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Shisi Pharmaceutical Accelerates High-Quality Development of Active Pharmaceutical Ingredients and Moves Toward Becoming a Leading API Manufacturer
Category:
TIME：2022-05-23
【SUMMARY】
Against the backdrop of implementing the nation’s new development philosophy and transitioning China from a major pharmaceutical producer to a leading pharmaceutical powerhouse, Shijiazhuang No.4 Pharmaceutical Group—one of China’s top 100 pharmaceutical companies (hereinafter referred to as “Shijiazhuang No.4”)—is vigorously pursuing a “API-plus-formulation” development strategy. Through strategic capital partnerships, acquisitions, and corporate restructuring, the company is actively expanding its upstream and downstream value chain, strengthening its competitiveness in both domestic and international markets, and injecting fresh momentum into the accelerated deployment and growth of its API business segment. A series of major initiatives are propelling Shijiazhuang No.4 Pharmaceutical Group toward its goal of becoming a leading API manufacturer.
The report to the 19th National Congress of the Communist Party of China pointed out that China’s economy has shifted from a phase of high-speed growth to one of high-quality development. In the new era and under the new development paradigm, how to accelerate transformation and achieve high-quality development has become a critical issue of our times that all sectors must pay close attention to and urgently address in the period ahead. Fulfilling the mission of building China into a powerhouse in pharmaceuticals and speeding up the process of high-quality industrial development will be the dominant theme of China’s pharmaceutical economy during the 14th Five-Year Plan period.
Against the backdrop of implementing the nation’s new development philosophy and transitioning from a major pharmaceutical producer to a leading pharmaceutical powerhouse, Shijiazhuang Sihua Pharmaceutical Group—one of China’s top 100 pharmaceutical companies (hereinafter referred to as “Shijiazhuang Sihua”)—is vigorously pursuing a “API-plus-formulation” development strategy. Through strategic capital partnerships, acquisitions, and corporate restructuring, the company is actively expanding its upstream and downstream value chain, strengthening its competitiveness in both domestic and international markets, and injecting fresh momentum into the accelerated deployment and growth of its API business segment. A series of significant initiatives are propelling Shijiazhuang Sihua toward its goal of becoming a leading API manufacturer.
“Combined Measures” Bolster Production Capacity Building and Establish a New Benchmark for High-Quality Development
Last year, the National Development and Reform Commission and the Ministry of Industry and Information Technology jointly issued the Implementation Plan for Promoting High-Quality Development of the Active Pharmaceutical Ingredient (API) Industry, outlining a series of measures to accelerate technological innovation and upgrading, advance green and low-carbon development, optimize industrial layout, and elevate internationalization. By 2025, the plan aims to develop a portfolio of high-value-added, high-growth APIs; achieve breakthroughs in green and low-carbon technologies and equipment; cultivate a group of leading enterprises with strong international competitiveness; and establish a number of industry clusters and production bases with global influence. These efforts will significantly enhance innovation-driven development and advanced manufacturing capabilities in the API sector, markedly strengthen its capacity for green and low-carbon development, and substantially bolster the resilience of the supply system, thereby providing robust support for the development of the pharmaceutical industry and forging distinctive competitive advantages for international cooperation and competition.
“Follow the overarching trends of the times and pursue the right path for industrial development.” According to Su Xuejun, Chairman of Shijiazhuang Sihua Pharmaceutical Group, in order to enrich and extend the industrial chain and strengthen its portfolio of specialty API products with distinctive competitive advantages, the group continues to implement its “One Body, Two Wings” development strategy—with finished dosage forms as the core and APIs and packaging materials as the two supporting wings. This approach reflects Shijiazhuang Sihua’s proactive alignment with national policies and its ongoing efforts to adjust its strategies, capabilities, and resources to adapt to changing circumstances.
