Health & Beauty

2020 is a year when the global pharmaceutical industry is deeply affected by the epidemic, and it is also a year when my country's API industry has withstood the test of fluctuations in the international market. According to the preliminary statistics of the China Medical Insurance Chamber of Commerce, my country's export volume of API products will reach 35.7 billion U.S. dollars in 2020, a record high, an increase of about 6% year-on-year.

The export growth of my country's APIs in 2020 will benefit from the stimulus of the epidemic. The epidemic has boosted global demand for anti-epidemic-related APIs, and has also affected the production of other APIs in India and the European Union. The international market has transferred orders for my country's APIs. increase. Specifically, the export volume of my country's raw materials increased by 7.5% year-on-year to 10.88 million tons. From the perspective of specific export categories, the export value of anti-epidemic-related raw materials such as anti-infectives, vitamins, hormones, antipyretics and analgesics, and some antibiotics have achieved varying degrees of growth. Some specific varieties have grown rapidly, such as The export value of dexamethasone increased by 55% year-on-year, the export value of lamivudine, vitamin C, and vitamin E increased by more than 30% year-on-year, and the export value of paracetamol and analgin increased by more than 20% year-on-year.

Since April this year, India's new crown pneumonia epidemic has become more and more serious, and local governments have taken measures such as lockdowns, suspension of work and production from time to time to respond. As the main competitor of my country's APIs in the international market, the severe epidemic in India will affect the normal production and export of APIs. It is reported that at the beginning of April, the Indian government has announced a ban on the export of Remdesivir APIs and preparations to meet the country's anti-epidemic needs, resulting in a tight global supply of Remdesivir APIs. In view of the unstable supply of raw materials in India, it is expected that my country will still be able to accept some transfer orders for raw materials in the international market this year and maintain the steady growth of my country's raw materials exports.

However, the export opportunities brought about by the epidemic are short-lived after all. How to face the deeper crises and opportunities after the epidemic is an issue that urgently needs to be considered in the future international development of my country's API industry.

challenge

01 The pattern of the global API industry will change. What is my country's position in the international market?

The pharmaceutical industry is a strategic safety industry. The shortage of medical supplies and medicines caused by the epidemic has caused a certain degree of tension and anxiety, and has once again aroused the attention of countries to establish independent and complete medical supply systems.

The vital and fundamental position of my country's APIs in the global pharmaceutical industry chain has caused anxiety in the United States and heated discussions on promoting the return of the pharmaceutical industry. Since last year, the U.S. government has taken various measures to strengthen the supply chain of APIs and reduce dependence on my country's APIs, such as initiating relevant laws to protect the drug supply chain, signing production contracts with companies, and bidding to reserve key APIs.

In Europe, the European Parliament, the European Commission, the European Medicines Agency and other institutions have discussed, researched and issued strategies to strengthen the drug supply chain, and plan to take measures to attract the return of API production.

The Indian government announced the production-related incentive plan (PLI) for APIs and key starting materials to encourage increased localized productivity of APIs and pharmaceutical intermediates. In January of this year, the plan approved the first batch of production applications from Indian companies. In addition, Brazil, Iran and other countries are also taking measures to promote the independent production of APIs.

In the future, as the policies of various countries to support the localized production of APIs gradually deepen and show results, the global API industry pattern may undergo slow changes, and my country's APIs' international market status may decline. It is expected that European and American companies will regain the production capacity of some key APIs with government support, and retain the capacity to expand at any time. APIs from China still occupy an important position in the European and American markets, but the right to speak is challenged. APIs from India are in The market share of Europe and the United States is expanding, and other sources of APIs supported by Europe and the United States will occupy a place in the market. On the one hand, India expands its own API production capacity to seize the international market share of Chinese companies, and on the other hand extends to upstream pharmaceutical intermediates, enhances intermediate production and manufacturing capabilities, and breaks the upstream and downstream supply chain relationship with my country. Both China and India The future will enter the era of competition across the entire pharmaceutical industry chain, especially in the field of APIs. The competition will become increasingly fierce.

02Focus on the problem of overcapacity

Overcapacity has always existed in my country's API industry. From 2017 to 2019, under the combined effect of stricter environmental protection and safety supervision and the continuous deepening of supply-side reforms, some domestic APIs with high energy consumption, high pollution, and backward production processes have gradually been eliminated, and the problem of overcapacity has been alleviated. Profit margins have rebounded and performance has improved. However, starting from 2019, domestic new or expanded API projects have been launched intensively. Over the next few years, overcapacity in the industry may become a high probability event.

From a domestic perspective, first, following the environmental and safety supervision guidelines, the relocation of pharmaceutical and chemical companies has been basically completed, and the production capacity of some APIs has been restored. Second, the epidemic has given birth to some companies urgently expanding production of APIs urgently needed by the epidemic, and want to seize the short-term “dividends” of the epidemic. In April last year, Shanghai Pharmaceuticals expanded its hydroxychloroquine production line. Recently, individual companies have urgently launched Maredcivir production projects. Some chemical plants have also switched to API production during the epidemic, which has brought about an increase in API production capacity. The third is the bottom-up demand transmission of centralized procurement, which enables companies to have a first-hand experience and good expectations for the actual procurement volume of centralized procurement exceeding the agreed procurement volume, and choose to expand the production of raw materials and preparations to cope with the larger-scale future Centralized procurement and supply. Fourth, companies are building or expanding API production lines in order to enhance their advantageous position in consideration of large-scale benefits or synergy between the upstream and downstream of the industrial chain.

