According to data, except for the impact of the COVID-19 pandemic, the global API pharma market has shown a stable growth trend in recent years, with an average annual compound growth rate of 7.5%. Meanwhile, the number of patent-expired drugs and generic drugs has increased, driving the growth of API production, with an expected average annual compound growth rate of over 10%.
In recent years, various factors such as RMB appreciation, changes in export tax refund rates, rising prices of raw materials such as grain and chemical raw materials, increased labor costs, and stricter environmental policies have led to an acceleration in the clearance of low-end bulk API pharma production capacity. The overall revenue of enterprises has declined significantly, followed by a rebound. The production capacity of specialty API medicines and patented API medicines has remained stable due to downstream market demand.
Bulk API medicines are mainly vitamins, antibiotics, antipyretic and analgesic drugs, and hormone API medicines. The demand for these products in the market is stable, and the supply side is concentrated. Prices and profits are mainly determined by supply and demand. As the national bulk API pharmaceutical production capacity is relatively abundant, market changes are usually caused by changes on the supply side, such as environmental pressure and production restrictions. Influenced by the tightening of environmental policies and the structural reform of the supply side, the prices of bulk API medicines in the market are overall showing an upward trend. At present, the prices of bulk API medicines remain high due to the impact of the pandemic which has not yet completely subsided.
Under the influence of various factors, the market size of specialty API medicines such as cardiovascular drugs, anti-tumor drugs, central nervous drugs, and gastrointestinal and digestive drugs continues to expand. First of all, the volume-based procurement lowers drug prices, and its role in improving the market penetration rate of relevant varieties is obvious. The increase in usage drives the growth of upstream API pharma demand. Secondly, the increasingly serious aging trend drives the expansion of the market size of chronic disease drugs, and there is continuous growth space for corresponding specialty API medicines demand. Finally, the patent cliff increases the proportion of generic drugs, providing a large space for substitution of generic drugs.
Patented API medicines are mainly used for the production of innovative drugs. Data shows that the global prescription drug market is expected to have a compound annual growth rate of 6.4% over the next five years with higher growth space. Driven by the growth of innovative drug market share, the market size of patented API medicines continues to steadily increase. In addition, the fine division of labor in the global industry promotes the transformation of multinational pharmaceutical companies' overall industry chain layout, outsourcing some research and development and production links, also promoting the accelerated development of patented API medicines.