Global APIs are 'off supply' concerns

The epidemic situation of new coronary pneumonia has spread rapidly around the world, which has caused a great impact on the production and supply chain of medicines. Some countries report that the supply of raw materials is tight. The relevant person in charge of the Ministry of Industry and Information Technology said that since the beginning of this year, China's export volume of raw material medicines has declined year-on-year, and most products have fallen by 10% to 20%, but there are also a few varieties of exports that have increased year-on-year. International transportation has become a bottleneck restricting the export of APIs.

The industry believes that the recovery rate of raw material pharmaceutical companies has been steadily increasing, domestic demand has been basically met, and it is expected to meet overseas demand. The export of raw material drugs related to the epidemic may usher in a brief outbreak period. However, it should be noted that due to the delay in the demand for non-anti-epidemic medical treatment, if the foreign pharmaceutical industry is shut down for a long time, it will have a negative impact on the overall export of China's APIs.

Poor international transportation becomes a bottleneck

Xin Guobin, vice minister of the Ministry of Industry and Information Technology, said on March 30 that China has more than 1,500 API manufacturers and is the world's largest API producer. The output of APIs in normal years is about 3 million tons. China is also the world's largest exporter of APIs. In normal years, exports are about 1 million tons, and the proportion of exports to the entire API output is about 1/3. In addition, China is the world's largest producer and exporter of vitamins, antibiotics, antipyretics and analgesics, anti-infectives, and sebum hormone drugs, accounting for more than 50% of the international market.

Xin Guobin said that at present, the new coronary pneumonia epidemic is spreading rapidly around the world, which also has a greater impact on the production and supply of drugs. Some countries now reflect the tight supply of raw materials. In response, the Ministry of Industry and Information Technology found that there are several factors: First, in January and February this year, due to the impact of the epidemic, some enterprises stopped production and production, and there was a short-term supply shortage. After February, due to the spread of the international epidemic, international transportation, especially shipping and maritime transportation, has been greatly restricted and affected, resulting in some logistics and transportation difficulties.

"Since this year, the export volume of APIs has decreased compared with the same period of last year. Most products have fallen by about 10% to 20%, and individual varieties have fallen by 30%. However, there are also a few varieties that have increased year-on-year. Xin Guobin said: "We have repeatedly communicated with enterprises, and everyone reports that the main constraints to the decline in exports are mainly maritime and international shipping, and the transportation costs have increased. International transportation has become a bottleneck in our supply of APIs."

The epidemic has triggered concerns about the global supply cut off

In recent years, with the continuous expansion of the generic drug market, as well as the improvement of domestic manufacturing enterprises' process technology, production quality and registration and certification capabilities in the drug administration market, bulk drug productive capacity has been transferred to China. According to agency statistics, there are currently over 8,000 domestic API manufacturers, and the export volume of APIs has reached new highs.

Since the beginning of this year, the "butterfly effect" impact of the new coronary pneumonia epidemic has led to an increase in the demand for terminal drugs in the industrial chain. As the overseas epidemic worsens, the incremental demand is being transmitted upward along the industrial chain. But at the same time, production stagnation, poor logistics and trade controls caused by the spread of the epidemic have directly led to obstruction of the global API supply chain.

Since March 25th, India implemented a national blockade, which has caused global concerns about the "cut off supply" of medicines, especially antibiotics, and has exacerbated the tension in the global pharmaceutical supply chain. As a "world pharmacy", India is also an important destination for China's API exports. According to data from the China Medical Insurance Chamber, in 2019, China's API exports to India accounted for nearly 17% of China's total API exports.

At present, more and more API manufacturers in China have resumed production and resumed production. Will this lead to an increase in the export of APIs by related domestic enterprises, and to meet global demand, becoming the focus of market attention.

In this regard, Xin Guobin said: "China, as a responsible big country, attaches great importance to the safety of the global pharmaceutical industry supply chain. We will work hard to maintain the production of API manufacturers to ensure the safety and stability of the global industry chain supply."

Xin Guobin introduced that it can be seen from the review of the national raw material pharmaceutical industry chain that the current resumption of production and the yield of major products are more than 80%, and the output of some varieties has also exceeded the level of the same period last year, especially for anti-epidemic drugs. The key to guarantee. "We feel that we can guarantee the international anti-epidemic needs in this respect. For example, in the previous stage, we identified chloroquine phosphate as an effective drug for the treatment of new coronary pneumonia. Two major domestic raw material drug manufacturers, We organized the resumption of work in a timely manner, and the current supply level of the preparation is relatively stable. At the same time, we also organized these enterprises to meet international demand. For example, the hydroxychloroquine produced by Chongqing Kangle Pharmaceutical exported 4.9 tons of API in 5 days. Market demand to further increase supply. "Xin Guobin said.

Epidemic related APIs may be exported for a short period

People in the industry generally believe that the current epidemic situation in China continues to improve, and the resumption of production and production of raw material drug companies is progressing in an orderly manner. The domestic demand has basically been met, and it is expected to meet overseas demand.

Zhu Renzong, deputy secretary general of China Chamber of Commerce for Import and Export of Medicines and Health Products, said that the "New Coronavirus Pneumonia Diagnosis and Treatment Program" will increase the international market demand for related drugs, including raw materials, and the demand for other drugs directly related to the prevention and treatment of new coronary pneumonia will increase China's export of related APIs may usher in a short period of outbreak.

Under the continuous fermentation of overseas epidemics, will the tight supply of APIs affect the performance of related companies? Southwest Securities believes that in the medium and long term, the price increase of export-oriented APIs will be an inevitable trend. In addition, the stress test of the epidemic highlights the status of domestically approved FDA and EU-certified specialty raw materials and intermediates in the global pharmaceutical industry, which has been significantly underestimated by the market in the past.

Flush data shows that there are 29 A-share pharmaceutical companies that mainly rely on APIs, including Bo Teng, Tonghe Pharmaceutical, Jindawei, Fuxiang and Xin Nuowei are expected to grow in the first quarter, including Bo Teng shares The increase is over 200%.

A person in the pharmaceutical industry said that with the development of the global epidemic and the rising demand for exports, the trend of rising volume and price in the future may have a positive impact on the second quarter performance of API companies. However, similar to the previous domestic situation, the demand for non-epidemic medical treatment may be postponed. If the foreign pharmaceutical industry is shut down for a long period of time, the overall impact on China's export of raw materials will be negative.

At present, China's API industry is mainly focused on bulk APIs including vitamins, antibiotics, hormones, etc. Analysts expect that the production of bulk APIs will become more and more concentrated and the process will be further improved. At the same time, there is tremendous room for development in the feature APIs and proprietary APIs.

It is understood that the next step of the Ministry of Industry and Information Technology will also organize the implementation of key product monitoring and production scheduling, coordinate and solve the export transportation difficulties encountered by enterprises, strengthen communication and docking with WHO, foreign business associations, and multinational pharmaceutical companies. Carry out targeted supply services, ensure the supply of domestic and international markets, and make due contributions to fight the epidemic worldwide.