| By Cindy Wu, Asia Manufacturing Pharma |
| Monday, 28 September 2009 |
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China-based Xinchang Guobang Chemicals, which has won nearly half of its domestic market for Azithromycin active pharmaceutical
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ingredients (API), have been lowering the price of its Azithromycin APIs since the beginning of this year as part of its strategy to further increase its share of the market. Azithromycin APIs in the Chinese market were sold at RMB800 (approx. US$117) per kilogram in September, almost at cost price. The other leading Azithromycin makers in the country, including Shanghai Modern Pharmaceutical, have also suffered a significant decrease in gross margin.
Industry analysts indicated that several factors coming together may make it impossible for the domestic Azithromycin API market to recover from this short term weakness.
As a member of the second-generation Erythromycin agents, Azithromycin with a long half-life, a |
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short course of treatment and a low adverse drug reaction has gained strong traction in the international antibacterial agent market. In addition, the Anti-infective Drugs Advisory Committee of the US Food and Drug Administration has recommended it for the treatment of respiratory tract genitourinary tract, skin and soft tissue infections.
These factors provide an extremely encouraging global outlook for Azithromycin and a a good product on which enterprises can base their expansion.
Pfizer introduced its Azithromycin product, Zithromax, in the UK market in 1990. When the company’s patent on Zithromax expired in November 2005, drugmakers worldwide wasted no time in launching generic equivalents. Henan province-based Topfond Pharmaceutical has completed the construction of a facility with an investment of RMB69 million (approx. US$10 million) for producing Azithromycin APIs.
The project is forecast to contribute RMB432 million (approx. US$62 |
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million) and RMB41 million (approx. US$6 million) and RMB41 million (approx. US$6 million) to Topfond’s average annual sales revenue and net profit respectively.
Shanghai Modern Pharmaceutical has expanded its annual capacity in Azithromycin APIs to over 200 tons. Xinchang Guobang Chemicals’ aggressive moves in cutting the prices of its Azithromycin APIs have led to Modern Pharmaceutical’s reduced gross margin.
However, Modern Pharmaceutical is still confident in the market as it is likely to be approved to market its Azithromycin APIs in the European market and benefit from the improved profitability.
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