API Prices Change in China

The prices of China’s APIs (active pharmaceutical ingredients) fluctuated in the first half of 2012. In addition to influences like normal seasonal cycles and declining demand, the price increases of common chemical APIs were heavily affected by GMP (Good Manufacturing Practices) implementation and compliance with strict environmental requirements. But vicious competitive price slashing in the sales of some products, due to an unjustified buildup of capacity in the sector, is the root cause.
   The price of lincomycin went up mainly because Nanyang Pukang Pharmaceutical Co Ltd, the largest lincomycin producer in China, suspended production due to environmental problems. The price of lincomycin is strongly expected to rise further.
   Environmental protection departments of the government ordered a number of enterprises that cannot meet the environmental protection requirements to suspend their production, so the supply has fallen short of demand, and the prices of erythromycin thiocyanate and hormone products have increased drastically. At present, China’s supply of erythromycin thiocyanate is tight.
   Recently, the supply of 7-ACA was reduced drastically and its price rose constantly due to the relocation of Shanxi Weiqida Pharmaceutical Co Ltd, a shutdown for maintenance at Fujian Fukang Pharmaceutical Co Ltd, a production suspension or slowdown of 7-ACA (7-aminocephalosporanic acid) units of Shandong Ruiying Pioneer Pharmaceutical Co Ltd and Shandong Lukang Pharmaceutical Group Co Ltd, and GMP implementation being conducted by other 7-ACA enterprises. The price of 7-ACA has increased from more than RMB400 per kg in 2011 to over RMB550 per kg.
   The prices of vitamin C and penicillin industrial salt have been hovering at low levels due to a supply surplus caused by ill-advised capacity expansion of various producers. The prices of cephalosporin products are influenced by an imbalance of supply and demand as well as a recent policy restricting the use of antibacterial agents.
   The demand for cefoxitin sodium climbed in the second quarter of 2012. Due to a tight supply of the key intermediate BSA (N, O-bis(trimethylsilyl)acetamide) and thiopheneacetyl chloride, etc., the market supply of cefoxitin sodium raw material has also been tight, even without a supply available on a spot basis.
The prices of the hormones dexamethasone and cortisone still continue a longtime decline.
   Some flavor nucleotides prices have slid to RMB100 per kg. Among amino acids, except for tryptophan, the prices of major feed amino acids fell significant. The export price of heparin sodium stayed at a low level – the average export price was US$7 756 per kg in May 2012, up 5% compared with April and down 8% year-on-year.
At present, the domestic aquaculture industry is depressed and the demand for feed is slack, causing a constant price decrease of most vitamin products in China. Due to the influence of the international economic situation, the volume of vitamin products exported from China has declined greatly, and some export prices have fallen constantly. According to export statistics, in the first five months of 2012, China’s export volume of vitamin C and vitamin E dropped 14.2% and 11.62%, respectively, compared to the same period of 2011.
   To ensure an adequate domestic electric power supply, enterprise’s overhauls in 2012 will be accelerated, and at the same time, the temporary influence of GMP-related equipment renovation will also disappear. The market outlook for products like erythromycin thiocyanate and 7-ACA, with both a price rise and oversupply in the first half of this year, is not optimistic in the second half.