Pharmaceutical intermediates

The so-called pharmaceutical intermediates are actually chemical raw materials or chemical products that need to be used in the synthesis process of drugs. Such chemical products can be produced in ordinary chemical factories without obtaining a drug production license. As long as the technical indicators meet certain level requirements, they can be used to participate in the synthesis and produce drugs. Although the synthesis of pharmaceuticals also belongs to the chemical industry, it is more stringent than general chemical products. Manufacturers of patent medicines and APIs need to accept GMP certification, but manufacturers of intermediates do not, because intermediate products are only the synthesis and production of chemical raw materials, which are the most basic and bottom-end products in the pharmaceutical production chain, and cannot be called It is a drug, so it does not require GMP certification, which also lowers the industry's entry threshold for intermediate manufacturers.

Pharmaceutical intermediate industry

Refers to those chemical companies that use chemical synthesis or biosynthesis methods to produce and process organic/inorganic intermediates or raw materials for pharmaceutical companies to manufacture finished drugs in accordance with strict quality standards. Here, pharmaceutical intermediates are divided into two sub-sectors, CMO and CRO.

CMO

Contract Manufacturing Organization refers to entrusted contract manufacturing enterprises, which means that pharmaceutical companies outsource the production process to partners. The business chain of the pharmaceutical CMO industry generally starts with dedicated 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. At present, major multinational pharmaceutical companies tend to establish long-term strategic partnerships with a small number of core suppliers. The survival of companies in this industry is basically clear through their partners.

CRO

Contract (Clinical) Research Organization refers to entrusting a contract research organization, and pharmaceutical companies outsource research links to partners. At present, the industry mainly uses customized production, customized research and development, and pharmaceutical contract research and sales as the main cooperation methods. Regardless of the method, regardless of whether the pharmaceutical intermediate product is an innovative product, the core competitiveness of an enterprise is still judged based on research and development technology. Elements, side reflected as the company's downstream customers or partners.

Pharmaceutical product market value chain

(picture from Qilu Securities) Industrial chain of pharmaceutical intermediate industry

(Picture from China Industry Information Network) Classification of pharmaceutical intermediates

According to the application field, pharmaceutical intermediates can be divided into antibiotic drug intermediates, antipyretic and analgesic pharmaceutical intermediates, cardiovascular system pharmaceutical intermediates, anticancer pharmaceutical intermediates and other major categories. There are many types of specific pharmaceutical intermediates, such as imidazole, furan, phenolic intermediates, aromatic hydrocarbon intermediates, pyrrole, pyridine, biochemical reagents, sulfur-containing, nitrogen-containing, halogen compounds, heterocyclic compounds, starch, mannitol , microcrystalline cellulose, lactose, dextrin, ethylene glycol, powdered sugar, inorganic salts, ethanol intermediates, stearate, amino acids, ethanolamines, potassium salts, sodium salts and other intermediates, etc. wait.

Overview of the development of China's pharmaceutical intermediate industry

According to data from IMS Health Incorporated, the global pharmaceutical market maintained a steady growth trend from 2010 to 2013, growing from US$793.6 billion in 2010 to US$899.3 billion in 2013. The pharmaceutical market has shown rapid growth since 2014, mainly due to the US market In 2014, a large number of innovative drugs were launched, reducing the impact of the patent cliff. The compound growth rate from 2010 to 2015 reached 6.14%. It is estimated that from 2015 to 2019, the international pharmaceutical market will enter a slow growth cycle. However, due to the rigid demand for drugs, it is expected that the net growth in the future will be very strong. By 2019, the world drug market will be close to 1.22 trillion US dollars.

(Image from IMS Health Incorporated) At present, with the adjustment of the industrial structure of large multinational pharmaceutical companies, the transfer of transnational production and the further refinement of the international division of labor, my country has become an important intermediate production base in the global division of labor in the pharmaceutical industry. my country's pharmaceutical intermediate industry has formed a relatively complete system from scientific research and development to production and sales. From the perspective of the development of pharmaceutical intermediates around the world, the overall process technology level in my country is still relatively low, and there are few manufacturers of a large number of advanced pharmaceutical intermediates and supporting intermediate products for patented new drugs, and are in the development stage of product structure optimization and upgrading. Output Value of China's Chemical and Pharmaceutical Intermediates Industry, 2011-2015

(Picture from China Business Industry Research Institute) From 2011 to 2015, the output of my country's chemical and pharmaceutical intermediate industry increased year by year. In 2013, the output of my country's chemical and pharmaceutical intermediates was 568,300 tons, and the export volume was 65,700 tons. By 2015, the output of my country's chemical and pharmaceutical intermediates was about 676,400 tons. Output Statistics of China's Chemical and Pharmaceutical Intermediates Industry, 2011-2015

