The global pharmaceutical industry chain is reshaping, and China's API industry is stable and far-r

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The global pharmaceutical industry chain is reshaping, and China's API industry is stable and far-r

Time：2022-08-16 13:47:18 Source： Author：

For many years, API has always occupied the highest proportion in China's pharmaceutical product export trade. China's API industry also occupies an important position in the global pharmaceutical industry chain. Affected by the COVID-19 epidemic, the safety of the pharmaceutical industry chain and the supply of raw materials has received unprecedented attention. This paper reviews the pattern changes and future development trends of the global API industry, and puts forward suggestions for the development of the API industry in China.

The global API industry pattern has gradually shifted to China and India

Before the 1990s, Europe and the United States were the world's most important API production areas, with large industrial scale and advanced technology; After that, influenced by factors such as production cost and environmental protection pressure, the production and supply of API in Europe and America gradually shifted to the Asia Pacific region. At present, the global production of chemical APIs is mainly concentrated in five regions: Western Europe, North America, Japan, China and India. Among them, Europe and the United States have gradually reduced the production capacity of API, especially in the United States, most generic pharmaceutical companies do not have their own API production workshops and mainly rely on imports. Emerging markets, represented by China and India, have risen rapidly and become major producers and exporters of APIs. Relevant data show that the global total proportion of API supply in China and India increased from 16.7% in 2008 to 47% in 2019.

Geographically, in Europe, except for France, the Netherlands, Germany, Switzerland, Spain, Italy, Ireland, Russia and a few countries in Eastern Europe, most countries have already abandoned the production of API. In the Americas, the United States, Mexico, Brazil and Cuba also have some API factories, but the number is not large, and the API enterprises in some countries are also decreasing. In Asia, in addition to China and India, there are a certain number of API and intermediate factories in Israel, Japan and South Korea, but the number is relatively limited. The API industry in Africa is almost zero.

From the perspective of varieties, developed countries and regions such as the United States and Europe, with their advantages in R & D, production process and intellectual property protection, occupy a leading position in the field of patented drug APIs with high added value; China is dominated by bulk raw materials; In India, the generic pharmaceutical industry is used to drive the production of characteristic APIs.

China and India play an important role in the API Market by virtue of their cost advantages. As the characteristic API manufacturers in developing countries such as China and India continue to increase R & D investment, improve production technology, improve process level, and invest in improving production equipment to form a professional production line, the API enterprises in China and India are also gradually extending to the high-end value chain of API.

Before the outbreak of COVID-19, the five major API production areas had been in a situation of mutual growth and decline. China and India benefit from the rapid development of their own pharmaceutical industry and the increase of international demand for API, and the growth of API industry is very considerable. Compared with the other three production areas, the future development prospects of the API industry in China and India are generally optimistic. At the same time, as the Indian pharmaceutical industry has much in common with China, the Indian API industry has formed a climate. It is expected that in the future, it will continue to compete fiercely with Chinese api enterprises.

Chinese api deeply participates in global pharmaceutical industry chain

China is the largest producer and consumer of chemical products in the world. In 2020, the output of dozens of bulk chemical products ranked first in the world. China's API industry has complete basic chemical raw materials in the upstream. Relying on the advantages of the industrial chain and supply chain, it has become an active participant in the global API industry after years of continuous development. In particular, since 2010, China has become the world's largest production base of APIs, which can not only effectively meet domestic demand, but also sell a large number of APIs to the international market. APIs are exported to nearly 200 countries and regions in the world. The export volume has been the first in the world for many years, and has begun to occupy an extremely important position in the global pharmaceutical industry chain.

According to clarivate data, China is able to produce about 1650 varieties of API with production capacity accounting for about 30% of the world. Its comparative advantages are reflected in fermentation products, cost control level and international standards. Among them, a large number of API and intermediate varieties occupy a considerable share in the global market and have certain bargaining power. For example, China's antibiotic production level is leading in the world, and antibiotic raw materials occupy 30% of the international market; The production of antipyretic and analgesic drugs such as paracetamol, aspirin and analgin is relatively high, of which the output of paracetamol accounts for 50% of the world's total output; Among the vitamin raw materials, except for a few varieties, most of them are in the forefront of the world; The market share of corticosteroids is leading in the world. In addition, China is also the largest supplier or even the only supplier of effective ingredients of some important drugs, such as vancomycin, and China also dominates the global supply of heparin.

According to the data of China Chamber of Commerce for the import and export of medical and health products, in addition to the slight decline of 1% - 2% in 2015 and 2016, the export scale of China's chemical raw materials has continued to grow over the years. The export volume has increased from US $15.98 billion in 2010 to US $41.77 billion in 2021. The export volume has exceeded 10 million tons, and there are dozens of products with an export value of more than US $100 million. According to some data, Chinese API has accounted for about one-third of the global API market, and it is worthy of being the global API leader. In recent years, the number of Chinese enterprises applying for EU CEP (European Pharmacopoeia suitability certificate for API) and US DMF (drug master document certificate) has shown a rapid growth trend. Taking the European market as an example, as of July 11, 2022, Chinese enterprises had a total of 899 valid CEP certificates, and about 900 API varieties were sold in the European market, making it the largest source of API in Europe.

