Jinan Zhuocheng Bio-Tech Co., Ltd.

By the middle of 2026, China's veterinary API market remained broadly stable but highly differentiated, with no clear overall direction in prices or demand.

Beneath this relatively calm market environment, however, a deeper transformation is taking place. The continued expansion of large-scale livestock farming is gradually changing the way veterinary medicines are purchased, evaluated and used, with these changes increasingly being transmitted upstream to veterinary API manufacturers.

As procurement becomes more concentrated among large livestock groups, veterinary medicines are increasingly being treated not simply as therapeutic products, but as standardized production inputs within modern livestock operations.

Large Livestock Groups Are Increasingly Concentrating Procurement

The scale of China's livestock industry has continued to increase in recent years, and large farming groups are playing an increasingly important role in veterinary drug procurement.

In 2025, the combined procurement value of veterinary products for breeding pigs by Muyuan Foods, Wen's Foodstuff Group and New Hope Group was close to RMB 3 billion. The top 50 livestock groups are estimated to account for more than 40% of the overall veterinary drug market through centralized procurement.

This concentration has continued to develop in 2026. Muyuan Foods' estimated annual related-party procurement budget for veterinary drugs was increased to approximately RMB 2.7 billion, RMB 1.05 billion higher than the previous figure.

The significance of this change goes beyond procurement volume.

Traditional veterinary drug sales relied heavily on distributors and a large number of individual farms. Product efficacy, brand recognition and local service were important purchasing considerations.

Large livestock groups operate differently. Veterinary medicines are increasingly incorporated into standardized production and cost-management systems. Procurement departments tend to pay closer attention to unit costs, treatment efficiency, quality consistency, supply security and overall return on investment.

For veterinary API manufacturers, this means that the customer base is gradually shifting from fragmented purchasing toward centralized, standardized and longer-term procurement models.

Quality Requirements Are Becoming More Stringent

The impact of large-scale livestock farming on the API market is not limited to purchasing volume. One of the more important changes is the increasing emphasis on quality standards.

Large livestock groups generally have professional veterinary teams, quality management systems and supplier-audit procedures. As a result, they can impose more detailed requirements on API purity, impurity profiles, batch-to-batch consistency and supporting quality documentation.

Some large-scale procurement programs require suppliers to provide recent quality inspection records and comprehensive test reports issued by qualified laboratories.

This creates additional challenges for manufacturers that primarily compete through low prices.

API suppliers with standardized GMP production facilities, stable manufacturing capabilities, comprehensive quality documentation and consistent quality-control systems are better positioned to meet the supplier qualification requirements of large customers.

The development of large-scale farming is therefore transmitting higher quality expectations from the downstream market to API manufacturers, gradually shifting competition from simple price competition toward quality, consistency and overall supply capability.

Product Demand Is Also Changing

Changes in farming models are also influencing the structure of veterinary drug demand.

Large-scale pig farms differ from traditional small-scale farms in disease management, medication strategies and administration methods. Large livestock companies generally place greater emphasis on herd-level disease prevention, standardized medication protocols and production management.

As a result, demand is becoming more concentrated for products that are suitable for large-scale livestock operations.

Products such as Tilmicosin, Tylvalosin and Florfenicol have received considerable attention in large-scale livestock production.

At the same time, some veterinary pharmaceutical companies are strengthening vertical integration between APIs and finished formulations. This allows them to exercise greater control over product quality, production costs and supply stability.

Sito Bio-Tech, for example, has reported a market share of more than 50% for Tylvalosin Tartrate API while developing an integrated business covering APIs and finished formulations.

This demonstrates how changes in downstream demand can gradually influence upstream product portfolios and manufacturing strategies.

Macrolide APIs: The Impact of Concentrated Procurement

Market developments in macrolide APIs during 2026 provide an example of how large-scale livestock procurement can influence short-term market conditions.