(Picture from China Business Industry Research Institute) The oversupply of pharmaceutical intermediates in my country is more prominent, and the dependence on exports is gradually increasing. However, my country's exports are mainly concentrated in bulk products such as vitamin C, penicillin, acetaminophen, citric acid and its salts and esters. The values ​​are all on the low side, and their large-scale production has caused the situation that the domestic pharmaceutical intermediate market is oversupplied. High-tech products still mainly rely on imports. For the protection of amino acid pharmaceutical intermediates, most of the products produced by domestic manufacturers are single in variety and unstable in quality, and they mainly produce customized products for foreign biopharmaceutical companies. Only some enterprises with strong research and development capabilities, advanced production facilities and large-scale production experience can obtain high profits in the competition.

Analysis of China's pharmaceutical intermediate industry

1. Customized production process for the pharmaceutical intermediate industry

One is to participate in the customer's new drug development stage, which requires the company's R&D center to have strong innovation capabilities; The second is to enlarge the customer's pilot product to meet the process route of large-scale production, which requires the company's ability to scale up the product's engineering and the ability to continuously improve the process of customized product technology in the later stage, so as to meet the needs of large-scale production of products. Continuously reduce production costs and improve product competitiveness; The third is to digest and improve the process of products in the mass production stage of customers, so as to meet the quality standards of foreign companies.

2. Characteristics of China's pharmaceutical intermediate industry     Pharmaceutical production requires a large amount of special chemicals. Most of these chemicals were originally produced by the pharmaceutical industry. However, with the deepening of social division of labor and the advancement of production technology, the pharmaceutical industry has transferred some pharmaceutical intermediates to chemical Enterprise production. Pharmaceutical intermediates are fine chemical products, and the production of pharmaceutical intermediates has become a major industry in the international chemical industry. At present, China's pharmaceutical industry needs more than 2,000 kinds of chemical supporting raw materials and intermediates every year, and the demand is more than 2.5 million tons. Since the export of pharmaceutical intermediates is not subject to various restrictions of the importing country like the export of pharmaceuticals, and the production of pharmaceutical intermediates in the world has shifted to developing countries, the chemical raw materials and intermediates required for Chinese pharmaceutical production can basically be matched at present, and only a small number of them need import. And because China is rich in resources and the price of raw materials is relatively low, many pharmaceutical intermediates have been exported in large quantities.     At present, my country needs more than 2,500 kinds of chemical raw materials and intermediates, with an annual demand of 11.35 million tons. After more than 30 years of development, the chemical raw materials and intermediates required for pharmaceutical production in my country have basically been able to form a complete set. The production of intermediates in my country is mainly in antibiotics and antipyretic analgesics.     Looking at the entire industry, China’s pharmaceutical intermediate industry has six major characteristics: First, most of the companies are private companies with flexible operations and small investment scales, ranging from several million to ten to twenty million yuan Second, the geographical distribution of enterprises is relatively concentrated, mainly centered in Taizhou, Zhejiang and Jintan, Jiangsu; third, as the country pays more and more attention to environmental protection, the pressure on enterprises to build environmental protection treatment facilities is increasing; fourth, the product update speed is fast, Generally, the profit rate will drop sharply after 3 to 5 years after entering the market, forcing enterprises to continuously develop new products or improve processes in order to obtain higher profits; fifthly, because the production profit of pharmaceutical intermediates is higher than that of general chemical products, the production process is basically Similarly, more and more small chemical companies have joined the ranks of the production of pharmaceutical intermediates, leading to increasingly fierce competition in the industry; Sixth, compared with raw materials, the profit margin of production intermediates is low, and raw materials The production process of intermediates is similar, so some enterprises not only produce intermediates, but also use their own advantages to start the production of raw materials. Experts pointed out that it is an inevitable trend for the production of pharmaceutical intermediates to develop in the direction of raw materials. However, due to the single use of APIs, they are greatly influenced by pharmaceutical companies, and it often happens in China that companies develop products but have no users. Therefore, manufacturers should establish long-term and stable supply relationships with pharmaceutical companies in order to ensure smooth product sales.

