Analysis of the API industry

I. Classification of API

Apis can be roughly divided into bulk apis, specialty apis, and patented apis:

① Bulk apis generally include traditional apis such as vitamins, amino acids, hormones and organic acids. Due to the lack of patent issues, large scale of use and low technical barriers, the competition is fiercer than characteristic apis, and the profit level is also low and prone to large fluctuations. The industry is similar to the segmented industry of fine chemical industry.
(2) Characteristic apis are like the apis of out-of-patent drugs for chronic diseases, such as antihypertensive drugs, lipid-lowering drugs and anti-diabetic drugs. Due to the large dosage of such drugs, the corresponding API demand is also larger, and compared with bulk apis, the barriers are higher, the competition pattern is better, and the profit level is higher.

(3) Patented apis refer to the apis of innovative drugs that are still within the patent period. The demand for such apis is often very small, the suppliers are relatively limited, and the stability requirements of the core suppliers are higher, and the barriers and profit levels are higher. At the same time, it has higher requirements for the R&D capability of API enterprises, so these enterprises mostly include CDMO business.

Ii. The pandemic has impacted the global supply of active drugs

During the period of relatively severe epidemic in China from February to March this year, the production of domestic API enterprises, especially the production and transportation of API enterprises in Hubei Province, were greatly affected. Major API manufacturers in Hubei Province, such as Wuhan Wu Pharmaceutical and Hubei Guangji, mainly produced bulk apis such as vitamins, antibiotics and hormones.

Therefore, at the peak of the epidemic in China, bulk apis were the main substances that had the greatest impact. Combined with the old vitamin production facilities in Europe, there were frequent problems. Therefore, we saw that bulk apis led by vitamins had a large price rise in the early stage, but the impact of characteristic apis was relatively limited at this time.

However, after the domestic epidemic was well controlled and the rapid outbreak began overseas, the supply gap of apis began to expand significantly. This was mainly reflected in India, another major API producer except China, which has completely closed down and restricted the export of 26 apis and related preparations.

Meanwhile, the epidemic is spreading rapidly in the United States, Italy, Spain, France, Germany and other major API producing countries. The confirmed cases in the United States have exceeded 400,000, and Italy, Spain and France have also exceeded 100,000, putting great pressure on their API supply.