Four major changes in the raw material medicine industry! Stone Medicine, Huahai, and the Confederation consolidate the leading edge

According to the medical network of May 29, APIs are an important part of the pharmaceutical industry in China. After years of rapid growth, China has become the world's largest producer and exporter of APIs. In 2017, the main business income of China's manufacturing of chemical APIs reached 4.991 trillion yuan, an increase of 14.68% year-on-year; exports reached 29.1 billion U.S. dollars, an increase of 13.7% year-on-year, and the growth rate has recovered to some extent.

However, in fact, since 2012, the growth rate of the main business of raw material pharmaceutical manufacturing in China has gradually declined. The growth rate of exports has also slowed down sharply, and even negative growth has occurred. The development of the raw material medicine industry has shown signs of weakness. It is undeniable that China's bulk pharmaceutical industry The long-term extensive development approach has brought capital accumulation to the pharmaceutical industry, and the favorable factors such as technological precipitation have brought about the drawbacks of overcapacity, environmental pressure and other obstacles to development.

At present, the raw material medicine industry in China is undergoing a period of change. Domestic and foreign regulations are becoming more stringent, and transformation and upgrading are gradually deepening. Under the new situation, new industries are looming. How to seize the opportunities for change and realize sustained and rapid development of the industry is a topic worthy of discussion.

Due to long-term use of bulk bulk drugs, low technical barriers, and large quantities of use, domestic companies have more and more production lines in the past 10 years. Domestic production capacity of amoxicillin is estimated to have exceeded 20,000 tons in 2017, compared to 10 years. It has doubled before, and the global demand is only 15,000 tons. Specialty API has also seen a trend of 'massization' in recent years. Atorvastatin calcium, a star product of specialty APIs, has been held by 14 companies in the past few years. Production approvals, capacity expansion make it no longer the scene of past high profits.

The issue of overcapacity has long plagued the pharmaceutical industry. Enterprises are competing for market prices and the profit margins continue to shrink. For example, the export price of amoxicillin has dropped from the peak value of 37 US dollars/kg to the current US$20/kg. 46%. At the same time, due to the fact that there are few manufacturers of small-scale raw material medicines in China and their production is low, there are manufacturers who sell the goods, dealers control, and the manufacturers buy out. Malicious monopoly prices have forced domestic manufacturers to purchase at high prices. Even unable to buy goods, affecting domestic drug Supply and preparation product exports.

In order to respond to the disorder of domestic raw material drugs, the government has been vigorously promoting supply-side structural reforms in recent years. It has relied on supervision and guidance to gradually eliminate backward production capacity, encourage the transformation and upgrading of raw material medicine companies, increase the standardization of raw material drug market, and crack down on illegal growth. Price and malicious control.

On the one hand, through the rational improvement of environmental protection standards, the leading enterprises are encouraged to increase their technological level to enhance their competitiveness, and high-pollution and non-compliant enterprises are forced to withdraw from the market to reduce the low-cost competitors in the raw material medicine market; on the other hand, “shortage drugs and APIs are released”. “Guidelines for Conducting Price Behavior of Business Operators” to investigate and deal with the malicious manipulation of prices of raw material medicines. Capacity integration, process improvement, market consolidation and reasonable profit retention will lay a more solid foundation for the sustainable and healthy development of the pharmaceutical raw material industry in the PRC, relying solely on low prices. The era of market seizure will never return.

The new drug substance regulatory ideas gradually emerged. November 2017 on the adjustment of APIs, pharmaceutical excipients and Medicine package The announcement of the review and approval of the matter was issued and implemented, and the raw material drug registration system was replaced by the registration system, marking the official end of the approval period for APIs and the filing of the Chinese version of DMF.

The long-awaited cancellation of the GMP certification is also expected to land this year. After the cancellation, the certification will be changed to flight inspection. As the drug regulatory department continues to strengthen the construction of a full-time inspector team, the industry will usher in more stringent supervision. The Food and Drug Administration has joined the ICH last year and is currently studying the PIC/S organization. This indicates that China's supervision of APIs is gradually becoming more relevant to the world. Regulation Changes will be more frequent, and industry reshuffle will speed up. Challenges have come and opportunities have come.

In recent years, under the premise of a decrease in the number of raw material pharmaceutical manufacturers in China, the number of companies that export APIs has increased year by year. In 2017, it has historically exceeded 11,000, an increase of 19% in five years. This shows that we are concerned about APIs. There are more and more companies in the international market. Some manufacturers choose to bypass the direct exports of traders. Some companies that originally targeted only the domestic market have set their sights on foreign countries, while others have entered traders who do not run bulk drug business. The field.

The sharp increase in the number of exporting companies shows the popularity of the industry and also brought about more fierce competition. The most intuitive performance is that the average export price has fallen. In the past five years, the average price of China's raw material medicines has dropped by 13%.

In recent years, the raw material medicine industry in China is facing tremendous development pressure. First, the labor and raw material costs have risen sharply, and environmental protection, safety and other policy factors have caused the operating costs of raw material medicine companies in China to continue to rise, which has weakened the international competitiveness of products. At the same time, India's support for the pharmaceutical industry to extend the upstream of the industry chain and other policies and measures to accelerate the breaking of the existing market structure, intensified market competition.

