Advantages of chemical raw materials industry of China’s urgent need to upgrade
Chemical raw materials in China is the world’s second-largest producer and the largest exporter in the world of traditional medicine markets of raw materials dominated, but not chemical raw power, especially in the industrial structure, market order and R & D levels are still much to be desired. Multiple development in the current, under pressure from the comparative advantages to competitive advantages of upgrading has become a top priority of China’s chemical raw materials industry.
First, chemical raw materials industry in China’s position in the international market
Currently, Western Europe, North America, China, Japan, India, the world’s five major chemical raw materials producing areas. Among them, chemical raw materials industry of China’s revenue accounts for about 13% of the world. From a single national point of view, China has become the world’s second-largest chemical raw materials producer, second only to the United States.
In 2006, China chemical raw output of 1.705 million tons. From 2004 to 2006, China’s annual growth rate of production of chemical raw materials was 30.4%, far higher than the global market, 6% to 7% growth rate.
Furthermore, chemical raw materials in China is the world’s largest exporter, and Western Europe, India, for the global market with a major supplier.
In 2006, total trade of China’s chemical raw materials for 15.352 billion U.S. dollars, an increase of 21.57%. Among this, exports 10.625 billion U.S. dollars, an increase of 25.61%. As exports competitive, leading to the general decline in export prices, the average export price fell 3.37%, to 2.81 U.S. dollars / kg, the main export destinations for the United States, India, Japan, Germany and the Netherlands. Exports of these five countries accounted for chemical raw materials in China’s total exports 46.62%. In recent years, China’s markets for developing countries in Latin America’s exports grew rapidly.
From the product category, our country in the traditional medicine ingredients such as vitamins, penicillin, paracetamol, citric acid and other technical maturity and market access threshold for low-dominated, while in the technical process complex or production requirements of high anti-cancer drugs and weak competitiveness of products for injection.
Second, comparative advantage
1. Production of large-scale
China’s large-scale production of chemical raw materials, especially in the technological maturity of the varieties (such as antibiotics and antibiotics, vitamins, antipyretic and analgesic type and other traditional products) areas, are large-scale production and export to the global market.
In 2006, China exported more than 78,000 tons of antibiotics, up 31.8%; exports of nearly 1.51 billion U.S. dollars, up 26.6%. Full range of China’s antibiotic products. Among them, the largest penicillin in 2006, the output of 3 million tons, accounting for 75% of global production; exported nearly 1.5 million tons, up 28% over the previous year. As the major European manufacturers have stopped tetracycline, chloramphenicol, oxytetracycline, streptomycin production, therefore, the main origin of these products are also concentrated in our country.
In addition, China is the world’s largest vitamins (especially vitamin C) producer and exporter. In 2006, China’s vitamin C exports of more than 70,000 tons, with exports up to 2.3 billion.
Antipyretic analgesics in the areas of production, China’s advantages are mainly concentrated in the paracetamol, aspirin and analgin. Of these, paracetamol production in the largest annual output of about 3 million tons, accounting for 35% of the global total. The world’s annual consumption of aspirin to 5 million tons, while China’s annual production capacity of aspirin to meet its 50% of the needs of 2.5 million tons, of which 2 / 3 for export.
2. Low production costs
The production costs of chemical raw materials in China is only half of the developed countries, mainly due to China’s low labor costs and environmental costs. China’s labor cost in developed countries is only 1 / 10. Relative to developed countries, strict environmental policy, environmental costs of production in China chemical raw materials is relatively low production cost is only 1 / 6. The recent large number of domestic raw material drug companies invest and build factories turn to the west of the decision-making, but also to further reduce the environmental cost of the move. The preferential policies for western development, coupled with a relatively low-cost local coal supply and adequate water resources, such as favorable factors will be the future of chemical raw materials for some time to promote the development of China’s motives.
Third, a competitive disadvantage
1. Irrational product mix, industrial chain, uneven
Although China is the world’s big country the size of traditional chemical raw materials, but in the product mix and brand are not competitive, is mainly reflected in the proportion of high raw material drug production is small, there is a high quality standard and influential brands of the total raw material drug production small volume. From the future global chemical raw market development trends, generic bulk drugs market in great demand, there will be considerable future development. In China, in this field are at a disadvantage in the global generic API market share of only 30%, 36% below the European level.
API caused by an irrational product mix of China’s chemical industry chain imbalance, as well as agents of production and new drug research and development of the weak. Chemical exports from China’s point of view, high value-added, high-tech Western medicine preparation and a very small proportion of bio-medicine, both western medicine combined accounted for just 9% of total exports, while the chemical raw materials account for 91% while the absolute share.
2. Increase in export volume fall in price
Recalling the past five years, the bulk of China’s export volume and export volume of chemical raw materials trend can be found between the two there is a clear negative correlation. Vitamin C with our superior products, for example, in 2003, its export volume continued to rise, but exports have continued to fall.
3. Vicious competition and lead to instability of the industry profit growth
At present, chemical raw materials industry, low barriers to entry and exit threshold high. Once a species there is a high added value, that is, a large number of domestic enterprises to enter the field, creating a vicious competition. And enterprises in order to gain a competitive advantage, usually taken to increase production, diluted the average cost method, which just make the “price war” further escalation of the price trough is also coming soon, thereby affecting operating efficiency.