From an international perspective, in the future, as the global epidemic situation gradually improves with the popularization of vaccines, the production capacity of major API production areas such as India and the European Union will not only recover quickly, but may also increase under local support policies. In addition, the United States and Brazil Such as the country's new production capacity stimulated by the localized production policy of APIs, the global API production capacity will usher in a wave of overall expansion.

For a long time, my country's API exports have been plagued by overcapacity. For example, traditional bulk raw materials such as penicillins, vitamins, and antipyretic and analgesic drugs. my country occupies a major share in the international market, but its pricing power has not been high. The main reason is that the production capacity of related products far exceeds global demand. Domestic companies are competing for International market shares have been auctioned at low prices. While exporting companies have meager profits or even losses, they have also been subject to anti-dumping investigations in some countries' markets, which has brought great obstacles to the healthy development of the industry.

Since the epidemic, the production capacity of raw materials at home and abroad has increased simultaneously, indicating that the problem of overcapacity may appear on a global scale in the future.

opportunity

01 my country's strong economic recovery brings more attention and opportunities to the development and upgrading of the pharmaceutical industry

In 2020, my country's GDP grew by 2.3% year-on-year, becoming the only major economy in the world to achieve positive economic growth. In the first quarter of 2021, my country's GDP grew by 18.3% year-on-year, becoming the highest value since the quarterly GDP statistics were available in 1992. These "eye-popping" figures fully demonstrate the strong momentum of my country's economic recovery. At the same time, my country's medicines and anti-epidemic materials have been exported in large quantities to more than 200 countries and regions around the world, which has strongly supported the global anti-epidemic cause. Driven by the export of anti-epidemic products, the growth rate of pharmaceutical exports has also reached a record high. According to the preliminary statistics of the China Medical Insurance Chamber of Commerce, my country's pharmaceutical product exports in 2020 will increase by about 68% year-on-year to 123.8 billion US dollars.

The above-mentioned outstanding performance has made the world look at China with admiration, and has also brought more attention and opportunities to the development and upgrading of my country's pharmaceutical industry. Among them, it can promote the internationalization of my country's API industry from at least two aspects. First, my country's API companies have the opportunity to enter the supply chain system of some multinational companies with high barriers, such as becoming a candidate supplier of APIs or undertaking the technology transfer of patented APIs; the second is to obtain more development and production opportunities for new products through CDMO , Multinational pharmaceutical companies in developed countries tend to outsource the production of raw materials for innovative drugs, and only retain the most profitable R&D, sales and other links. However, my country’s CDMO market is still growing at a high speed, and the stable production environment under the epidemic makes my country an ideal The undertaker of the development and production outsourcing of APIs.

02The epidemic has made the importance of APIs more prominent and policies are more supportive

The new crown pneumonia epidemic has caused the stability and safety of the API supply chain to receive enthusiastic attention from around the world. my country has also begun to pay more attention to the API industry, and the status of APIs has risen. First, the government has introduced policies to guide the development of the API industry to be more standardized. For example, the "Anti-monopoly Guidelines in the Field of APIs" (draft for comments) issued by the State Administration for Market Regulation in October 2020 will ensure the safety and stability of the domestic drug supply chain. And promoting the healthy development of the API industry; second, the local government actively explores new ways to support the development of the API industry, so that the chemical park is more willing to accept the establishment of API companies and transform into the pharmaceutical park. For example, according to relevant state ministries and commissions, Suzhou The spirit of the document is the first to explore and propose the development path of "building a high-standard pharmaceutical green manufacturing industrial park and key pharmaceutical monitoring points with reference to the chemical park and monitoring point identification management model", and promote the implementation of the API project.

Suggest

How to deal with the "dangers" brought by the epidemic, while seizing the "opportunities" brought about by the epidemic, to remain invincible in the future international development is an important issue that my country's API companies should consider carefully and take precautions.

The first is to increase the intensity of innovation and research and development. The development of product development towards complex structure and high value-added sub-categories will obtain a certain technical threshold. Process development must be upgraded to high-efficiency, low-pollution, and green development, such as biotechnology and enzymatic methods. The process and manufacturing methods are up to intelligent manufacturing, such as continuous, automated, and modular upgrades.

The second is to optimize the supply chain system, actively undertake pharmaceutical division of labor, deeply embed the global pharmaceutical industry chain, and establish long-term and strong cooperative relations with upstream and downstream enterprises.

The third is to occupy the commanding heights of cost. Under the premise of meeting the requirements of environmental protection and safety, the cost advantage will be improved through technological upgrading, process transformation and large-scale production. Under the same conditions, cost advantage will always be the most important weapon to occupy the market.

The fourth is to adhere to the global layout, conform to the changing trend of the global API industry, and consider establishing production bases in Europe, America and along the “Belt and Road”.

Fifth, both domestic and foreign countries walk on "two legs", both focusing on the international market and taking into account the domestic market, improving the ability to serve the two markets and coping with the "double cycle", while preventing the international "black swan" event from triggering market fluctuations and survival crises.