APIs refer to the raw medicinal substances used to manufacture various pharmaceutical preparations, serving as the fundamental link in the pharmaceutical industrial chain. After long-term and continuous development, China's API industry is currently in a prosperous phase, with both overall market share and export volume showing an upward trend.
While the development prospect of the API industry is promising, it should be noted that China's domestic API industry still remains at a relatively backward stage, confronted with a host of underlying challenges and even dilemmas.
This conclusion can be drawn from the global development landscape of the API industry. At present, global API production bases are mainly concentrated in Western Europe, North America, Japan, China and India. Among them, the API output of the United States cannot meet domestic market demand, making it reliant on imports; Japan is basically self-sufficient in APIs; Western Europe boasts advanced R&D capabilities and production technologies for APIs, taking a leading position in the high-value patented drug segment. By contrast, China and India hold a large market share in the generic drug sector.
It can be seen that although China's API market is sizable, it is mainly concentrated in the mid-to-low-end bulk API segment. With market expansion, problems such as overcapacity, shrinking profit margins for enterprises and fierce market competition have become increasingly prominent.
In particular, the consistency evaluation of pharmaceutical preparations in recent years, the country's growing emphasis on environmental protection, and the promulgation of relevant regulations are forcing enterprises to meet higher quality and environmental protection requirements for APIs. Industry insiders believe that these factors will drive the domestic API industry into an era where accelerated transformation and upgrading are imperative.
Against this backdrop, API enterprises need to promptly recognize the reality amid changing market conditions, seize opportunities brought by the upgrading of the pharmaceutical industry, proactively adapt to the new situation, take a long-term perspective, and embark on a path of innovative development. Experts point out that transforming pure API manufacturers into integrated API and preparation enterprises is a viable approach to achieving breakthrough development.
From the perspective of current market competition, API enterprises need not only sound pricing strategies, but also a rich product pipeline and product portfolio to hedge against the risk of sharp price drops of individual varieties, so as to cope with the sustained drug price reduction pressure under the new normal in the future. Therefore, integrated API and preparation enterprises will enjoy greater competitiveness in the future market.
At present, an increasing number of pharmaceutical enterprises are moving toward the integration of APIs and preparations. For instance, Apeloa Pharmaceutical, a leading domestic API enterprise, adheres to the development strategy of refining APIs, strengthening CDMO business, and optimizing preparations, with its comprehensive competitiveness steadily improving in recent years. The integration of APIs and preparations has opened up broader room for the company's development.
Similarly, Huahai Pharmaceutical, a leader in domestic specialty APIs, has established a complete industrial chain covering intermediates, APIs and pharmaceutical preparations. It has delivered an outstanding performance in the volume-based procurement model, ranking among the top in the industry in terms of winning bids in the "4+7" volume-based procurement and expanded centralized procurement programs.
In addition, industry experts hold the view that API enterprises with high added value and high technological content will have brighter long-term prospects. In fact, to better capture market share, some API enterprises are actively building production bases for high-end APIs.
For example, Borui Pharmaceutical recently held a groundbreaking ceremony for its high-end API and oral preparation production base in Taixing, Taizhou, Jiangsu Province. With a total investment of 500 million yuan, the project is expected to be completed and put into operation in about one year, generating an additional annual sales revenue of 4.7 billion yuan and tax revenue of 420 million yuan. Borui Pharmaceutical has long been committed to the R&D and production of high-end generic drugs and innovative new drugs, striving to become a globally leading innovative pharmaceutical enterprise. In recent years, the company has actively participated in international competition and built a full industrial chain covering starting materials → high-difficulty intermediates → specialty APIs → preparations. Its cGMP production system has obtained certifications from China, the United States, Europe, Japan and South Korea, with products sold to many countries and regions worldwide.
In summary, transformation and upgrading have become an irresistible trend for domestic API enterprises. Nevertheless, this process must follow the laws of industrial development, strengthen competitive elements of industrial growth, adopt a global layout vision, and enhance the influence and value distribution capacity of the API industrial value chain. In particular, domestic enterprises need to scale up R&D and innovation capabilities in the development of specialty APIs featuring high-efficiency processes and high-value-added products.
