Analysis of China’s chemical API industry 3

3. Industry development

As one of the strategic pillars of China’s pharmaceutical industry, the chemical API industry has formed a relatively complete industrial system through decades of development, and has the characteristics of large scale, low cost and high output. In recent years, after adjustment and upgrading, the API industry is expected to maintain a rapid growth rate, the prospect continues to be good, and will become an important thrust for the upgrading of the pharmaceutical industry.

After nearly a decade of development, the growth rate of operating revenue and total profit of China’s API industry fluctuates greatly, but both maintain a high-speed growth trend year by year. From 2012 to 2013, the growth rate of the main revenue of the API industry slowed down, while the profit growth rate decreased significantly compared with that in 2012. The main reason is that the external demand market for API began to shrink and the price continued to decline due to the overall decline of China’s trade and export. In 2014, the profit growth rate of China’s chemical API industry began to hit the bottom and rebounded, reaching the peak in 2016, while the growth rate of main business income in the same period decreased year by year to 8.4% in 2016, the lowest in recent years. There are two main reasons for the upside down between revenue growth and profit growth. On the one hand, due to the high pressure of environmental protection, many enterprises that fail to meet the standards limit production and stop production one after another, and the supply of raw materials is affected; On the other hand, environmental protection requirements have raised the technical barriers of the API industry, making the production capacity relatively concentrated, driving the price rise of upstream API. In 2017, the profit growth rate fell sharply again, while the revenue growth rate increased for the first time in the same period. The main reason is that the sharp rise in profits in the previous round has increased the investigation and punishment of illegal price bid ups by the state, and the profit space of the industry has narrowed. The above phenomena show that China’s chemical API industry is constantly upgrading, the products are gradually changing from medium and low-end to medium and high-end, and the standardization of industry development is constantly improving.