Fine chemical industry is the economic field of producing fine chemicals in chemical industry, which is different from general chemical products or bulk chemicals.Fine chemical industry is one of the important symbols of a country’s comprehensive technological level. Its basic characteristics are to produce high-quality, multi-varieties, special or multi-functional fine chemicals for the global economy and people’s life with high and new technology.Fine chemical industry has high technology density and high added value.Since the 1970s, some industrially developed countries have successively shifted the strategic focus of chemical industry development to fine chemical industry, and accelerating the development of fine chemical industry has become a worldwide trend.Fine chemicals include pesticides, medicines, dyes (pigments), etc.Specialized chemicals include feed additives, food additives, adhesives, surfactants, water treatment chemicals, leather chemicals, oilfield chemicals, electronic chemicals, papermaking chemicals and other more than 50 fields.

Pharmaceutical intermediates refer to intermediate chemicals made in the process of chemical drug synthesis and belong to fine chemical products.Pharmaceutical intermediates can be divided into antibiotic intermediates, antipyretic and analgesic intermediates, cardiovascular intermediates, and anticancer intermediates according to their application fields.The upstream industry of pharmaceutical intermediates is the basic chemical raw material industry, while the downstream industry is the chemical API and preparation industry.As a bulk commodity, the price of basic chemical raw materials fluctuates greatly, which directly affects the production cost of enterprises.Pharmaceutical intermediates and subdivided into primary intermediate and advanced intermediates, primary intermediate due to production technology difficulty is not high, prices are low, and the added value in oversupply situation, advanced intermediates is the primary intermediate reaction products, compared with the primary intermediate, complex structure, just one or a few steps to the preparation of high value-added downstream products, its gross margin level is higher than the intermediates industry gross margin.As the primary intermediate suppliers can only provide simple intermediate production, they are at the front end of the industrial chain with the greatest competitive pressure and price pressure, and the price fluctuation of basic chemical raw materials has a great impact on them.Senior intermediate suppliers, on the other hand, not only have strong bargaining power over junior suppliers, but more importantly, they bear the production of advanced intermediates with high technical content and keep closer ties with multinational companies, so the price fluctuations of raw materials have less impact on them.Non-gmp intermediates and GMP intermediates can be classified according to the degree of influence on the final API quality.Non-gmp intermediate refers to the pharmaceutical intermediate before the API starting material;GMP intermediate refers to a pharmaceutical intermediate manufactured under THE requirements of GMP, that is, a substance that is produced after an API starting material, during the API synthesis steps, and that undergoes further molecular changes or refinement before becoming an API.

The second patent cliff peak will continue to stimulate the demand for upstream intermediates
The pharmaceutical intermediate industry fluctuates under the influence of the overall demand of the downstream pharmaceutical industry, and its periodicity is basically consistent with that of the pharmaceutical industry.These influences can be divided into external factors and internal factors: external factors mainly refer to the approval cycle of new drugs on the market;Internal factors mainly refer to the patent protection cycle of innovative drugs.The pace of new drug approval by drug regulatory agencies such as FDA also has a certain influence on the industry. When the time span of new drug approval and the number of approved new drugs are favorable to pharmaceutical companies, the demand for pharmaceutical outsourcing services will be generated.Based on the number of new chemical entity drugs and new biological drugs approved by THE FDA in the past decade, a large number of new drug approvals will continue to generate demand for upstream intermediates, thus supporting the industry to maintain a high boom.Once the patent protection of innovative drugs expires, the generic drugs will be greatly improved, and intermediate manufacturers will still enjoy the explosive growth of demand in the short term. According to Evaluate’s statistics, it is estimated that from 2017 to 2022, there will be 194 billion yuan of drug market facing the situation of patent expiry, which is the second patent cliff peak since 2012.

