The rise of big molecules and the desolation of small ones!

Shi Chin's "Overflow: The Future History of Made in China" once said that many late-developing countries have tried to formulate industrial policies, but most of them have failed, and only a small part of them have succeeded.

In the 1990s, the profits of foreign APIs gradually declined, and the production centers of APIs needed to be transferred to countries with lower costs.

01 , Taizhou 10 listed pharmaceutical companies, most of the main business of pharmaceutical raw materials

Over the past 30 years, Taizhou has bred more than 160 billion listed companies with a market capitalization, of which nearly 90 billion listed companies are mainly engaged in APIs.

Listed companies headquartered in Taizhou:

Taizhou's listed companies are mainly divided into two categories:

The first category, both raw materials and preparations

The more representative ones are Huahai and Hisun.

The advantages of Huahai Pharmaceutical's APIs are mainly Puri and Sartan drugs.

In the 2020 annual report of Hisun Pharmaceutical, the operating income of pharmaceutical manufacturing is 5.

The second category is mainly raw materials

Kyushu Pharmaceutical, Tianyu Co.

98.

Tianyu's raw materials revenue in the first half of 2020 is 878 million, corresponding to 65.

Stellite's performance in the first half of 2020 reached 1.

The domestic competitors of Taizhou APIs include Puluo Pharmaceutical from Hengdian, Zhejiang (total market value of 32.

02.

Featured APIs are divided into three types according to the patent period of small chemical molecules.

The first is the patented drug raw materials and intermediates, mainly for customers with patents to choose a customized mode.

The second is the APIs and intermediates of the first generic drugs and the original drugs in the late stage of patent protection.

The third type is APIs without patent protection and mature technology.
These APIs are usually listed by many companies.
Generic drug companies can purchase directly from API companies, but if the API is monopolized and controlled by an API company , Generic drug companies may not be able to obtain the most competitive prices and the best quality of raw materials, and even monopolistic API companies may stop supplying for their own (including strategic cooperation) companies to achieve the integration of raw materials and preparations.

Taizhou used to sacrifice the ecological environment in exchange for economic development.
Long before the national centralized procurement, Taizhou's API companies were forced to extend the development of the high-end industrial chain due to environmental pressure.
Based on the basic point of the development of the specialty API industry, internationalization and the integration of specialty APIs from upstream APIs to downstream preparations are the development directions of the specialty API industry.

In recent years, not limited to Taizhou, domestic API companies and preparation companies have been implementing the integration of raw materials and preparations in various ways, and are more actively going out to expand overseas markets: Beilu Pharmaceuticals acquired Haichang Pharmaceuticals, Stellite acquired competitors Poseidon Pharmaceuticals (IMAX Ireland) and Xianju Pharmaceuticals acquired downstream customers Newchem from Italy, the cooperation between Minova and Simcere, and the cooperation between Stellite and Hengrui Pharmaceuticals (iopamidol, iohexol).

From 2013 to 2019, with the exception of Puluo Pharmaceutical and Aoxiang Pharmaceutical, domestic specialty API companies maintained a relatively rapid rate of fixed asset expansion.
From 2018 to 2020, Minova, Tianyu, Stellite, Xianju Pharmaceutical , Tonghe Pharmaceuticals are all showing a trend of accelerated expansion.
The reasons are both the expansion opportunities brought by the adjustment of the supply side of related products (Minohua, Tianyu), and the horizontal expansion under the effect of scale (Stellite, Xianju Pharmaceutical) , Tonghe Pharmaceutical), and the layout of the integration of API preparations (Xianju Pharmaceutical).

In terms of internationalization, from the US DMF (API filing) and EU COS (API filing) filings, China has surpassed the United States and the top five EU countries to become the world's second largest country with the number of DMF filings.
The next goal is to challenge India.

It is worth noting that domestic manufacturers of generic pharmaceutical preparations may not be willing to export.
The reason why domestic generic drug preparation companies are unwilling to internationalize is that the overall cost of domestic preparations is higher than that of India, and there is no competitive advantage, and internationalization requires unannounced inspections of European and American GMP, which requires higher investment in facilities and management; on the other hand; On the one hand, the prices of some generic drugs in the United States and Europe are very low compared to those in China, so it is better to work hard to cultivate the domestic market.