According to reports, Hebei Guangxiang Pharmaceutical, built with an investment of RMB 3 billion, serves as the strategic hub for Shijiazhuang Sihua Pharmaceutical Group’s efforts to establish a “bulk pharmaceutical ingredients plus finished dosage forms” business model, accelerate industrial transformation, and strengthen and extend the industry value chain. The company’s goal is to develop it into a new high ground for innovative, high-quality development of bulk pharmaceutical ingredients in China, making it a core pillar of the group’s overall industrial growth.
Currently, Hebei Guangxiang Pharmaceutical leverages bulk active pharmaceutical ingredients such as caffeine, metronidazole, theophylline, aminophylline, and nifedipine as its core product base, while also focusing on the production, R&D, and export of dozens of high-value-added specialty APIs, including arbidol, pentoxifylline, argatroban, rosuvastatin calcium, and pitavastatin calcium. The company has thus established itself as a major domestic industrial-scale API manufacturing hub. According to relevant data, Shijiazhuang Sihua Pharmaceutical Group’s caffeine, azithromycin, and nifedipine have entered the top tier in terms of domestic production and sales volume, while the market influence of newly launched API products such as epalrestat, terbutaline sulfate, and dexmedetomidine hydrochloride is steadily growing.
As a national model enterprise for technological innovation, Shijiazhuang Sihua Pharmaceutical Group leverages high-level R&D platforms—including a national-level enterprise technology center, a national–local joint engineering laboratory, and a postdoctoral research workstation—to collaborate with leading research institutions such as Tsinghua University and Tianjin University across multiple therapeutic areas, including anti-infectives, psychotropic agents, respiratory drugs, and diabetes-related active pharmaceutical ingredients. Through these partnerships, the company has established an independent innovation system centered on industry–university–research–application collaboration and focused on building robust technology platforms and developing new products, thereby laying a solid foundation for innovative product development.
Leveraging the new opportunities created by Shijiazhuang Sihua Pharmaceutical Group’s acquisition of 100% equity in Cangzhou Lingang Youyi Chemical, a leading domestic producer of methylamine-based products, Guangxiang Pharmaceutical achieved a strong start in caffeine production and sales in 2022, with its first-quarter caffeine exports accounting for more than 30% of China’s total caffeine exports. Meanwhile, Shijiazhuang Sihua Pharmaceutical Group is accelerating the efficiency of new-product R&D; following the approval of the country’s first novel antipsychotic, buxanerine, six additional new products—including pentoxifylline, ornidazole, and levornidazole—are expected to receive regulatory approval and enter the market in the near future, further highlighting the exemplary role of the API business as a “specialized, refined, distinctive, and innovative” “little giant.”
Su Xuejun explained: “Acquiring upstream industries is aimed at accelerating the development of our active pharmaceutical ingredient (API) business segment, thereby strengthening our strategic positioning in the upstream API segment of the value chain.” Methylamine is one of the primary raw materials used in caffeine production; by acquiring Cangzhou Lingang Youyi Chemical, we have not only reduced caffeine production costs but also effectively addressed the coordination between upstream and downstream links in the production chain and enhanced supply management, making the entire value chain more integrated and efficient.
By transforming the business into a subsidiary under the Group, we will leverage Shijiazhuang Sihua Pharmaceutical’s group-level technological and managerial strengths to further pursue vertical resource integration, optimize the integrated layout of production capacity, enhance synergies and complementarities across the value chain, expand economies of scale, and consolidate our cost and competitive advantages in the API segment. In doing so, we will not only ensure supply within the Group but also meet broader market demand, thereby driving the growth and strengthening of the API business segment.
Driven by innovation, industries are undergoing a transformative evolution and confidently embarking on a new journey.
Data show that during the 13th Five-Year Plan period, key economic indicators for the active pharmaceutical ingredient (API) industry exhibited significant volatility, with total profits and export value growing at faster rates than main-business revenue and export volume, respectively. In 2018 and 2019, both main-business revenue and output of APIs declined; however, in 2019 and 2020, total main-business profits rebounded, reflecting a situation in which volume fell while prices rose, thereby enhancing profitability. With regard to exports, despite production restrictions and cuts, export value not only did not decline but actually increased, driven by higher unit export prices and greater product value-added, indicating that the global pharmaceutical supply chain remains highly dependent on China’s API sector.
