Industry Overview:
API (Active Pharmaceutical Ingredients), also known as active drug substances, are substances that cannot be directly consumed by patients but are synthetically produced, extracted from plants or manufactured using biotechnology. After adding excipients and undergoing processing, they become drugs that are ready for consumption.
According to ICH Q7, APIs are defined as substances or mixtures thereof that are active components used in pharmaceutical production. These substances are intended to prevent, diagnose, cure, alleviate or treat diseases or other direct effects, or affect the structure and function of the human body.
There are three primary types of APIs based on their origin: chemical synthesis APIs, biochemical APIs, and plant-based APIs.
Industry Analysis: A Long Industry Chain
The upstream industry of API is the basic chemical industry and the agricultural, forestry, animal husbandry, and fishery industries. The API industry relies heavily on upstream raw materials, and changes in their prices directly affect sales prices and profits in the API industry. The downstream industry of chemical APIs is chemical preparations. With the development of society and the trend of population aging, the overall demand for chemical pharmaceutical preparations is increasing, providing indirect demand guarantees for chemical APIs. Generally speaking, the gross profit margin of the chemical pharmaceutical industry shows an increasing trend from upstream to downstream, and the gross profit margin of APIs is lower than that of chemical inhibitors and higher than that of intermediates. The closer to the downstream of APIs, the higher the gross profit margin of intermediates.
Looking back on the development of China's national economic plan, the "Ninth Five-Year Plan" called for further strengthening of pharmaceutical market management, vigorously developing new products and continuously improving drug quality. Later on, the "Tenth Five-Year Plan" to the "Twelfth Five-Year Plan" emphasized enhancing the independent development capability of APIs and establishing a complete pharmaceutical guarantee system. The "Thirteenth Five-Year Plan" clearly stated the gradual abolition of drug markups while promoting the reform of medical service prices. The "Fourteenth Five-Year Plan" explicitly proposed cultivating advanced manufacturing clusters and promoting innovation and development of the pharmaceutical and medical equipment industries.