1. Brief introduction of pharmaceutical intermediates

Pharmaceutical intermediates are chemical products in the synthesis process of chemical raw materials. According to the provisions of the State Food and Drug Administration, intermediates can be regarded as raw materials for pharmaceuticals, and there is no need to submit approval for production and apply for batch numbers in accordance with pharmaceutical regulations. Pharmaceutical intermediates can be divided into primary pharmaceutical intermediates and advanced pharmaceutical intermediates. Advanced pharmaceutical intermediates often only need one or two steps of synthesis to make raw materials.

Pharmaceutical Industry Chain

Source of information: public information, Zhiyan consulting and collation

Pharmaceutical intermediates include general-purpose and customized products, and according to different stages of outsourcing services, the customized business model of intermediates can generally be divided into CRO (contract R&D outsourcing) and CMO (contract manufacturing outsourcing). In the past, pharmaceutical intermediates mainly used the CMO business outsourcing model. Under the CMO model, pharmaceutical companies outsource production to partners. Therefore, the business chain generally starts from special pharmaceutical raw materials. Industry companies need to purchase basic chemical raw materials and classify and process them into special pharmaceutical raw materials, and then process them to gradually form raw material drug starting materials, cGMP intermediates, raw material drugs and preparations. However, with the continuous update of the patent expiration status of leading pharmaceutical multinational companies, the continuous development of new drug innovation, the difficulty of discovering, screening and subsequent approval of new compounds continues to increase, and the cost of research and development is increasing. The time for new drug research and development urgently needs to be more rationally optimized. The patent period is guaranteed by real benefits. Therefore, while maintaining high-intensity R&D investment, large pharmaceutical companies are also constantly seeking to improve R&D efficiency and optimize cost control, thereby outsourcing more R&D and production work to CDMO companies and integrated new drug development service companies. This provides more and more clear opportunities for CDMO companies to fully participate in the product supply chain from early development, clinical research to commercial production. The CDMO model (production R&D outsourcing) emerged as the times require. CDMO requires customized manufacturing companies to participate in the customer's R&D process, provide customers with process improvement or optimization, achieve high-quality large-scale production, and reduce production costs. Compared with the CMO model, it has a higher profit margin.

Pharmaceutical Intermediates Business Model

2. Policy environment analysis

The pharmaceutical industry is an important part of my country's national economy and is closely related to people's health. It is an important industry for building a harmonious society. In recent years, my country has issued a series of policies to support and guide the rapid development of the pharmaceutical manufacturing industry and encourage the development and innovation of the pharmaceutical manufacturing industry. The formulation of relevant industrial policies provides a clear and broad market prospect for the development of the pharmaceutical manufacturing and pharmaceutical intermediate industries, and provides a good production and operation environment for enterprises.

Pharmaceutical intermediate industry related policies

3. Economic environment analysis (E)

As the world's largest production and export region of pharmaceutical intermediates, my country not only benefits from the development of the domestic pharmaceutical market, but also benefits from the development of the global pharmaceutical market. With the advancement of medicine, domestic and global pharmaceutical R&D and production are expected to continue to grow. Pharmaceutical intermediates The market size will continue to expand. Before 2018, the output of my country's pharmaceutical intermediates continued to grow. In recent years, due to the impact of environmental protection, the scale of my country's pharmaceutical intermediates market has declined, but it is constantly recovering. It is expected to reach 227.8 billion yuan in 2022.

2018-2022 China's pharmaceutical intermediates market size forecast trend (100 million yuan)

In recent years, under the influence of environmental protection and safety production supervision policies, pharmaceutical intermediates and downstream raw material pharmaceutical manufacturers are facing certain environmental protection management pressures. Some enterprises in the market cannot meet the requirements of "retiring from cities and entering parks" due to their inability to meet green production or enterprise scale. Being phased out or forced to relocate and stop production, the overall scale of my country's pharmaceutical intermediate industry has shown a short-term adjustment trend in recent years. According to statistics, the output of my country's pharmaceutical intermediates in 2019 was 10.21 million tons, a year-on-year decrease of 1.07%. In 2020, affected by the new crown epidemic, the global pharmaceutical market will rise rapidly. It is estimated that the output of my country's pharmaceutical intermediate industry will reach 10.29 million tons in 2022.

2018-2022 Chinese pharmaceutical intermediate market output forecast trend (10,000 tons)

From 2015 to 2021, my country's per capita medical care pointed to an overall upward trend, and in 2020, affected by the epidemic, it will decline slightly. However, the level of national health care consumption is still steadily increasing. The main reason is that my country's economy continues to develop well, people's lives are richer, and consumption power and consumption levels are steadily improving. Naturally, people's health awareness is also strengthening. The strengthening of people's health awareness and the enhancement of economic capacity will help the development of the pharmaceutical intermediate industry.

2015-2022 China's per capita health care expenditure

Fourth, social environment analysis (S)

Driven by the rapid development of the global pharmaceutical market, in the context of fierce competition in drug prices, the API and pharmaceutical intermediate industries need to be transferred to developing countries with cost advantages for the sake of cost control. Developing countries such as China and India have become the key areas to undertake the transfer of global raw materials due to their better technical foundations for raw materials and intermediates, which has promoted the rapid development of China's pharmaceutical intermediates industry.

Average annual after-tax salary around the world in 2021 (USD)

The continuous growth of the world population and the aging trend of China's population make the pharmaceutical intermediate industry have great potential for development. In 2021, the population over 65 years old in China will account for 18.7% of the total population, while the population over 65 years old in 2011 accounted for only 8.9%. An increase of 9.8 percent in 10 years.

2011-2021 China Population Age Structure Proportion

V. Technology patent analysis (T)

In order to meet the continuous development of the pharmaceutical industry, my country's pharmaceutical intermediate industry will develop from the traditional mode of low-level repetition, lack of innovation, and extensive production to innovation and upgrading, high-quality, and high-level direction. With the advancement of research and development , The accumulation of independent intellectual property rights, the product added value and process complexity of pharmaceutical intermediates will continue to increase, which will become a strong guarantee for the development of the pharmaceutical industry. The number of patent applications for pharmaceutical intermediates in China will maintain an upward trend until 2020, and the number of applications will decline in 2021 to 442. Since 2022, the number of patent applications for pharmaceutical intermediates in China has reached 214.

2013-2022 Chinese pharmaceutical intermediate patent application trend