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Over the years, APIs have always occupied the highest proportion in my country’s export trade of pharmaceutical products. China’s API industry also occupies an important position in the global pharmaceutical industry chain. Affected by the new crown pneumonia epidemic, the safety of the pharmaceutical industry chain and the supply of APIs have received unprecedented attention. This paper sorts out the pattern change and future development trends of the global API industry and puts forward suggestions for the development of my country’s API industry.


China's API
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The global API industry pattern is gradually shifting to China and India

Before the 1990s, Europe and the United States were the most important API production areas in the world, with large-scale industries and advanced technology. Later, affected by factors such as production costs and environmental protection pressures, the production and supply of APIs in Europe and the United States gradually shifted to the Asia-Pacific region. Currently, global chemical API production is mainly concentrated in five regions: Western Europe, North America, Japan, China and India. Among them, Europe and the United States are gradually reducing the production capacity of APIs, especially in the United States, most generic drug 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 have become major API producers and exporters. Relevant data show that the total global supply of APIs from China and India has risen from 16.7% in 2008 to 47% in 2019.

From a geographical point of view, in Europe, except for France, the Netherlands, Germany, Switzerland, Spain, Italy, Ireland, Russia and some Eastern European countries that have a few API factories, most countries have already given up the production of APIs. In the Americas, the United States, Mexico, Brazil, and Cuba also have some API factories, but the number is not large, and the number of API companies in some countries is still decreasing. In Asia, in addition to China and India, Israel, Japan, and South Korea also have a certain number of API and intermediate factories, but the number is relatively limited. The API industry in Africa is almost zero.

In terms of varieties, developed countries and regions such as the United States and Europe, relying on their advantages in research and development, production technology and intellectual property protection, occupy a dominant position in the field of patented pharmaceutical APIs with high added value; China is dominated by bulk APIs In India, the generic drug industry drives the production of characteristic APIs.

China and India rely on cost advantages to occupy an important position in the API market. As China, India and other developing countries of characteristic API manufacturers continue to increase investment in R&D, improve production technology, improve process levels, and invest in improving production equipment to form specialized production lines, Chinese and Indian API companies are gradually moving towards high-end APIs value chain extension.

Before the outbreak of COVID-19, the five major API production areas had shown a situation of trade-offs among each other. China and India have benefited from the rapid development of their own pharmaceutical industries and the increase in international demand for APIs, and the API industry has grown considerably. And 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, due to the similarities between India’s pharmaceutical industry and China’s, the Indian API industry has formed a climate, and it is expected that it will continue to compete fiercely with Chinese API companies for a long time in the future.

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Chinese APIs are deeply involved in the global pharmaceutical industry chain

China is the world’s largest producer and consumer of chemical products. In 2020, the output of dozens of bulk chemicals ranked first in the world. China’s API industry has complete upstream basic chemical raw materials, backed by the advantages of the industrial chain and supply chain. After years of continuous development, it has become an active participant in the global API industry. Especially 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 have been exported to nearly 200 countries and regions around the world, and the export volume has been stable for many years. No. 1 in the world, it has begun to occupy an extremely important position in the global pharmaceutical industry chain.

According to Clarivate data, China is able to produce about 1,650 varieties of APIs with production capacity accounting for about 30% of the world’s total. Its comparative advantages are reflected in fermented products, cost control levels, and international compliance. Among them, a large number of APIs and intermediates occupy a considerable share in the global market and have certain bargaining power. For example, China’s production level of antibiotics is internationally leading, with antibiotic APIs accounting for 30% of the international market; the production of antipyretic and analgesic drugs such as paracetamol, aspirin and Analgin is relatively high, of which the production of paracetamol accounts for 50% of the world’s total production; vitamin Among the APIs, except for a very few varieties, most of the production ranks in the forefront of the world; the market share of corticosteroid drugs is the world’s leading. In addition, China is also the largest supplier or even the only supplier in the world for some important pharmaceutical active ingredients, such as the antibiotic vancomycin, etc. China also dominates the global supply of heparin.

According to the data of the China Chamber of Commerce for Import and Export of Medicines and Health Products, except for a slight decline of 1% to 2% in 2015 and 2016, the export scale of China’s chemical raw materials has continued to grow over the years, and the export value has increased from 15.98 billion US dollars in 2010 to 41.77 billion US dollars in 2021, the export volume has exceeded 10 million tons, and there are dozens of products with an export value of over 100 million US dollars. According to data, Chinese-made APIs account for about one-third of the global API market, making it a well-deserved global API leader. In recent years, the number of Chinese enterprises applying for the EU CEP (European Pharmacopoeia Applicability Certificate for APIs) and the US DMF (Drug Master File Certificate) have shown a rapid growth trend. Taking the European market as an example, as of July 11, 2022, Chinese companies have a total of 899 valid CEP certificates, and more than 900 varieties of APIs are sold in the European market, making them the largest source of APIs in Europe.