Second, the supervision of the APIs in the international market has become increasingly stringent, and the pressure for compliance has increased. In addition to regulatory agencies such as the United States, European Union, Japan, and drug regulatory agencies in Brazil, Mexico, and India, they also conducted on-site inspections in China.

Third, the stable supply chain of chemical raw materials was transmitted to the raw material pharmaceutical industry in an unstable manner. As a result, companies could not complete orders on time, which undermined the confidence of the international market for raw material medicines in China. Many European and American end users switched to other markets such as India to find more raw material suppliers. , Some API varieties began to shift production to other countries.

The international development of China's API industry has been plagued by trade friction. Since 2010, China medicine A total of 73 cases of trade frictions were encountered in the products. More than half of the APIs were used. APIs such as amoxicillin, paracetamol, ofloxacin, ceftriaxone, and gliclazide all suffered from anti-dumping investigations. Exports have a negative impact.

In recent years, China's pharmaceutical industry has experienced a clear upward trend in trade friction cases, and major export markets for raw material drugs such as India, the United States, and the European Union have also been the subject of trade frictions. Recently, the United States announced that it intends to impose tariff lists on China’s exports, involving raw materials. There were 28 drug customs codes, some of which were included in the list, which brought uncertainty to the export of pharmaceutical raw materials to the United States.

However, China's API industry has been deeply involved in the international pharmaceutical industry chain. Many domestic API manufacturers are long-term stable suppliers of multinational pharmaceutical companies. For example, Shandong Xinhua supplies Merck, Roche supplies levodopa, and Wing Tai Technology has a Germany supplies key intermediaries for sofosbuvir. The irreplaceability of Chinese pharmaceutical raw materials in the global market has increased. This is evident from the recent media coverage of the German generic pharmaceutical company Stardard Inc., which was disrupted by the shortage of raw material drugs in China.

Certainly, some new changes in the international API market have also provided new opportunities for the development of China's API industry. New ideas such as the R&D organization (CRO) and contract manufacturing organizations (CMO) that have emerged in recent years have made China The R&D and production capacity of APIs have been improved and released, also by WuXi PharmaTech, Kailaiying, Hequan Pharmaceutical, Jiuzhou Pharmaceutical, Zhejiang Tianyu, etc. enterprise Provides a shortcut to overtaking.

In recent years, China's bulk drug industry mergers and acquisitions are commonplace. From 2012, Fosun Pharma acquired 580 million yuan in mergers and acquisitions of Hunan Dongting Pharmaceuticals, and in 2016, Yabao Pharmaceuticals purchased 6.1 million yuan in Qingsong Pharmaceuticals, and in 2017, it reached 837 million yuan in cents. Acquired two Italian steroid hormone drug factory, the amount of acquisitions is getting bigger and bigger, the tentacles from the inside out.

The first purpose of M&A is to increase production capacity and achieve economies of scale. For example, Tung Shing Pharmaceutical acquires Zhongtai Bio and obtains its low-cost manufacturing base in Thailand. Second, it enriches the product line and complements the shortcomings of individual products missing from the series, such as cents. The acquisition of Handan Pharmaceuticals makes up for the lack of high-end raw materials for its raw materials. Third, it controls the upstream and reduces the production cost of its own preparations. For example, Yabao Pharmaceuticals acquires Qingsong Pharmaceuticals to obtain R&D and production capabilities for its raw material medicines and intermediates, ensuring the company's industrial chain. Upstream and downstream play a synergistic role; Fourth, access to certification resources, open up the path to enter the international market, such as the acquisition of Malpensa Pharmaceuticals Yabamoto Chemicals, designed to help the company more products through European and American certification, to obtain market sales.

Increasing the degree of concentration is one of the important means for capacity reduction in China's bulk pharmaceutical industry, and it is also a necessary path for the development of the industry. Under the multiple roles of mergers and acquisitions, transformation and upgrading, and the survival of the fittest, the concentration of raw material drugs in China will increase year by year. Leading companies have gradually consolidated their leading position. Shijiazhuang Pharmaceutical Group is a leader in vitamin C, the caffeine industry, Huahai Pharmaceuticals is Puli, a leader in antihypertensive drugs for Satan, and U.S. Pharmaceuticals is a leading drug in penicillin APIs. Chuangnuo is an antiviral drug. The raw material medicine leader, Zhejiang Pharmaceuticals, Xinhecheng is the leader of vitamin E, Xianyi Pharmaceutical is the leading drug of steroid hormones, Haipu Rui is the leading drug of heparin raw materials... The leading enterprises contribute to the development of the industry is the advantages of scale, and Lower production costs and healthier profit margins.

At present, the world is undergoing the third industrial revolution dominated by life sciences. The Nineteenth Congress report also included the strategy of 'Healthy China', which pointed out the direction for the development of China's pharmaceutical industry. Raw material medicines are also faced with rare opportunities. Development Opportunities. API companies should see clearly the trend, move at random, seize opportunities in change, use innovation, technology, and quality as the main weapons, not only to strengthen themselves, but also to benefit the society.