaceutical drug Its higher profits are more concerned by more companies and it is expected that the future development competitiveness will increase.

Compared with the mature chemical synthesis or raw material drugs produced by fermentation, the biological raw material drug is still in its infancy. From the production process point of view, most biological products use bioreactors, bacterial sources, process variables, impurity types and other uncontrollable factors. In many cases, the raw material drug (also known as raw liquid) has a relatively high quality risk, so it is difficult to develop.

However, as the demand for bio-pharmaceuticals in the market continues to increase, the bio-pharmaceutical market contains significant potential for growth. Ebovite, Bristol-Myers Squibb, GlaxoSmithKline and other multinational pharmaceutical companies are involved, and Sansheng Guojian , Oda Bio, Baimaibo and other domestic companies also started related businesses. Vaccines, interferon, recombinant proteins, growth hormone, monoclonal antibodies and other biopharmaceutical subdivision products are still being introduced, will promote our country has emerged a number of Representative bio-pharmaceutical companies.