China is a big country in the pharmaceutical industry and has an important place on the global pharmaceutical industry chain, however, China’s pharmaceutical industry has been playing the role of API supplier on the global pharmaceutical industry chain in recent 15 years.
APIs account for 80% of China’s pharmaceutical export at present, with the situation of huge capacity, fierce price competition, and generally low profits, while downstream preparations only account for 10% of the export.
Positive changes have been happening to the situation in recent 5 years, especially in recent two years, as more and more Chinese pharmaceutical enterprises join the internationalization, strengthen registration and certification on international regulated markets and construction of market channel, and sell preparation products in a large scale overseas.
The number of the U.S. ANDA received by Chinese enterprises has largely increased from single digits to 75 over the 5 years, and export of products of Chinese pharmaceutical enterprises to the European and American regulated markets has achieved rapid growth.
Xu Ming, Vice President of CCCMHPIE, said, "From the perspective of trend, the transformation of APIs to preparations is a new direction of internationalization, but preparation export cannot replace API export at present in China due to the large scale, large volume, and difficult transformation of APIs. API enterprises should look for own road of characteristic development."
From APIs to high-end preparations
In 2016, the amount of China’s export of Western medicine reached USD 31.483 billion, accounting for 56.8% of China’s pharmaceutical product export; China’s overseas pharmaceutical M&A reached 25, with the M&A amount exceeding USD 5.5 billion; the number of the U.S. ANDA received reached 75.
From the perspective of trend, Chinese pharmaceutical enterprises are walking on the road that India has walked to start the industrial upgrading: the path of APIs→ characteristic APIs→ generic drugs→ innovative drugs becomes increasingly clear, the international core competence of China’s Western medicine significantly improves, and the pharmaceutical industry internationalization starts the new journey.
From the perspective of export region, Africa and Asia were the biggest markets for China’s preparation export in 2012, accounting for 64.63% in total of its export, while in 2016, this figure declined to 54.3%, and the proportion of the U.S. and EU rose from 15.87% to 28.9%, showing product level improvement of China’s preparation export, and changing of enterprise ideas to focus more on regulated pharmaceutical markets to obtain higher profits.
Despite the quick progress in internationalization, Chinese enterprises are confronted with huge challenges in the face of the current industry situation. On the one hand, the traditional API enterprises upgrade products, increase R&D investment, and form closer strategic cooperation with multinational pharmaceutical enterprises; on the other hand, the "patent cliff" and R&D cost growth in recent years have accelerated the outsourcing of global large pharmaceutical enterprises.
A consensus has been formed by insiders: APIs are the foundation of preparation development, and preparation production capacity cannot do without strong API production capacity.
For example, Qilu Pharmaceutical has been unswervingly pushing the internationalization strategy, and during the continuous deep involvement in the division of labor in international pharmaceutical industry, its position constantly rises, leaping to the top of the value chain of international pharmaceutical industry, with product export expanded from APIs to preparations.
Especially in recent years, the company’s high-end preparations have been achieved breakthroughs in export to high-end markets including the U.S., UK, Germany, and Japan, etc.
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