Jinan Zhuocheng Bio-Tech Co., Ltd.

China’s veterinary pharmaceutical industry is undergoing a profound transformation. In 2026, the market is expected to exceed RMB 92 billion, with chemical veterinary drugs continuing to account for the largest share and remaining the core segment of the industry. Although the chemical veterinary drug market is large, it is also highly homogeneous and price-competitive, characterized by high sales volumes, low unit prices, and relatively low margins.

Against this increasingly competitive backdrop, a number of leading chemical veterinary pharmaceutical companies are widening their advantage through API capabilities, production scale, cost control, and technological barriers. The competitive landscape is gradually shifting from simple price competition toward comprehensive capabilities across manufacturing, quality, technology, and supply chains.

China’s veterinary pharmaceutical market has maintained relatively stable demand. The market grew from approximately RMB 62.1 billion in 2020 to RMB 69.65 billion in 2023 and is expected to exceed RMB 92 billion in 2026.

From a product perspective, chemical veterinary drugs occupy the largest market share and remain the mainstay of the industry. Veterinary biological products have higher technical barriers and greater value per product, particularly in the prevention and control of major animal diseases. Traditional Chinese veterinary medicine serves as a green and relatively safe complementary segment, with stable demand in livestock farming and the companion animal market.

In terms of regional distribution, Shandong and Henan remain the leading provinces, together accounting for approximately 28.6% of China’s veterinary pharmaceutical enterprises. Shanxi, Sichuan, Jiangsu, Hebei, and Guangdong form the next major group. From 2020 to 2024, Hubei, Shanxi, Zhejiang, Guangdong, and Hunan recorded relatively rapid growth in the number of enterprises, while Henan, Hebei, and Jiangxi experienced declines.

Chemical veterinary drugs mainly include antimicrobials, antiparasitic drugs, antipyretic and analgesic drugs, and other categories. Common dosage forms include premixes, injections, and soluble powders. Compared with biological products, chemical veterinary drugs generally have lower entry barriers, resulting in a large number of manufacturers and intense competition.

The implementation of updated veterinary GMP requirements has accelerated the exit of non-compliant companies. At the same time, the increasing concentration of downstream livestock production is putting greater pressure on upstream suppliers in terms of quality, cost, supply stability, and compliance. Companies without sufficient production scale or cost-control capabilities are facing increasingly limited room for development.

Among the major players, Lukang Pharmaceutical has developed an integrated API and finished-formulation business. Its capabilities include microbial fermentation and products such as tylosin and tilmicosin. Through industrial relocation, digitalization, and production optimization, the company is working to improve efficiency and reduce energy and hazardous-waste costs, while expanding its R&D activities into areas such as synthetic biology, semi-synthetic optimization, and advanced formulations.

Jinhe Biotechnology (002688) is one of the world's major producers of veterinary chlortetracycline premixes, with an annual production capacity of approximately 115,000 tonnes and an estimated global market share of 60–70%. Its competitive advantages include fermentation technology, high-yield strains, long-term FDA compliance experience, and access to relatively cost-efficient raw materials and energy resources in Inner Mongolia. Overseas business accounted for 39.28% of its revenue in the first half of 2026, while the company is also expanding its manufacturing presence in the United States.

Other notable companies in China's chemical veterinary pharmaceutical sector include Qilu Animal Health Products, Hebei Yuanzheng Pharmaceutical, Huisheng Bio-Tech (300871), Zhengda Bio-Technology (03839.HK), Lianbang Animal Health, Aimeikejian, and Shengli Biology. These companies are strengthening their positions through different combinations of API manufacturing, finished formulations, fermentation technology, R&D capabilities, and production scale.

Looking ahead, three trends are becoming increasingly clear. First, API manufacturers are moving further downstream into finished formulations, with companies such as Lukang Pharmaceutical, Jinhe Biotechnology, and Qilu developing integrated API-plus-formulation business models. Second, industry consolidation is accelerating as GMP compliance, environmental requirements, and production efficiency become increasingly important. Companies with insufficient scale, technology, or compliance capabilities are likely to face greater pressure.

Third, overseas expansion is becoming an increasingly important growth driver. Chinese veterinary pharmaceutical manufacturers continue to benefit from competitive production costs and established manufacturing capabilities. Leading companies are strengthening their international registrations, overseas production capacity, and global supply chains to compete more directly in international markets.

Overall, China’s chemical veterinary pharmaceutical sector remains a highly competitive market, but the rules of competition are changing. Cost advantages alone are becoming insufficient. Manufacturing scale, API capabilities, product quality, regulatory compliance, technological development, and international supply-chain capabilities are becoming increasingly important.

As market consolidation continues, companies are likely to follow two main paths: either focus deeply on a specific product or niche, building strong technological and cost advantages, or develop an integrated business model covering APIs, formulations, manufacturing, and international markets. The competitive space for companies positioned in the middle is gradually becoming narrower.