| By Liu Yuanyuan, Asia Manufacturing Pharma |
| Monday, 10 August 2009 |
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Despite an exports rebound during the
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past several months due to rigid demand and improved global economic environment, China’s active pharmaceutical ingredients (APIs) sector is still facing huge challenges from both inside and outside the country, including decreased international demand and weak domestic sales, foreign technical and trade barriers and ever-changing domestic policies, among others. For the first four months of this year, exports of China’s western APIs amounted to US$5.09 billion, down 8.9 per cent from the same period last year.
For April, exports registered US$1.37 billion, down 9.2 per cent from a year earlier, and significantly lower than the already decreasing growth rates of 29 percent, 23.9 percent and 14.5 percent recorded in the first three months. However, industry analysts said the industry should not sit on its laurels but rather seek out the reasons for proportion of exports to major markets and for the depressed profits. For the first four months, 88 per cent of the country’s |
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APIs were exported to Asia, Europe and North America.
However, exports to Europe and North America, the two dominant and most profitable markets, accounted for 29.8 per cent and 15.8 per cent respectively of the total, down 26.9 per cent and 25.4 per cent respectively from a year earlier.
Given the grim export situation, many pharmaceutical companies plan to turn back to the domestic market, enhancing the competition among domestic players. However, not all companies are expected to succeed. Those companies, especially the small and medium-sized ones, face higher production costs due to different quality and technology standards. In addition, domestic market is usually associated with significantly higher operation risk.
Although industry insiders predict that the export prices of China’s APIs will see steady growth in 2009, an executive from a major Chinese pharmaceutical company who decided to remain anonymous holds a different view, saying the prices will be in downtrend in the second |
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half of this year due to lower prices facing the chemical materials market. In addition, enterprises’ strategies to expand market and increase sales will pose further pressure on the prices, he noted.
The executive further added that, such measures as timely and effective price negotiation, production control and market collaboration will not only help pharmaceutical companies to maintain solid profits, but also are efficient measures to raise the barrier for newcomers wishing to enter the market. He suggested that the crisis presents opportunities that the pharmaceutical makers should grasp, through enhancing innovation, upgrading management and improving competitiveness.
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