Ariations in recent years, with the expansion and the drug structure complicated, new drug research and development success rate is reduced, the rapid increase of new drug research and development costs of McKinsey in the Nat. Rev. DrugDiscov. “mentioned, in 2006-2011, new drug research and development success rate is only 7.5%, from 2012 to 2014, due to the biological macromolecules good selectivity and low toxicity of miss distance (drugs in the late development stage, that is, from the clinical phase III to approved listing has a 74% success rate), drug research and development the overall success rate of increase slightly, but still difficult to back up to 16.40% success rate in the 90 s.The cost of successfully listing a new drug has increased from us $1.188 billion in 2010 to us $2.18 billion in 2018, nearly doubling. Meanwhile, the return rate of new drugs continues to decline. In 2018, the global TOP12 pharmaceutical giants only made a return rate of 1.9% on investment in research and development.

Increasing r&d costs and declining return on r&d investment have brought great pressure to pharmaceutical companies, so they will choose to outsource the production process to CMO enterprises in the future to reduce costs. According to ChemicalWeekly, the production process accounts for about 30% of the total cost of the original drugs.CMO/CDMO model can help pharmaceutical companies reduce the total cost of fixed asset input, production efficiency, human resources, certification, audit and other aspects by 12-15%.In addition, the ADOPTION of CMO/CDMO mode can help pharmaceutical companies to improve the reaction yield, shorten the stocking cycle and increase the safety factor, which can save the time of production customization, shorten the r&d cycle of innovative drugs, accelerate the speed of drug marketing, and enable pharmaceutical companies to enjoy more patent dividends.

Chinese CMO enterprises have advantages such as low cost of raw materials and labor, flexible process and technology, etc., and the transfer of international CMO industry to China promotes the further expansion of China’s CMO market share.The global CMO/CDMO market is expected to exceed us $102.5 billion in 2021, with a compound growth rate of about 12.73% in 2017-2021, according to South’s forecast.

In the global fine chemical market in 2014, pharmaceutical and its intermediates, pesticide and its intermediates are the top two sub-industries of fine chemical industry, accounting for 69% and 10% respectively.China has a strong petrochemical industry and a large number of chemical raw material manufacturers, which have formed industrial clusters, making dozens of kinds of raw and auxiliary materials needed for the production of high-grade fine chemicals available in China, improving efficiency and reducing overall cost.At the same time, China has a relatively complete industrial system, which makes the cost of chemical equipment, construction and installation in China far lower than that of developed countries or even most developing countries, thus reducing investment and production costs.In addition, China has a large number of capable and low-cost chemical engineers and industrial workers.Intermediates industry in China has developed from scientific research and development to production and sales of a complete set of relatively complete system, pharmaceutical production of chemical raw materials and intermediates for basic can form a complete set, only a few need to import, can produce pharmaceutical intermediates, pesticide intermediates and other 36 major categories, more than 40000 kinds of intermediates, there are many intermediate products achieved a large number of exports, intermediate exports of more than 5 million tons annually, has become the world’s largest intermediates production and exporter.

China’s pharmaceutical intermediates industry has been highly developed since 2000.At that time, pharmaceutical companies in developed countries paid more and more attention to product research and development and market development as their core competitiveness and accelerated the transfer of intermediates and active drug synthesis to developing countries with lower costs.Therefore, China’s pharmaceutical intermediates industry to take this opportunity to obtain excellent development.After more than ten years of steady development, China has become an important intermediate production base in the global division of labor in the pharmaceutical industry with the support of national overall regulation and various policies.From 2012 to 2018, the output of China’s pharmaceutical intermediates industry increased from about 8.1 million tons with a market size of about 168.8 billion yuan to about 10.12 million tons with a market size of 2017 billion yuan.China’s pharmaceutical intermediates industry has achieved strong competitiveness in the market, and even some intermediates manufacturers have been able to produce intermediates with complex molecular structure and high technical requirements. A large number of influential products have begun to dominate the international market.However, on the whole, China’s intermediate industry is still in the development period of product structure optimization and upgrading, and the technology level is still relatively low.Most of the products in the pharmaceutical intermediates industry are still primary pharmaceutical intermediates, while a large number of advanced pharmaceutical intermediates and the supporting intermediates of new patented drugs are rare.