The epidemic highlights the status of China’s API centre

Since the outbreak of the new crown pneumonia epidemic, the global supply chain of APIs has been affected to a certain extent. India, the United States and other countries have experienced drug shortages to varying degrees, especially epidemic-related drugs. In February 2020, at the beginning of the outbreak of the novel coronavirus pneumonia, the World Health Organization immediately sent to the China Chamber of Commerce for Import and Export of Medicines and Health Products a list of priority products that need to be monitored due to the interruption of the supply of APIs and intermediates in China, including the production of antibiotics, There are a total of 35 varieties of APIs for antiviral, hypertension treatment and other drugs. India announced to stop the export of 26 active pharmaceutical ingredients (APIs) and related medicines to protect their own use during the epidemic.

The above situation highlights the importance of China in the global pharmaceutical industry chain. According to the data, the APIs and drugs restricted by the Indian government are mainly antibiotics, vitamins, antiviral and antipyretic and analgesic products, most of which are drugs needed to fight the epidemic. The APIs or core intermediates of these drugs are mainly from China. Among them, there are even Hubei local enterprises occupying the world’s leading share. At the Group of Twenty (G20) Special Summit on the New Coronary Pneumonia Epidemic held in March 2020, China proposed that “China will increase its efforts to supply APIs, daily necessities, anti-epidemic materials and other products to the international market”, highlighting the need for new crown pneumonia Against the backdrop of the global epidemic of pneumonia, China, as the world’s largest producer and exporter of APIs, has responsibilities and responsibilities. During the new crown pneumonia epidemic, the export value of anti-infectives, vitamins, hormones, antipyretic and analgesics, some antibiotics and other anti-epidemic-related raw materials and drugs in China has achieved varying degrees of growth, and some varieties have grown rapidly. 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.

At present, Pfizer’s Paxlovid and Merck’s Molnupiravir have been approved and commercialized in multiple countries and regions, respectively. Many Chinese companies have become important intermediate and API suppliers for the above-mentioned drugs from Pfizer and Merck. According to relevant announcements, three domestic manufacturers, Asymchem, WuXi AppTec, and Proton, have received orders of over 14 billion yuan from Pfizer Palo Verde—Chinese enterprises have been deeply involved in the global industry chain of small molecule drugs for the treatment of new coronary pneumonia and supply chain.

The new crown pneumonia 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 in downstream industries. After the outbreak, the export of Chinese pharmaceutical products has been delayed, affecting the Indian pharmaceutical companies that are closest to China’s upstream and downstream pharmaceutical supply chains, and thus affecting the normal production and global supply of downstream companies.

It can be said that the new crown pneumonia 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, and more and more European and American pharmaceutical companies have begun to consider raw materials. The problem of regression in pharmaceutical production. In the future, the global API industry chain may develop towards diversification, localization and regionalization, but this will be a long process.

It is time for China’s API industry to upgrade and iterate

In the past, the division of labour in the supply chain of the global pharmaceutical industry chain was based on the resource endowment and comparative advantages of each country and was the result of the free choice of the market. Countries considered cost priority and efficiency priority. However, the continuation of the new crown pneumonia epidemic, coupled with trade protectionism and geopolitical conflicts, may become a catalyst for reshaping the industrial structure. 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, my country’s API industry has shown a trend of a hundred flowers blooming and a hundred schools of thought contending. The implementation of pharmaceutical reform policies such as the evaluation of the quality and efficacy of generic drugs, centralized drug procurement, and the filing system for APIs are accelerating the development of the API industry toward high quality.

In the future, on the one hand, Chinese API companies should strive to explore existing advantageous varieties and bulk varieties, continuously improve technologies and processes, actively upgrade and iterate towards green, intelligent and digital production, and use synthetic biology, enzymes and enzymes. Advanced technology platforms such as catalysis and continuous flow will empower the industry and firmly stabilize the basic market of the API industry; on the other hand, China’s API industry must continue to expand the space for growth, and more opportunities for the API industry will come from characteristic raw materials in the future The increase in drug varieties, the development of standardized markets and the extension to contract custom manufacturing (CDMO) should actively develop towards the high-end value chain of speciality APIs and complex APIs. At the same time, with the rapid development of CDMOs, Chinese API companies are developing from the primary and intermediate competitors of global API CDMOs to advanced competitors and will have the opportunity to participate in the R&D and production of global blockbuster innovative drugs in the future. This also brings new business opportunities for Chinese API companies, which will accelerate the growth of the API industry to a certain extent.


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