How Will Domestic API Companies Develop?

1. Centralized environmental solutions

At present, environmental protection and green APIs are national strategies, and for API companies, they have always been life-critical matters. The application of new technology and environmental protection has a foundation for a large layout, such as the application of enzyme catalytic technology, and it is generally difficult for old enterprises and independent enterprises to have the strength to build. At present, many API companies are established in comprehensive parks, and many enterprises share the cost of joint construction, and environmental protection costs can be greatly reduced. It has become a reality in the Shanghai Chemical Industry Park and will be promoted in more emerging industrial parks. The water pollution control of Shanghai Chemical Industry Park adheres to the management principle of "integration", and the wastewater of enterprises in the park is unified and centralized, which on the one hand reduces the pressure of enterprise environmental protection, and on the other hand, centralized treatment reduces the environmental protection input of individual enterprises.

2. API enterprises form unified cooperation with upstream and downstream

Under the promotion of the drug holder system, drug holders have very high requirements for the cost, stability and consistency of APIs, and at the same time need to be bound to the process of preparation research and development and declaration, so it is recommended that raw material enterprises and holders establish a project company in a unified manner, and use the project company to jointly declare and hold the approval. On the one hand, stabilize the downstream sales link and ensure long-term stable cooperation, on the other hand, the production capacity can be planned earlier to avoid insufficient or wasted capacity.

3. Improvement of technology platform

EuroAPI, the world's leading small molecule API company, has always emphasized the importance of complex chemical synthesis, fermentation (synthetic biology, fermentation semi-synthesis, etc.), highly active APIs, and peptide/oligonucleotide technologies to the company's API and CDMO customer expansion. In 2021, its revenue from complex small molecule synthesis accounted for 68.7%, fermentation-related accounted for 17.1%, highly active APIs accounted for 11.5%, and peptides/oligonucleotides accounted for about 2.7%. Most of China's API companies are less categories but more profitable models, but with the participation of competition in India and other countries, the price growth of bulk raw materials and the increase of environmental protection pressure will make such profitability gradually change, so it is necessary to upgrade the existing technology platform to improve competitiveness.

Chinese API enterprises have large revenue and high capital expenditure intensity, but there are still relatively few variety registrations and overseas preparation layouts. Industrial upgrading, industrial chain extension is a process, in the international competition, most of the Chinese API companies still focus on a few advantageous varieties, in most of the high barriers, high premium API category of international participation is not high, but at the same time some companies based on the technology platform to accelerate new product registration, as more and more Chinese companies accelerate the integration into the global API manufacturing regulations system and supply chain division of labor, the domestic API industry will have a new upgrade based on long-termism.