There are five major problems in China's raw material drug exports

Business Club March 14th News China is a big country in the production and export of bulk drugs, but structural defects in export products are more serious, and traditional price advantages are gradually losing. In general, the following problems exist in the current export of bulk drugs in China:

First, the production capacity of some large-scale varieties is cyclically oversupply, and the price fluctuations are relatively large. Most of the APIs produced in China are old and have low added value. Taking 2010 export statistics as an example, out of the 223 coded commodities exported, the average price exceeds 100 US dollars/kg, 27 types, accounting for 12.11%, but the export volume accounted for only 5.59% of the total export volume of all APIs. 47% of API varieties have an average export price of less than US$10/kg. It can be seen that the structural defects of raw materials in China are relatively serious, and the proportion of high-end raw material drugs is too low. Many raw material drug manufacturers are playing at the low-end industrial chain, and the homogeneity at low levels is serious. As a result, low-price competition has become increasingly fierce. What is even more worrying is that some companies have been eager for quick success and profits. They have seen blindly launched or expanded production of any product whose export prices have risen. They have quickly caused the market to seriously oversupply and have fallen back into the quagmire of vicious competition. Such as penicillin industrial salt, VC and other large varieties are the same. This vicious circle of cyclical and vicious competition has created a diarrhea in China's bulk pharmaceutical industry, which has consumed many important resources and has greatly depleted the vitality of the company, which has seriously hampered the healthy development of the raw material medicine industry.

The second is that the cost increase is more difficult to pass on to importers. China's raw material medicine has always been known for its low price and good quality, and the price advantage formed by low cost is the largest and traditional competitive advantage in entering the international market. However, this traditional advantage is gradually losing. In 2010, the company’s production and operating costs increased significantly. First, the improvement of environmental standards forced some companies to move out of the developed coastal regions, increasing the cost of resettling enterprises, and increasing the input costs of enterprises that have adapted environmental protection facilities on the spot. , And it also requires higher maintenance costs each year; followed by the increase in labor costs. After the implementation of the new labor contract law, the cost of labor for some companies has increased by 20% to 30%, and the "labor shortage" that occurs everywhere has increased. Big increase in the cost of labor for SMEs; third, rising prices of raw materials, rising costs of coal, water, oil, electricity, transportation, etc., resulting in high production costs, but not only the export prices of many products have not increased synchronously, but also There is a drop. Many export companies stated that only 30% to 50% of the rising costs can be shared by customers through communication, and most companies need to digest themselves through technological transformation, strengthening management, or even sacrificing profits. This is a great pressure.

Third, the outlook for export tax rebates is not optimistic, and the competitive advantage has weakened. Export tax rebates are an important promotion measure for the country's export trade. However, with the gradual deepening of policies such as low-carbon and environmental protection, the prospects for export tax rebates for APIs are becoming increasingly less optimistic. Since many APIs fall under the category of “two high-quality products”, the export tax rebate rate has been reduced from 13% to 5%, directly affecting the export prices of APIs. Although in the context of the international financial crisis, the export tax rebate rate for most products rose back to 9%, and some products returned to 11%, but it is difficult to restore to the level of 13% to 15%. Although biopharmaceuticals are a key development area in the country, some of the APIs are also high-tech and high-value-added products. However, since most API codes are comprehensive codes, it is very important to increase the export tax rebate rates for these products. difficult. In recent years, there have been more and more disputes over the classification of export declaration codes for some products. Because the export tax rebate rate for different codes differs by 6 percentage points, the impact of different classification results on enterprises is also very large. The reduction in the export tax rebate rate puts some of our products at a disadvantage in competition with Indian companies.

Fourth, there is a tendency for the renminbi to appreciate and the operating risks are relatively high. The pressure of appreciation of the renminbi has always been a sharp sword that hangs on the head of export companies. On February 10, the exchange rate of the renminbi against the US dollar rose to 6.5849, a record high since the exchange reform. At present, the Western countries led by the United States are still exerting pressure on the appreciation of the renminbi, and the renminbi still has a tendency to appreciate. With respect to the profit margin of foreign trade companies of about 3%, and taking into account the devaluation factors of most countries since the financial crisis, the sharp appreciation of the renminbi will be devastating to enterprises. The expectation of the appreciation of the renminbi even affects the willingness of companies to sign their orders. Concerns about exchange rate changes have a direct impact on the development of the raw material drug export trade.

Fifth, the industrial chain has not been extended enough, and there is a clear gap in the competition with India. India is the biggest competitor of China's bulk drug exports. Generally speaking, Chinese bulk drugs have an advantage over India in terms of export volume and some large varieties. However, in terms of downstream product competition, India is clearly dominant. In 2010, the average price of raw materials imported from China by India exceeded that of Europe and the United States, reflecting India’s increasing efforts in the downstream products or brand quality of APIs. The gap between Chinese and Indian companies in this area is likely to widen. Because India has been ahead of the Chinese enterprises in the degree of internationalization of enterprises, access to high-end market quality certification, and the development of pharmaceutical preparation markets in Europe, America, and Africa, my company will become a raw material for Indian companies if it does not pay attention to the development of raw material drug industry chain and high-end market. Drug factory danger.