3. Industry entry barriers ①Customer barriers The pharmaceutical industry is monopolized by a few multinational pharmaceutical companies. Pharmaceutical oligarchs are very cautious in the selection of outsourcing service providers, and the inspection period for new suppliers is generally longer. Pharmaceutical CMO companies need to meet the communication modes of different customers, and need to undergo a long-term continuous assessment before they can gain the trust of downstream customers and become their core suppliers. ②Technical barriers The ability to provide high-tech value-added services is the foundation of a pharmaceutical outsourcing service enterprise. Pharmaceutical CMO companies need to break through the technical bottlenecks or blockades of the original route and provide pharmaceutical process optimization routes to effectively reduce drug production costs. Without long-term and high-cost R&D investment and technical reserves, it is difficult for companies outside the industry to really enter the industry. ③Talent barriers The technological innovation and industrialized operation of the pharmaceutical process requires a large number of excellent R&D, production management talents and project executives. It is difficult for CMO companies to establish a behavior model that meets cGMP standards, and it is difficult to establish a competitive R&D and production elite team in a short period of time. ④Quality regulatory barriers The quality supervision requirements of FDA and other drug regulatory agencies are becoming increasingly stringent, and products that have not passed the review cannot enter the market of the importing country. ⑤Environmental protection regulatory barriers Pharmaceutical companies with backward technology will bear high pollution control costs and regulatory pressure, and traditional pharmaceutical companies that mainly produce high-pollution, high-energy-consuming, low-value-added products (such as penicillin, vitamins, etc.) will face accelerated elimination. Adhering to process innovation and developing green pharmaceutical technology has become the future development direction of the pharmaceutical CMO industry.

4. Domestic pharmaceutical intermediate listed companies From the perspective of the position of the industrial chain, the six fine chemical listed companies currently producing pharmaceutical intermediates are all at the low end of the industrial chain. Whether they are developing into professional outsourcing service providers or extending to raw materials and preparations, their technical strength is not high. core driver of change. In terms of technological advantages, companies with leading international technology, strong reserves, and high R&D investment are favored: The first group: Lianhua Technology and Yaben Chemical. Lianhua Technology takes eight core technologies such as ammonia oxidation and fluorination as the core technology, among which the hydrogen oxidation method is in the leading position in the world. Yaban Chemical's chiral drugs, especially its chemical resolution and racemization technology, are internationally leading, with the highest R&D investment, accounting for 6.4% of revenue. The second group: Wanchang Technology and Yongtai Technology. Wanchang Technology waste gas hydrocyanic acid method is the method with the lowest cost and the most advanced technology to produce orthotricarboxylate. Yongtai Technology is good at fluorine fine chemicals. The third group: Tianma Fine Chemicals and Bikang (formerly known as Jiujiujiu).

Comparison of technical strength of listed companies

Comparison of customers and marketing models of pharmaceutical intermediate listed companies

Comparison of Downstream Demand and Patent Life Cycle of Listed Companies

Analysis of Product Competitiveness of Listed Companies

The road to upgrade of fine chemical intermediate enterprises

(Pictures and materials are from Qilu Securities)

Prospects for the development of China's pharmaceutical intermediate industry

As an important industry in the field of fine chemicals, pharmaceutical production has become the focus of development and competition in the past 10 years. With the advancement of science and technology, many medicines have been continuously developed to benefit mankind. The synthesis of these medicines depends on new, high The production of high-quality pharmaceutical intermediates, so new drugs are protected by patents, but there is no problem with the supporting intermediates. Therefore, the development space and application prospects of new pharmaceutical intermediates at home and abroad are very promising.

At present, the research direction of pharmaceutical intermediates is mainly reflected in the synthesis of heterocyclic compounds, fluorine-containing compounds, chiral compounds, biological compounds, etc. There is still a certain gap between the development of pharmaceutical intermediates in my country and the requirements of the pharmaceutical industry. Some products require a high level of technology, and domestic production cannot be organized, so they basically rely on imports, such as anhydrous piperazine and propionic acid. Although some products can meet the requirements of the domestic pharmaceutical industry in terms of quantity, their high cost and poor quality have affected the competitiveness of pharmaceutical products, and the production process needs to be improved, such as TMB, p-aminophenol, D-PHPG, etc. It is expected that in the next few years, worldwide research on new drugs will focus on the following 10 types of drugs: brain function improving drugs, anti-rheumatic arthritis drugs, anti-AIDS drugs, anti-hepatitis and other viral drugs, blood lipid-lowering drugs, antithrombotic drugs, Antineoplastic drugs, platelet activating factor antagonists, glycoside cardiotonic agents, antidepressants, antischizophrenia and anxiolytics, etc. The development of intermediates for these drugs is the direction of future development of pharmaceutical intermediates and an important way to expand new market space.