In recent years, China’s pharmaceutical industry has developed rapidly, and new drug research and development has become a key direction of national development.As a branch of the chemical industry, the pharmaceutical intermediates industry is also the upstream industry of the pharmaceutical industry. In 2018, the market size reached 2017B RMB, with an average growth rate of 12.3%.With the rapid development of the pharmaceutical industry, the pharmaceutical intermediates market has a good prospect.However, China’s pharmaceutical intermediates industry is facing multiple difficulties and does not receive sufficient attention and policy support at the national level. By sorting out the problems existing in China’s pharmaceutical intermediates industry and combining with the analysis of the data of this industry, we put forward relevant policy Suggestions for expanding and strengthening the pharmaceutical intermediates industry.

There are four main problems in China’s pharmaceutical intermediates industry:

1. As a major exporter of pharmaceutical intermediates, China and India jointly undertake more than 60% of the global supply of pharmaceutical intermediates.In the process of intermediate manufacturing moving to Asia, China has taken on a large number of pharmaceutical intermediates and apis by virtue of low labor and raw material prices.In terms of the import and export of intermediates, domestic pharmaceutical intermediates are mainly low-end products, while high-end products are still dependent on import.The following figure shows the import and export unit prices of some pharmaceutical intermediates in 2018. The export unit prices are much lower than the import unit prices.Because the quality of our products is not as good as that of foreign countries, some pharmaceutical enterprises still choose to import foreign products at high prices.

Source: China Customs

2. India is a major competitor in China’s pharmaceutical intermediates and API industry, and its deep cooperative relationship with developed countries in Europe and America is much stronger than China’s., according to Indian pharmaceutical intermediates annual import amount is $18 million, more than 85% of the intermediates are supplied by China, its export amount has reached $300 million, the main export countries in Europe, America, Japan and other developed countries, export to the United States, Germany, Italy, the number of the three countries account for 46.12% of total exports, while the proportion was only 24.7% in China.Therefore, While importing a large number of low-price pharmaceutical intermediates from China, India provides the developed countries in Europe and America with higher quality pharmaceutical intermediates at a high price.In recent years, Indian pharmaceutical companies have gradually stepped up the manufacturing of intermediates in the late stage of the original r&d, and their R&D capacity and product quality are both better than China’s. India’s R&D intensity in the fine chemical industry is 1.8%, consistent with that of Europe, while China’s is 0.9%, generally lower than the world level.Because India’s pharmaceutical raw material quality and management system is in line with Europe and the United States, its product quality and safety is widely recognized around the world, and with low-cost manufacturing and strong technology, Indian manufacturers are often able to obtain a large number of outsourced production contracts.Through close cooperation with developed countries and multinational enterprises, India has drawn lessons from and absorbed the practices of the PHARMACEUTICAL industry in the United States, constantly promoting its own enterprises to strengthen research and development, upgrade the preparation process, and formed a virtuous cycle of the industrial chain.In contrast, due to the low added value of products and the lack of experience in grasping the international market, China’s pharmaceutical intermediates industry is difficult to form a long-term and stable cooperative relationship with multinational enterprises, which leads to the lack of motivation for R&D upgrading.

While the pharmaceutical and chemical industries in China are accelerating the development of innovative RESEARCH and development, the research and development capacity of pharmaceutical intermediates is neglected.Due to the fast updating speed of intermediate products, enterprises need to constantly develop and improve new products to keep pace with the progress of innovative research and development in the pharmaceutical industry.In recent years, as the implementation of environmental protection policies has intensified, the pressure on manufacturers to build environmental protection treatment facilities has increased. The intermediate output in 2017 and 2018 decreased by 10.9% and 20.25%, respectively, compared with the previous year.Therefore, enterprises need to increase the added value of products and gradually realize industrial integration.

3. The main pharmaceutical intermediates in China are mostly antibiotic intermediates and vitamin intermediates.As shown in the figure below, antibiotic intermediates account for more than 80% of the major pharmaceutical intermediates in China.Among the intermediates with a yield of more than 1,000 tons, 55.9% were antibiotics, 24.2% were vitamin intermediates, and 10% were antibacterial and metabolic intermediates respectively. The production of other types of antibiotics, such as intermediates for cardiovascular system drugs and intermediates for anticancer and antiviral drugs, was significantly lower.As China’s innovative drug industry is still in the development stage, there is an obvious gap between the research and development of anti-tumor and anti-viral drugs and developed countries, so it is difficult to drive the production of upstream intermediates from the downstream.In order to adapt to the development of global pharmaceutical level and the adjustment of disease spectrum, the pharmaceutical intermediates industry should strengthen the research, development and production of the pharmaceutical intermediates.

Data source: China Chemical Pharmaceutical Industry Association

4. China’s pharmaceutical intermediates production enterprises are mostly private enterprises with small investment scale, most of which are between 7 million and 20 million, and the number of employees is less than 100.As the production profit of pharmaceutical intermediates is higher than that of chemical products, more and more chemical enterprises join in the production of pharmaceutical intermediates, which leads to the phenomenon of disordered competition in this industry, low enterprise concentration, low resource allocation efficiency and repeated construction.At the same time, the implementation of the national drug purchase policy makes enterprises have to reduce production costs and exchange prices by volume. Raw material manufacturers cannot produce products with high added value, and there is a bad situation of price competition.

In view of the above problems, we suggest that the pharmaceutical intermediates industry should give full play to China’s advantages such as super productivity and low manufacturing price, and increase the export of pharmaceutical intermediates to further occupy the market of developed countries despite the negative situation of the epidemic situation abroad.At the same time, the state should attach importance to the research and development capacity of pharmaceutical intermediates, and encourage enterprises to extend the industrial chain and comprehensively upgrade to the CDMO model that is technology-intensive and capital-intensive.The development of pharmaceutical intermediates industry should be driven by the downstream demand, and the added value and bargaining power of products should be enhanced by occupying the developed countries’ markets, improving their own research and development capabilities and strengthening product quality testing.The way to extend the upstream and downstream industrial chain can not only improve the profitability of enterprises, but also develop customized intermediate enterprises. This move can deeply bind the production of products, enhance customer stickiness, and cultivate long-term cooperative relations. Enterprises will benefit from the rapid growth of downstream demand and form a production system driven by demand and RESEARCH and development.