In the long run, thanks to its well-established industrial foundation, robust patent protection, and economies of scale, China’s API industry will continue to strengthen its global standing. At the same time, technological upgrades will increasingly focus on high-barrier, high-margin products, and the industry chain will extend further downstream, thereby further enhancing China’s competitive advantages in the API sector. Accordingly, Shijiazhuang Fourth Group has been proactively preparing to seize market opportunities and expand its API business.
Currently, Shijiazhuang Sihua Pharmaceutical Group operates 10 subsidiaries with total assets of RMB 7.4 billion, having established a full-industry-chain business model that spans from specialty active pharmaceutical ingredients and novel dosage forms to innovative drugs, as well as the R&D, production, and application of pharmaceutical packaging materials. Among these, Hebei Guolong Pharmaceutical is a large-scale pharmaceutical enterprise built by Shijiazhuang Sihua Pharmaceutical Group in the Shijiazhuang Economic and Technological Development Zone under its “API-plus-formulation” development strategy, with a primary focus on the production of specialty APIs. In response to the evolving market landscape, Hebei Guolong Pharmaceutical has placed innovation at the core of its strategy and is accelerating the development of an integrated industry–university–research–application production innovation hub centered on “specialty APIs plus formulations.”
According to reports, the RMB 2 billion Hebei Guolong Pharmaceutical New-Formulation and Biopharmaceutical Industrial Park project is currently under vigorous construction. Leveraging the locational advantages and industrial clustering of the national-level economic development zone, this project is being developed by Shijiazhuang Sihua Pharmaceutical Group to meet world-class pharmaceutical standards, creating a high-standard, high-quality, and modern pharmaceutical industrial park with an international outlook. The goal is to build a model green factory that is distinctive, environmentally friendly and safe, and characterized by intensive operation and high efficiency—serving as both a strategic pillar for Shijiazhuang Sihua Pharmaceutical Group’s accelerated transformation and upgrading during the 14th Five-Year Plan period and a key provincial, municipal, and district-level project aimed at enabling the company to grow into a RMB 20 billion enterprise.
Active pharmaceutical ingredients (APIs) occupy the upstream segment of the pharmaceutical industry value chain; their production involves the use of numerous organic solvents, resulting in relatively high emissions of the “three wastes” across the sector. Against the backdrop of society-wide efforts to transition toward green and low-carbon development, efficiency, environmental protection, and energy conservation have become inevitable trends. Su Xuejun emphasized: “We must adhere to a development philosophy that gives equal weight to green transformation and industrial upgrading, and strive to establish benchmarks for high-quality development.” Shijiazhuang Sihua Pharmaceutical Group is conducting research focused on the independent R&D of specialty and high-end APIs, as well as on breakthrough technological innovations in API synthesis. The company is continuously accelerating the efficiency of new-product development in the “API-plus-formulation” model and stepping up innovation in API synthesis technologies, while placing particular emphasis on raising quality standards and reducing consumption of materials, energy, and environmental resources.
Accelerating the development of a tiered portfolio of active pharmaceutical ingredients and advancing industrial upgrading, Shijiazhuang Sihua Pharmaceutical Group is simultaneously refining and strengthening its traditional product lines while strategically building out a new pipeline of innovative products. “Seizing product innovation—the ‘key lever’—is the linchpin for accelerating the company’s transformation and growth,” said Su Xuejun. By aligning with emerging trends and breaking through existing constraints, the group will use innovation-driven development as its breakthrough point, focusing intently on the R&D and market launch of high-value-added generic formulations and innovative drugs, thereby ushering in a new era of robust, high-quality growth for Shijiazhuang Sihua Pharmaceutical Group.
Reprinted from: Pharmaceutical Economic Daily
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