4. Lack of research and development capabilities, intellectual property awareness is weak and
Chemical raw materials enterprises in China R & D investment is very low, accounting for only 1% of sales compared with foreign firms 15% ~ 20% level, the gap is too large. Inadequate investment in research and development leading to a lack of innovation, and my 99% of the raw drug is generic. This low level of R & D constraints is also reflected in the application of bulk drugs, present, China can only be made into a kind of raw material medicine is about three kinds of preparation products, while 10 foreign countries to produce products of several or even dozens of kinds of preparations.
Weak awareness of IPR in China chemical raw materials business is an outstanding example of the “2006 Paris World Pharmaceutical Exhibition”, China has six exhibitors due to alleged infringement of intellectual property rights by the French police custody. In addition, chemical raw materials in China and India, a leader in comparative perspective, the level of China’s patent applications are also significant gaps. In 2006, India’s Ranbaxy had 127 patent applications submitted to the U.S. FDA ANDA 27 and received 10 approval. In China, Harbin Pharmaceutical Group, is that, as of first half of 2006, a total of 150 products in a pending or in the research state.
4, facing a competitive advantage from a more advantages to upgrade multiple pressures
1. Product cost by raising the pressure of multiple
Product cost is low, as chemical raw materials industry in China, one of the important comparative advantages, are facing pressures. The first source of pressure is the increase in production costs. Countries of the “two high a capital” industry, strict control, making the relevant raw material drug production enterprises should not allow their own interests, but must gradually assume corresponding social responsibilities. Many enterprises have already begun to sewage treatment and the application of cleaner production technologies to invest a lot of money. Moreover, China’s labor costs are increasing, estimated future production costs will increase 5% ~ 10%.
Another source of pressure is the increase in the cost of exports. July 1, 2007 start of the new export tax rebate policy, although did not involve most of the traditional chemical raw materials in China, but its effects are still affected varieties. Among them, glutamate classes and antipyretic and analgesic raw material medicine classes affected by large companies produce these products, and therefore trapped. In addition, the continuing appreciation of the yuan will also increase the export of chemical raw materials costs.
2. Local enterprises are facing the pressure of international industrial transfer
China’s manufacturing cost advantages and relatively lenient environmental policies to attract many multinational companies to invest in China plant. These enterprises more than the traditional raw material drug production shifted to China, while the early establishment of overseas factories to limit production or stop production. World-renowned multinational enterprises in China have the API layout: Switzerland Lonza Guangzhou, Nansha factory; Germany’s BASF in Jilin, Fan Yang set up factories; Netherlands DSM in Shandong Province, Zhangjiakou, the establishment of two factories. In addition, Clariant, Germany, and Degussa,?????are equipped with production facilities in China.
Multinational corporations to leverage China’s low-cost combination of advanced technology, highly competitive production of chemical raw materials for China’s local enterprises pose a threat to the same product. To foreign raw material drug companies in China (including Hong Kong, Macao and Taiwan investments) of the overall situation, its operating efficiency is higher than the industry average, and the number of after-sales revenue and total profits are rising at a trend
3. India catch up with international competition experience of the pressure
All along, India are our chemical raw materials market in the world the most powerful competitor. So far, despite India’s competitiveness in the industry in China is still out after, but recent trends indicate that India’s industry, chemical raw materials beyond our potential is great. The reasons are: (1) India remain the world’s highest annual sales growth rate; (2) Indian manufacturers specifications major customers are located in markets such as Europe and the United States, there is a considerable proportion of our sales focus on the non – regulate the market in Southeast Asia, Africa, South America. For production enterprises, standardize the market and non-standard market, the biggest difference is that the profit a huge difference.
Compared with India, China’s raw material industry uncompetitive in the international market mainly reflected a series of marketing and product training. India’s chemical raw materials industry has successfully achieved “characteristics of the bulk raw material medicine APIs generic generics patent medicine” of the industrial upgrading. In China, the main raw material medicine is still large, high value-added products produced on the weak state of staying put. In addition, India’s progress in intellectual property norms are also ahead of our country.
V. CONCLUSIONS
To ease the load ahead of China’s chemical raw state, must be dark soon as possible before the comparative advantage to enhance industry’s competitive edge. In this regard, I propose the following:
(1) raising awareness of international and enhance international competitiveness. Currently, foreign drug registration, certification and marketing abroad, is holding back China’s export of bulk drugs major bottleneck, as soon as possible to improve the international certification. Meanwhile, faced with an increasing number of non-tariff barriers in recent years, anti-dumping investigation, China’s raw material drug companies would also be good to use international trade rules to avoid risks. In addition, to strengthen cooperation between enterprises, standardize competition and avoid disorderly competition against the industry.
(2) changes in industrial structure, and strong bulk drugs industries. API must be changed only in low-end chain feeding situation, the development of agent production and promote industrial upgrading. In this regard, “Indian model” is a successful precedent. After big drug industry, the bulk of raw materials, transformation characteristics of bulk drugs industry, stage of development, industrial upgrading, and industry chain extended to the preparation of production, new drug research and development and other fields.
(3) focus on different levels of enterprises and products with comparative advantages. To play a large size of the business advantages and flexibility advantages of SMEs, in particular, is to play some small high-tech pharmaceutical company in a small variety of R & D and production technology and techniques of the advantages and fully develop and tap its potential for development.
I am China Manufacturers writer, reports some information about ethyl vinyl ether , urea formaldehyde glue.
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