Pharmaceutical intermediates are an important link in the pharmaceutical industry chain

Upstream are basic chemical raw materials, most of which are petrochemical products, such as acetylene, ethylene, propylene, butene and butadiene, toluene and xylene.

Pharmaceutical intermediates are subdivided into primary intermediates and advanced intermediates. Among them, primary intermediate suppliers can only provide simple intermediate production, and are at the front end of the industrial chain, with great competitive pressure and price pressure, so the price fluctuation of basic chemical raw materials has a greater impact on them.

The advanced intermediate supplier not only has a strong bargaining power for the primary supplier, but more importantly, because it undertakes the production of advanced intermediates with higher technical content, it maintains a closer relationship with multinational companies, so the fluctuation of raw material prices has less impact on it.

The middle reaches belong to the pharmaceutical fine chemical industry. Pharmaceutical intermediates manufacturers synthesize intermediates or raw pharmaceutical products, and sell the products in the form of chemical products to pharmaceutical companies, and pharmaceutical companies are refined and then sold as drugs.

Pharmaceutical intermediates include general and customized products, and according to the different stages of outsourcing service, the customized business model of intermediates can generally be divided into CRO (contract research and development outsourcing) and CMO (contract production outsourcing).

In the past, pharmaceutical intermediates mainly adopted the CMO business outsourcing model. Under the CMO model, pharmaceutical companies outsource production to a partner. The business chain therefore generally begins with specialized pharmaceutical raw materials. Industry companies need to purchase basic chemical raw materials and classify them into special pharmaceutical raw materials, and then gradually process them into starting materials for apis, cGMP intermediates, apis and preparations.

However, with pharmaceutical companies' requirements for cost control and efficiency improvement, simple production outsourcing services have been unable to meet the needs of enterprises. CDMO model (production research and development outsourcing) came into being. CDMO requires customized production enterprises to participate in the R&D process of customers, provide process improvement or optimization for customers, achieve high-quality large-scale production and reduce production costs. It has a higher profit margin than the CMO model.

The downstream is mainly the API production industry, and the API is in the upstream and downstream industry chain relationship with the preparation. Therefore, the consumer demand for downstream preparations will directly affect the demand for apis, which in turn will affect the demand for intermediates.

From the perspective of the entire industry chain, the current pharmaceutical intermediates are still in the growth period, the average gross profit margin is generally 15-20%, while the average gross profit margin of the raw material is 20-25%, and the average gross profit margin of the downstream pharmaceutical preparations is as high as 40-50%, obviously the gross profit margin of the more downstream part is significantly higher than the upstream part. Therefore, in the future, pharmaceutical intermediates enterprises can further extend the product chain by producing apis, increase the profit of products and improve the stability of sales.