The API (Active Pharmaceutical Ingredients) industry is facing a historic development opportunity, with vast potential for an upward turnaround in the API sector!
Release time:
2024-04-11
In a research report released by CITIC Securities on April 11, it was pointed out that the domestic API (Active Pharmaceutical Ingredients) industry is currently at the bottom of its cycle.
In a research report released by CITIC Securities on April 11, it was pointed out that the domestic API (Active Pharmaceutical Ingredients) industry is currently at the bottom of its cycle. Inventory reduction is nearing its end, orders are improving marginally, and the peak of capacity expansion has subsided. The profit pressure brought about by amortization has decreased. Both performance and valuation are expected to recover. This indicates that the API industry is facing a historic development opportunity with vast potential for an upward turnaround.
Patent Expiry Peak of Innovative Drugs to Bring Huge Market Opportunities
According to Evaluate Pharma, the total sales risk of off-patent drugs is expected to reach as high as US$354 billion from 2023 to 2028. The period from 2023 to 2029 will see a concentration of patent expiries for the top 50 best-selling small-molecule originator drugs globally. On average, five new drugs per year will face patent cliffs, corresponding to a potential generic drug market exceeding US$130 billion. This provides a rare development opportunity for domestic specialty API companies. Leveraging their registration and production capabilities, domestic companies are expected to accelerate their entry into overseas markets and capture a larger market share.
API + Formulation Integrated Companies Will Stand Out
In the long term, under the pressure of increasing drug quality requirements and bidding price reductions, API + formulation integrated companies, with their cost advantages and quality control, are expected to stand out. Downstream extension into formulations can bring substantial value-added to APIs, and the integration of API + formulation is expected to help companies break through revenue ceilings. According to Precedence Research, the global API market size was US$204.04 billion in 2022, with an annual compound growth rate of 6.1% from 2023 to 2032. Over the next decade, the global API market is expected to maintain stable growth, providing broad development space for API + formulation integrated companies.
Challenges and Risks in the Development of the API Industry
Of course, the development of the API industry also faces some risks and challenges, such as the risk of patent cliffs starting earlier than expected, the risk of continuous downward pressure on API prices, the risk of generic drug development progress falling short of expectations, the risk of new product R&D and registration, and the risk of changes in industry regulatory policies. However, as long as companies can seize opportunities, actively respond to challenges, and continuously enhance their core competitiveness through measures such as strengthening R&D innovation, optimizing production processes, and improving management efficiency, they will surely achieve greater success in future market competition.
This article is from the financial world.
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Hantai Pharma (Group) was established in April 2010 and is headquartered in Xinchang County, Shaoxing City, Zhejiang Province. The company's industry involves pharmaceutical raw materials, chemical intermediates, pharmaceutical excipients