The epidemic highlights China's position as the center of API

Since the outbreak of covid-19, the global API supply chain has been affected to a certain extent. India, the United States and other countries have experienced drug shortages in varying degrees, especially the epidemic related drugs. In the early stage of the outbreak of COVID-19 in February 2020, the World Health Organization immediately sent to the China Chamber of Commerce for the import and export of medical and health products a list of priority products that need to be monitored and stored due to the interruption of the supply of raw materials and intermediates in China, including a total of 35 varieties of raw materials for the production of antibiotics, antiviral drugs and high blood pressure drugs. During the outbreak, India announced that it would stop the export of 26 active pharmaceutical ingredients (APIs) and related drugs to ensure their own use.

The above situation highlights the importance of China in the global pharmaceutical industry chain. According to the data, the API and drugs restricted by the Indian government are mainly antibiotics, vitamins, antiviral, antipyretic and analgesic products, and the vast majority of them are drugs needed to fight the epidemic. The raw materials or core intermediates of these drugs are mainly from China, and some local enterprises in Hubei even occupy the leading share in the world. At the group of 20 (G20) special summit on coping with COVID-19 epidemic held in March 2020, China proposed that "China will increase its efforts to supply raw materials, daily necessities, epidemic prevention materials and other products to the international market", highlighting China's responsibilities and responsibilities as the world's largest producer and exporter of raw materials in the context of the global epidemic of COVID-19. During the COVID-19 epidemic, the export value of raw materials and drugs related to the epidemic, such as anti infective drugs, vitamins, hormones, antipyretics and analgesics, and some antibiotics, increased to varying degrees. Some varieties grew rapidly, such as dexamethasone, lamivudine, vitamin C, vitamin E, etc., with a year-on-year increase of 55%, paracetamol, analgin, etc., with a year-on-year increase of over 20%.

At present, Pfizer's paxlovid and Merck's molnupiravir have been approved and commercialized in many countries and regions respectively. Many enterprises in China have become important suppliers of intermediates and APIs for Pfizer and MSD. According to relevant announcements, three domestic manufacturers, Klein, Wuxi apptec and poten, have obtained Pfizer palovide orders worth more than 14 billion yuan - Chinese enterprises have deeply participated in the global industrial chain and supply chain of small molecule drugs for the treatment of COVID-19.

The COVID-19 epidemic has also further recognized the importance of the global pharmaceutical industry chain. Problems in any link of the industry chain will have a chain reaction on downstream industries. After the outbreak of the epidemic, the export of Chinese pharmaceutical products was delayed, affecting the Indian pharmaceutical enterprises closest to China's upstream and downstream pharmaceutical supply chains, and further affecting the normal production of downstream enterprises and global supply.

It can be said that the COVID-19 epidemic has further highlighted the status of Chinese APIs in the global pharmaceutical industry, but it has also made countries around the world pay more attention to the safety and stability of their own API supply. More and more European and American pharmaceutical enterprises have begun to consider the return of API production. In the future, the global API industry chain may develop towards diversification, localization and regionalization, but this will be a long process.

The upgrading and iteration of China's API industry is at the right time

In the past, the division of labor in the supply chain of the global pharmaceutical industry chain was based on the resource endowments and comparative advantages of various countries, and was the result of free market selection. Countries considered cost priority and efficiency priority. However, the continuation of the COVID-19 epidemic, combined with trade protectionism and geopolitical conflicts, may become a catalyst for reshaping the industrial pattern. How to continue to maintain the advantages of China's API industry in the reshaping of the global pharmaceutical industry chain is of great strategic significance for the future development of China's pharmaceutical industry.

At present, China's API industry has shown a situation of a hundred flowers blooming and a hundred schools of thought contending. The implementation of pharmaceutical reform policies, such as the evaluation of the consistency of quality and efficacy of generic drugs, the centralized purchase of drugs with quantity, and the filing system of APIs, is accelerating the development of the API industry towards high quality.

In the future, on the one hand, Chinese api enterprises should strive to explore the existing superior varieties and bulk varieties, constantly improve and upgrade the technology and process, actively upgrade and iterate towards green, intelligent and digital production, and use advanced technology platforms such as synthetic biology, enzyme catalysis and continuous flow to empower the industry, so as to firmly stabilize the basic situation of API industry; On the other hand, China's API industry should also continue to expand its incremental space. In the future, the opportunities for the API industry will come from the increase of characteristic API varieties, the development of standardized markets, and the extension to the contract customized production business (cdmo). It should actively develop to the high-end characteristic API and complex API fields in the value chain. At the same time, with the rapid development of cdmo, Chinese api enterprises are developing from primary and intermediate competitors of global API cdmo to advanced competitors. In the future, they will also have the opportunity to participate in the R & D and production of global blockbuster innovative drugs. This will also bring new business opportunities to Chinese api enterprises, which will accelerate the growth of API industry to a certain extent.

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