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Shi Si Yao accelerates the high-quality development of active pharmaceutical ingredients and moves toward becoming a leading API manufacturer.

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Time：2022-05-23

Against the backdrop of implementing the country’s new development philosophy and accelerating the transition from a large pharmaceutical producer to a powerful pharmaceutical nation, China’s top 100 pharmaceutical enterprise, Shijiazhuang Fourth Pharmaceutical Group (referred to as “Shijiazhuang Fourth Pharma”), is vigorously pursuing a “API + Finished Dosage Form” development strategy. Through strategic capital partnerships, acquisitions, and restructuring, the company is actively expanding its upstream and downstream industrial chains, enhancing its competitiveness in both domestic and international markets, and injecting fresh momentum into the accelerated development of its API business segment. A series of significant initiatives are propelling Shijiazhuang Fourth Pharmaceutical Group toward its goal of becoming a leading API manufacturer.

Shi Si Yao accelerates the high-quality development of active pharmaceutical ingredients and moves toward becoming a leading API manufacturer.

The report of the 19th National Congress of the Communist Party of China pointed out that China’s economy has shifted from a stage of high-speed growth to a stage of high-quality development. In this new era and under this new development paradigm, how to accelerate the transformation and achieve high-quality development is a crucial issue that all sectors must pay close attention to—and urgently address—in the current period and for the foreseeable future. Realizing the mission of becoming a powerful pharmaceutical nation and speeding up the process of high-quality industrial development are the dominant themes of China’s pharmaceutical economy during the 14th Five-Year Plan period.

Against the backdrop of implementing the country’s new development philosophy and accelerating the transition from a major pharmaceutical producer to a powerful pharmaceutical nation, China’s leading pharmaceutical enterprise, Shijiazhuang No.4 Pharmaceutical Group (referred to as “Shijiazhuang No.4 Pharma”), is vigorously pursuing a “API + Finished Dosage Form” development strategy. Through strategic capital partnerships, acquisitions, and restructuring, the company is actively expanding its upstream and downstream industrial chains, enhancing its competitiveness in both domestic and international markets, and injecting fresh momentum into the accelerated development of its API business segment. A series of significant initiatives are propelling Shijiazhuang No.4 Pharma toward its goal of becoming a leading API manufacturer.

The “combined approach” strengthens production capacity building and sets 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,” clearly outlining measures—including accelerating technological innovation and upgrading, promoting green and low-carbon development, adjusting industrial layout, and advancing internationalization—to achieve, by 2025, the development of a batch of high-value-added, high-growth products, breakthroughs in a number of green and low-carbon technologies and equipment, the cultivation of a group of leading enterprises with international competitiveness, and the creation of several industry clusters and production bases with global influence. As a result, the API industry will see significant improvements in innovative development and advanced manufacturing levels, markedly enhanced capabilities for green and low-carbon development, and substantially strengthened resilience of the supply system, providing robust support for the development of the pharmaceutical industry and forging distinctive competitive advantages for international cooperation.

“Seizing the momentum of the times and pursuing a sound industrial path”—this is the approach advocated by Su Xuejun, Chairman of Shijiazhuang Fourth Pharmaceutical Group. To enrich and extend the industrial chain and strengthen its portfolio of distinctive, high-value-added active pharmaceutical ingredients, Shijiazhuang Fourth Pharmaceutical Group continues to implement its “One Body, Two Wings” development strategy: “with formulations as the core and APIs and packaging materials as the two supporting wings.” This strategy also reflects Shijiazhuang Fourth Pharmaceutical’s proactive alignment with national policies, continuously adjusting its strategies, capabilities, and resources to adapt to evolving circumstances.

It is understood that Hebei Guangxiang Pharmaceutical, with an investment of 3 billion yuan, serves as the origin for Shijiazhuang Siyao Group’s strategy of building an “active pharmaceutical ingredient (API) + finished dosage form” business model, accelerating industrial transformation, and strengthening and extending the supply chain. The company aims to establish itself as a new high ground for innovative, high-quality development of APIs in China and make it a core pillar of industrial growth.

Currently, Hebei Guangxiang Pharmaceutical relies on bulk active pharmaceutical ingredients such as caffeine, metronidazole, theophylline, aminophylline, and nifedipine, while also focusing on the production, R&D, and export of dozens of high-value-added specialty APIs—including arbidol, pentoxifylline, aggaplant, rosuvastatin calcium, and pitavastatin calcium—thus becoming a major domestic industrial base for API manufacturing. According to relevant data, products from Shijiazhuang Fourth Pharmaceutical Group, such as caffeine, azithromycin, and nifedipine, have already entered the top tier in terms of domestic production and sales volume. Moreover, the market influence of newly launched APIs like epalrestat, terbutaline sulfate, and dexmedetomidine hydrochloride is steadily growing.

As a national demonstration enterprise for technological innovation, Shijiazhuang Sihua Pharmaceutical Group leverages high-level R&D platforms—including the National Enterprise Technology Center, the National-Local Joint Engineering Laboratory, and the Postdoctoral Research Workstation—to collaborate with prestigious research institutions such as Tsinghua University and Tianjin University in multiple fields, including anti-infective, psychiatric, respiratory, and diabetes-related active pharmaceutical ingredients. The group has established an independent innovation system centered on the integration of industry, academia, research, and application, as well as on technology platform development and new product R&D, thereby laying a solid foundation for achieving innovative product development.

