Jinan Zhuocheng Bio-Tech Co., Ltd.

China’s raw material pharmaceutical (API) industry is currently undergoing a prolonged cyclical downturn, with intensifying global competition, weakening demand, and persistent overcapacity reshaping market dynamics.

During the 24th World Pharmaceutical Ingredients China Exhibition (CPHI China, June 16–18), several industry executives described the current environment as highly competitive, with one senior executive from Hisun Pharmaceutical noting that the industry has become “like a battlefield” due to global price pressure and shrinking margins.

Industry Competition Intensifies: From “First Launch” to “Last Exit”

China, the world’s largest API producer and exporter, accounts for roughly one-third of global supply. However, following demand surges during the COVID-19 pandemic, the industry has entered a correction phase marked by:

• Weakening demand
• Capacity expansion
• Severe product homogenization
• Continuous price declines in many mature API segments

Industry competition has shifted from “First Launch” (early market entry advantage) to “Last Out” (survival in a zero-sum market), reflecting increasingly aggressive global pricing dynamics.

Financial Pressure Persists, but Structural Recovery Emerges

Using a sample of 63 listed API-related companies tracked by CITIC Securities, industry performance in Q1 shows mixed signals:

• 36 companies reported revenue growth
• 27 companies reported revenue decline
• 30 companies saw net profit growth (after adjustment)
• 33 companies experienced profit decline

Some leading firms demonstrated resilience:

• Livzon Pharmaceutical Group reported declining revenue but rising profit, supported by structural optimization.
• Hisun Pharmaceutical showed a similar pattern of revenue decline but improved profitability.
• In contrast, companies such as Sino Biopharmaceutical and Huahai Pharmaceutical faced sharper profit declines.

Industry analysts note that firms with CDMO capabilities or integrated “API + finished dosage” business models are performing more steadily, while companies dependent on bulk generics are under greater pressure.

Overseas Markets Become Key Growth Battleground

According to executives, global markets have become the main arena for incremental growth.

One executive from Hisun Pharmaceutical stated that since March, teams have been traveling continuously across Europe, Africa, Latin America, and Asia to secure orders.

Unlike previous high-demand cycles—when companies could selectively choose customers—current conditions force firms to compete aggressively for every order.

Executives described the situation as highly volatile:

• Pricing changes occur rapidly
• Customer orders shift frequently
• Competitor strategies change in real time

Fragmented Recovery in Some Segments, but No Full Cycle Reversal Yet

Despite overall weakness, certain segments are showing early signs of recovery.

Market research reports indicate that several vitamin products, including vitamins E, B3 (niacin), and B9 (folic acid), have experienced price increases due to tightening supply conditions.

In addition, some cardiovascular API segments (such as sartan drugs) are stabilizing after prolonged price declines.

However, analysts emphasize that a sustained industry reversal requires deeper supply-side adjustment, including capacity exits and rebalancing of supply-demand fundamentals.

Industry Outlook: Cost, Scale, and Globalization as Core Competitiveness

Looking ahead, industry executives expect competition to center on:

• Cost control capability
• Large-scale production efficiency
• International market expansion
• Integrated upstream and downstream development

Companies such as Hisun Pharmaceutical are focusing on:

• Green chemistry processes
• Continuous manufacturing technologies
• Higher-value specialty APIs
• Expansion into regulated markets (EU, US, Japan)

Emerging markets such as India and Southeast Asia are also becoming key growth regions.

Conclusion

China’s API industry remains under significant cyclical pressure, but structural differentiation is emerging. While bulk commodity APIs continue to face oversupply and pricing pressure, specialty APIs, CDMO services, and integrated pharmaceutical models are gradually forming new competitive advantages.

Industry participants agree that the next phase of competition will be determined not by scale alone, but by technology, cost efficiency, and global market execution capability.