| By Liu Yuanyuan, Pharmaceutical Manufacturing News |
| Friday, 04 September 2009 |
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Fierce competition can be described as the most remarkable feature of China’s active pharmaceutical ingredient (API) market in 2009. Given the economic slump worldwide,
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the country’s API manufacturers in the upstream industry chain have had to cut the costs by accelerating improvements in the production processes due to the impact from the further decrease in profits. The biggest issue facing the Chinese API market is overcapacity, which will affect the future development of the industry. However, in the international markets, China-made APIs have always benefited from their lower costs. It has never been easy for these suppliers to gain access to the international markets. China is the world’s leading provider
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APIs, additives, antibiotics, vitamins, antipyretics and analgesics. The cyclical changes in the country’s API industry will not prevent the market moving towards a balance between supply and demand in API products.
The demand for basic antibiotics and major vitamin products hasn’t been affected by the recent financial slump. What has been a result of the downturn is an inventory decrease in sale channels.
Spot trading, a reliable means to avoid risks and maintain strength, will become an important trade form in the API market, reducing the number of large orders and shorting the time between placing of an order and its delivery.
During the fourth quarter of 2008, the prices of APIs in China bottomed out. However, the country’s API market began to warm in the second quarter of this year, boosted by the
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country’s healthcare reform and the first signs that the financial slump was turning the corner. The pressure in the international API markets now comes from Renminbi appreciation.
What the country’s API market needs to thrive is the upgrade of the industry. Henan province-based Huaxing Medicines Factory has expanded to downstream products market, shifting from focusing on Penicillin-Gs. The market is expected to continue extending towards downstream products in 2009.
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