Leveraging the new opportunities created by Shijiazhuang Sihua Pharmaceutical Group’s acquisition of 100% equity in Cangzhou Lingang Youyi Chemical—China’s leading producer of methylamine-based products—Guangxiang Pharmaceutical enjoyed a strong start to its caffeine production and sales in 2022. In the first quarter, caffeine exports accounted for more than 30% of the country’s total caffeine exports. Meanwhile, Shijiazhuang Sihua Pharmaceutical Group is also accelerating its R&D efficiency for new products. Following the approval of Bunaosel, its first novel antipsychotic drug, six additional new products—including pentoxifylline, ornidazole, and levornidazole—are set to receive regulatory approval and enter the market soon. The “specialized, refined, distinctive, and innovative” and “little giant” roles played by active pharmaceutical ingredients are becoming increasingly evident and demonstrative.

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 sector of the industrial chain.” Methylamine is one of the primary raw materials used in caffeine production. By acquiring Cangzhou Lingang Youyi Chemical, we have not only reduced the cost of caffeine production but also effectively addressed the challenges of integrating upstream and downstream links in the production chain and managing supply adjustments, making the entire industrial chain more complete and smoother.

By transforming the Friendship business into a subsidiary, we will leverage the technological and management strengths of Shijiazhuang Four Pharmaceutical Group to further pursue vertical integration of resources, optimize the integrated layout of production capacity, enhance synergies and complementarities across the industrial chain, expand economies of scale, and solidify our cost and competitive advantages in the active pharmaceutical ingredient (API) sector. While ensuring supply within the group, we will also meet broader market demands and drive the API business segment to grow stronger and larger.

Driven by innovation, we are catalyzing a “transformation” of industries and confidently stepping forward into a new journey.

Data show that during the 13th Five-Year Plan period, key economic indicators in the active pharmaceutical ingredient (API) industry experienced significant fluctuations. The growth rates of total profits and export value exceeded those of main business revenue and export volume. In 2018 and 2019, both main business revenue and output of APIs declined; however, from 2019 to 2020, total profits from core business activities rebounded, reflecting a reversal between volume and price trends and indicating enhanced profitability. From an export perspective, despite production restrictions and reductions in API output, export value not only remained stable but even increased. The unit export price rose, and the added value of products improved, suggesting that the global pharmaceutical supply chain exhibits a strong reliance on China’s APIs.

In the long term, thanks to its well-established industrial base, stringent patent protection, and economies of scale, China’s API industry will continue to rise in global prominence. At the same time, as technological upgrades shift toward high-barrier, high-margin products and the industrial chain extends downstream, China’s API industry will further enhance its competitive edge in the future. Therefore, Shijiazhuang Fourth Group is proactively preparing itself to seize market opportunities and strengthen its API business.

Currently, Shijiazhuang Sihua Pharmaceutical Group has 10 subsidiaries with total assets reaching 7.4 billion yuan, and has established a comprehensive industrial chain covering the entire value chain—from specialized 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 subsidiaries, Hebei Guolong Pharmaceutical is a large-scale pharmaceutical enterprise primarily engaged in the production of specialty APIs, built by Shijiazhuang Sihua Pharmaceutical Group in the Shijiazhuang Economic Development Zone as part of its “API + Formulation” development strategy. Faced with new market conditions, Hebei Guolong Pharmaceutical places innovation-driven development at the core of its strategy and is accelerating the construction of an integrated production, research, education, and application innovation base centered on “specialty APIs + formulations.”

It is reported that the Hebei Guolong Pharmaceutical New Formulation and Biopharmaceutical Industrial Park project—investing 2 billion yuan—is currently being vigorously advanced. This project, spearheaded by Shijiazhuang Fourth Pharmaceutical Group, leverages the advantages of its location in a national-level economic development zone and its industrial agglomeration to benchmark against world-class pharmaceutical standards, thereby creating a high-standard, high-quality, and modern pharmaceutical industrial park with an international outlook. The project is fully committed to building a distinctive, environmentally friendly, safe, and highly efficient model green factory—a showcase facility that sets a new standard. It also serves as a strategic support project for Shijiazhuang Fourth Pharmaceutical Group during the 14th Five-Year Plan period, helping the company accelerate its transformation and upgrading, achieve leaps and bounds in development, and become a 20-billion-yuan enterprise. Additionally, it is listed as a key provincial, municipal, and district-level project.

Active pharmaceutical ingredients (APIs) are located upstream in the pharmaceutical industry chain. Due to the production process that requires the use of various organic solvents, the industry as a whole generates relatively high levels of “three wastes.” Against the backdrop of society-wide efforts toward green and low-carbon transformation and development, efficiency, environmental friendliness, and energy conservation have become inevitable trends. Su Xuejun emphasized: “We must adhere to a development philosophy that equally emphasizes green transformation and industrial upgrading, and strive to set a benchmark for high-quality development.” Shijiazhuang Fourth Pharmaceutical Group is conducting research centered on the independent R&D of specialty APIs and high-end APIs, as well as key technological innovations in API synthesis. The group is continuously accelerating the pace of developing new “API + formulation” products and further innovating API synthesis technologies, with a strong focus on enhancing quality standards and reducing consumption of materials, energy, and environmental resources.

We are accelerating the development of a tiered pipeline of active pharmaceutical ingredient (API) products and promoting industrial upgrading. While continuously refining and strengthening our traditional products, Shijiazhuang Fourth Pharmaceutical Group is strategically positioning its new product pipeline around its established strategy. “Grasping product innovation—the ‘crucial lever’—is the key to speeding up the company’s transformation and development,” said Su Xuejun. By staying attuned to market trends and achieving breakthroughs and overcoming existing bottlenecks, Shijiazhuang Fourth Pharmaceutical Group will take innovation-driven development as its breakthrough point, focusing intently on the research, development, and market deployment of high-value generic drug formulations and innovative medicines, thus ushering in a brand-new era of high-quality growth for the company.

Reprinted from: Pharmaceutical Economic Daily

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