Development of the pharmaceutical intermediate industry

1、 Introduction to Pharmaceutical Intermediates

Pharmaceutical intermediates are chemical products used in the synthesis process of chemical raw materials. According to the regulations of the National Medical Products Administration, intermediates can be considered as pharmaceutical raw materials and do not need to be approved for production or batch number application according to drug regulations. Pharmaceutical intermediates can be divided into primary pharmaceutical intermediates and advanced pharmaceutical intermediates. Advanced pharmaceutical intermediates often only require one or two steps of synthesis to produce active pharmaceutical ingredients.

Medical intermediates include two types of products: general and customized. According to the different stages of outsourcing services, the customized business model of intermediates can generally be divided into CRO (Contract Research and Development Outsourcing) and CMO (Contract Production Outsourcing). In the past, pharmaceutical intermediates mainly adopted the CMO business outsourcing model. In the CMO model, pharmaceutical companies outsource the production process to their partners. Therefore, the business chain generally starts with specialized pharmaceutical raw materials. Industry companies need to purchase basic chemical raw materials and classify them into specialized pharmaceutical raw materials, and then gradually form raw material starting materials, cGMP intermediates, raw materials, and formulations through further processing. But with the continuous updates of patent expiration status of leading multinational pharmaceutical companies, the continuous development of new drug innovation, the difficulty of discovering, screening, and subsequent approval of new compounds, and the increasing research and development costs, the time for new drug research and development urgently needs to be more reasonably optimized to ensure true benefits during the patent period. Therefore, while maintaining high-intensity R&D investment, large pharmaceutical companies also continuously pursue improving R&D efficiency and optimizing cost control, thereby outsourcing more R&D and production work to CDMO enterprises and integrated new drug development service companies. This provides more and more clear opportunities for CDMO enterprises to deeply participate in the product supply chain from early development, clinical research, to commercial production in all aspects. The CDMO model (Production Research and Development Outsourcing) has emerged, which requires customized production enterprises to participate in customer research and development processes, provide process improvement or optimization for customers, achieve high-quality large-scale production, reduce production costs, and have a higher profit margin compared to the CMO model.

2、 Policy environment analysis

The pharmaceutical industry is an important component of China's national economy and is closely related to people's health. It is an important industry related to the construction of a harmonious society. In recent years, China has introduced a series of policies to support and guide the rapid development of the pharmaceutical manufacturing industry, encouraging its development and innovation. The formulation of relevant industrial policies provides clear and broad market prospects for the development of pharmaceutical manufacturing and pharmaceutical intermediate industries, and provides a good production and operation environment for enterprises.

3、 Economic environment analysis

As the world's largest producer and exporter of pharmaceutical intermediates, China not only benefits from the development of the domestic pharmaceutical market, but also from the development of the global pharmaceutical market. With the progress of medicine, domestic and even global drug research and development production are expected to continue to grow, and the market size of pharmaceutical intermediates will continue to expand. Before 2018, the production of pharmaceutical intermediates in China continued to increase. In recent years, due to environmental pressure, the market size of pharmaceutical intermediates in China has declined, but is constantly recovering. It is expected to reach 227.8 billion yuan by 2022.

Forecast trend of the market size of pharmaceutical intermediates in China from 2018 to 2022 (in billions of yuan)

In recent years, influenced by environmental protection and safety production supervision policies, pharmaceutical intermediates and downstream raw material pharmaceutical production enterprises have faced certain environmental governance pressures. Some enterprises in the market have been gradually eliminated or forced to relocate and stop production due to their inability to meet the requirements of green production or enterprise scale being unable to meet the requirements of "leaving the city and entering the park". Therefore, in recent years, the overall scale of China's p