The low willingness of domestic generic drug preparation companies to go overseas means that the domestic API industry cannot copy the development path of the Indian API industry and needs to acquire generic drug preparation companies abroad, such as Xianju Pharmaceutical.

03.
The impact of desolate small molecule drugs on APIs

From a longer-term perspective, the desolation of small molecule drugs may further affect the market of small molecule APIs.

The recent PD-1/PD-L1 monoclonal antibody has won multiple tumor indications after the market, and a variety of innovative biotechnologies such as gene therapy and cell therapy have emerged one after another.
Whether it is the world's product market size ranking or the preference of mainstream investment institutions, macromolecular therapy has become the "mainstream.
"

In 2000, 8 of the top 10 innovative drugs in global sales were small molecule drugs.
Since 2008, the small molecule drugs in the Top 10 sales of innovative drugs can barely occupy half of the country.
By 2019, only 4 of the Top 10 are small molecules.
It is becoming more and more difficult for molecular drugs to reach the top 1 in sales, and the proportion of small-molecule innovative drugs in the overall market sales is also showing a gradual decline.

From the end of the last century to the beginning of this century, the rapid development of small molecule drugs largely relied on the discovery of new disease targets and disease indications, as well as the explosive development of synthetic organic chemistry and the advancement of various detection technologies.
Usually, there are enough molecules in the chemical library for you to screen, find one or more seed compounds (Hit) that meet the requirements in the library, and optimize the structure to obtain the lead and candidate compounds.
Then, the safety and effectiveness of the system can be fully verified through systematic clinical trials, and then the drugs used by the patients can be obtained.
The discovery of disease indicators and targets has allowed millions of small molecule drugs to be screened by these disease indicators and targets, which has led to an explosion of new small molecule drugs.

Although the small molecule library of chemical drugs is still growing year by year, the growth rate of the types and diversity of molecules has decreased year by year.
It is the discovery of new targets and disease indications that promote breakthroughs in the research and development of small molecule drugs.
After the discovery of new targets and disease indications, it is currently mainly used to screen old compound libraries with new targets.
Therefore, many small molecule drugs that have been on the market are often reported to discover new targets and develop new ones.
Indications.

In response to the slow growth of the reserve of small molecule chemistry libraries, scientists have used combinatorial chemistry (Combinatorial Chemistry), DNA encoding library (DNA Encoding Library, DEL) and other technologies to expand the compound library, but these technologies still cannot escape the existing classics.
Organic synthesis reactions also have strict requirements on reaction conditions.
The restricted types of chemical reactions limit the expandable upper limit of chemical molecule categories.

The reason why capital prefers small molecule chemical libraries is mainly due to the relatively poor specificity of new small molecule drugs compared with macromolecular therapies, low R&D success rate (large molecules often have a relatively high success rate after target confirmation), and product life cycle Limited by the drug's patent (it will be quickly imitated by generic drug companies after the patent expires), macromolecular therapy often has imitation barriers, and the product life cycle depends on the technical difficulty in addition to the patent.

The limited development of small molecule drugs will inevitably affect specialty API companies.
There are fewer and fewer small molecule drugs on the market with patent protection restrictions.
If the number of small molecule drugs on the market is further reduced, then API companies can only target existing Small molecules compete, and technology will one day break through.
In the end, API companies can only fight for price and cost.

The characteristic API companies that Taizhou has an advantage are mainly concentrated in some mature product areas.
If India is to challenge India, my country's first generic drug and late-patent API suppliers must increase, and competitiveness must also be strengthened; some API companies that can only rely on imports but also need R&D capabilities for independent development.

Times make heroes.

Due to the past market demand, geographical factors, international situation, and historical precipitation, Taizhou has become the city of China's APIs.

Environmental protection factors limit the production capacity of domestic APIs, and Taizhou API companies are upgrading ahead of most domestic companies.
The epidemic has accelerated Taizhou's API companies to go overseas, and domestic policies such as comprehensive centralized procurement in 2021 have forced the integration of raw materials and preparations.
This is a short-term benefit for Taizhou API companies that have actively deployed internationalization and preparation integration.