During the first half of 2026, Tylosin Tartrate prices came under pressure, declining by approximately 11.19%. By the end of the second quarter, Tilmicosin prices appeared to have reached a short-term bottom. Major manufacturers subsequently adjusted quotations, low-priced market supplies became less available, and downstream purchasing activity began to recover.

During the third quarter, several macrolide APIs showed signs of price recovery. Tilmicosin gradually stabilized around RMB 330/kg, while Tylosin Tartrate showed a relatively firm month-by-month upward trend.

These market movements were influenced by several factors, including environmental compliance measures, production adjustments and supply-side management.

At the same time, centralized procurement and short-term order locking by large livestock groups and formulation manufacturers can have a significant effect on short-term supply-demand conditions.

When procurement becomes highly concentrated, the purchasing schedule of a small number of large customers can influence the short-term balance of a particular product.

Large-scale stocking programs can create temporary demand surges, while a subsequent inventory-consumption period can reduce replenishment demand.

This demand-cycle characteristic is becoming an important factor to consider when analyzing veterinary API market fluctuations in an increasingly concentrated livestock industry.

Two Development Paths for API Manufacturers

As procurement volumes become increasingly concentrated among large livestock groups, veterinary API manufacturers are exploring different development strategies.

One approach is to establish deeper and longer-term relationships with large livestock groups and major veterinary pharmaceutical companies.

The cooperation between Muyuan and companies such as China Animal Husbandry Group and Lianbang Animal Health illustrates the increasing connection between livestock producers, veterinary pharmaceutical companies and upstream manufacturing resources.

For API manufacturers, becoming part of a major livestock group's supply chain can provide more stable orders and improve capacity utilization. At the same time, suppliers must meet stricter requirements regarding pricing, quality, delivery and supply assurance.

Another approach is to strengthen product differentiation and technological capabilities.

When conventional products face strong price competition, differentiated products, internal production of key intermediates and integration between APIs and finished formulations can provide manufacturers with greater flexibility in managing costs and product portfolios.

Sito Bio-Tech reported a 157.37% year-on-year increase in attributable net profit in the first half of 2026. Neomycin Sulfate sales reached a record high for the same period, while new Tylosin and Tylvalosin products were also launched.

By contrast, Guobang Pharma shipped more than 2,500 tonnes of Florfenicol during the first half of the year, but its overall attributable net profit declined by 25.07%.

These contrasting results demonstrate that higher product sales do not necessarily translate directly into higher profitability. Under increasing market competition, production scale needs to be supported by cost control, product differentiation and supply-chain integration.

Large-Scale Farming Is Reshaping the API Supply Chain

Large-scale livestock farming is not a new trend, but its influence on the veterinary API industry is becoming increasingly significant.

As procurement shifts from a large number of fragmented farms toward major livestock groups, veterinary drug purchasing is becoming more centralized, standardized and increasingly oriented toward long-term supply relationships.

This change is also forcing API manufacturers to reassess their competitive capabilities.

For large livestock groups, suppliers are expected to provide not only competitive pricing, but also stable production capacity, consistent product quality, complete quality documentation and reliable delivery.

For veterinary API manufacturers, future competition is increasingly likely to focus on three core capabilities: quality systems, product portfolio depth and cost control.

Quality systems determine whether a manufacturer can qualify for the supply chains of large customers. A diversified product portfolio can help reduce exposure to price fluctuations in individual products. Cost control determines whether a manufacturer can maintain sustainable operations in an environment characterized by centralized procurement and pricing pressure.

The expansion of large-scale livestock farming is therefore gradually driving a structural adjustment in China's veterinary API industry.

The shift from fragmented to centralized procurement, from price-focused purchasing toward comprehensive supplier evaluation, and from single-product competition toward technology and supply-chain capabilities is increasingly being transmitted from livestock producers to API manufacturers.

For veterinary API companies, the future competitive question is no longer simply whether a product can be sold. Increasingly, it is whether the manufacturer can become a stable, reliable and long-term supply-chain partner for large livestock and veterinary pharmaceutical companies.