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23

2022

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05

Analysis of the development trend of the API industry

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(1) The market barriers for APIs continue to rise, and the industry concentration increases, which is beneficial to API companies

In recent years, the government has paid more and more attention to the standardized governance of the API industry, and successively issued relevant policies and regulations such as "consistency evaluation of generic drugs", "centralized procurement with volume", and environmental protection verification, which has gradually increased the standardization of my country's pharmaceutical market and barriers to entry. , the industry concentration has increased, and API companies have continued to benefit. Specifically: A. Non-compliant small and medium-sized enterprises have been eliminated from the market one after another, providing enterprises with good development opportunities; B. With the implementation of the "consistency evaluation" policy , APIs are directly related to the review and approval of preparations, and the cost of replacing API manufacturers has increased, making the position of API companies in the industry chain crucial; C. The national centralized procurement leads to a large reduction in the price of preparations, which in turn compresses upstream APIs Due to the profit margin of enterprises, some small and medium-sized API companies have not been able to form scale effects, so it is difficult to meet the needs of downstream preparation customers for "high-quality, low-cost" APIs.

Therefore, under the current policy background, factors such as production costs, drug quality, and environmental protection requirements have raised industry barriers, accelerated market clearance, and increased the concentration of the API industry. At present, the number of entrepreneurs with registration numbers of gliclazide, metformin hydrochloride, ropivacaine hydrochloride and isosorbide mononitrate in my country are 9, 20, 7 and 14 respectively. The status of pharmaceutical companies in the industry continues to improve.

(2) Patent expiration promotes demand growth

Between 2019 and 2024, patents on multiple original drugs with a combined sales of up to US$198 billion will expire, including the top ten global sales of adalimumab and ustekinumab injection. The expiration of the original drug patent will create a good opportunity for the growth of the generic drug market, which in turn will drive the increase in the demand for APIs. In addition, for drugs that have expired, due to the continuous growth and transformation and upgrading of drug demand in developing countries, the output of APIs has also increased to a certain extent.

(3) The trend of downstream integration of APIs

In the pharmaceutical manufacturing industry chain, molecular building blocks, intermediates, APIs, and preparations are in a progressive relationship. After the implementation of the consistency evaluation and volume-based procurement policy, the industry competition has intensified and the concentration has increased. Relying on cost and quality advantages, API companies will be more likely to extend to downstream preparations and take the initiative in the market. Specifically, characteristic API companies have the advantages of quality control and cost control, which provides a good foundation for the development of generic drugs, and can quickly complete the upgrade of generic drugs from non-regulated markets to regulated markets. After the original drug patent expires Upgrade to the first imitation to enhance the company's position in the industrial chain. The integration of APIs and preparations has become the mainstream trend of industry development.