Why do the prices of raw materials continue to rise?

Recently, spendedge, a well-known procurement intelligent solution provider, released a procurement intelligence report on the global API market, which provides an in-depth overview of the analysis of bulk drug raw material expenditure and insights on procurement pricing in different regions According to businesswire, factors such as volatile crude oil prices, increasing regulation and a lack of innovative pharmaceutical formulations will control the price trend of most pharmaceutical raw materials and lead to potential price increases in the market However, consumers' preference for drugs composed of natural ingredients with less side effects will be conducive to the growth of expenditure in this market Governments in developing countries are actively improving the existing health care system, which will have a significant impact on consumption growth in the global API market Category spending is expected to grow by more than $112 billion in 2018-2023 According to the source, APIs can be divided into two categories: chemical synthetic drugs and natural chemical drugs Chemical synthetic drugs can be divided into inorganic synthetic drugs and organic synthetic drugs Inorganic synthetic drugs are inorganic compounds (very few are elements), such as aluminum hydroxide and magnesium trisilicate used to treat gastric and duodenal ulcer; organic synthetic drugs are mainly made of basic organic chemical raw materials through a series of organic chemical reactions (such as aspirin, chloramphenicol, caffeine, etc.); according to their sources, natural chemical drugs can also be divided into biochemical drugs and planting There are two kinds of physicochemical drugs Antibiotics are generally produced by microbial fermentation and belong to the category of biochemistry In recent years, a variety of semi synthetic antibiotics are the products of combination of biological synthesis and chemical synthesis Among APIs, the proportion of varieties, output and output value of organic synthetic drugs is the largest, which is the main pillar of the chemical pharmaceutical industry The quality of API determines the quality of preparation, so its quality standard is very strict All countries in the world have formulated strict national pharmacopoeia standards and quality control methods for API widely used Most APIs have the characteristics of low solubility and good stability under physiological conditions Due to the lack of pharmaceutical preparations with better solubility, buyers are unable to meet the growing market demand for innovative and better drugs The top three API price trend reports that affect the total cost of ownership of the buyer in the market indicate that the price of bulk drug raw material market will be driven by factors that have a negative impact on the purchasing situation of the market during the growth period There is no immediate remedy for these consumer accelerators However, an in-depth understanding of regional price trends and supplier cost structures will help buyers identify areas where they can optimize their spending in the bulk pharmaceutical raw materials market The main factors driving the price rise of bulk drug raw materials are: shortage of supply, rising crude oil price, and soaring research and development costs of bulk drug raw material suppliers According to domestic news in recent years, the shortage and supply of domestic drugs have also attracted market attention for many times Hospitals usually encounter the phenomenon of shortage of low-cost drugs commonly used in clinical practice Sometimes some drugs can't be bought because the factory would rather store them than deliver them and wait for price adjustment According to reports, Cediland, a cardiotonic in cardiology department, was out of stock for a long time due to the rising price of raw materials, and then the supply was stable after the price was raised In addition, the supply of metronidazole suppository and indomethacin suppository is not stable recently Zeng Yixin, deputy director of the national health and Health Commission, said that the number of drugs in absolute shortage since last year was small The shortage of drugs was mainly caused by the reduction of market supply or structural imbalance of supply, imperfect policies, monopoly of some APIs, inadequate distribution and other reasons The crude oil price also affects the API According to the latest news of phoenix.com, 21 oil price adjustments have been made since 2019, including 11 rises, 7 falls and 3 strandings International oil prices rose on October 25, while light crude oil futures for December delivery on the New York Mercantile Exchange rose $0.43 to close at $56.66 a barrel, up 0.76% London Brent crude oil futures for December delivery rose $0.35 to close at $62.02 a barrel, up 0.57% The API price trend report states that the global bulk drug raw material market is facing a severe supply shortage due to the shutdown of production plants in key production areas According to the analysis of the expenditure of bulk drug raw materials, such tight supply and rising demand will lead to a substantial increase in the price of bulk drug raw materials The rise of crude oil price will have a chain reaction to the purchase expenditure of bulk drug raw material market Rising crude oil prices will force solvent suppliers to raise the prices of hydrocarbons and oxygenated solvents used to produce pharmaceutical raw materials Higher crude oil prices will also lead to higher intermediate prices, which will lead to higher operating costs for suppliers Due to the increase of R & D cost of suppliers, the purchase cost will expand They are investing in new drugs or developing innovative technologies for manufacturing / business processes The increasing purchase expenditure has seriously avoided the buyer's return on investment The acceleration of various expenditures will further increase this expenditure Most countries that are regarded as the manufacturing center of bulk drug raw materials are prone to frequent disruption of supply base, leading to serious supply tension in the global bulk drug raw materials market Inventory cost is another major cost component that drives the buyer's spending In order to cope with these challenges, API suppliers' participation in inventory planning will reduce the cost of inventory holding In demand forecasting, the purchaser should seek the help of the supplier to determine the quantity to be ordered and kept, which will play an important role in solving supply shortage and controlling storage cost The main regional report of API market also points out that the growing demand for biological products and the measures taken by the government to strengthen the medical infrastructure in various regions will mainly contribute to the growth of expenditure in bulk drug raw material market in the forecast period Nowadays, with the rapid development of medical technology, many countries are facing the problems of population growth and aging, people's awareness of disease prevention and health care, and the country's efforts to improve medical security and other issues, all of which make the global drug market show a trend of continuous growth According to the statistics of IMS Health, from 2010 to 2015, the total global drug sales increased from US $793.6 billion to US $1034.5 billion, with an average compound annual growth rate of about 5.4%, higher than the global economic growth rate in the same period, and it is predicted that the average compound annual growth rate of global drug sales from 2015 to 2019 will reach 4% - 5% Due to the gradual expiration of patent drugs and the difficulty of R & D, the growth rate of global drug market has declined However, the rapid development of drug market in developing countries and the rapid increase of the number of generic drugs will continue to drive the global drug market to maintain rapid development The Asia Pacific region will achieve the highest demand growth in the forecast period due to the growing drug sales in India, Malaysia, China, South Korea and Indonesia The increase in sales is due to the initiatives of the governments of these countries to improve their health infrastructure by providing several health insurance schemes According to IMS statistics, during the period of 2010-2014, the sales share of the pharmaceutical market in emerging countries such as China, Brazil, India and Russia increased gradually; among them, the market share in China increased from 8% to 11%; at the same time, the market share of the pharmaceutical market in developed countries and regions such as the United States, Europe and Japan decreased year by year Increased demand for biologics and biosimilars to treat chronic diseases in North America will drive spending growth in the region's bulk pharmaceutical raw materials market Suppliers in North America are increasing their investment in biosimilars through the use of recombinant DNA technology, which is expected to contribute to spending growth in the region's API market According to the statistics of price supervision and Competition Bureau of national development and Reform Commission in 2017, China can produce more than 1500 kinds of APIs, with a total output of million tons and an export volume of more than 60% It has become the world's second largest producer and largest exporter of APIs after the United States In recent years, with the increasing number of patented drugs with patent expiration, the variety and quantity of generic drugs are also rising rapidly, which brings huge market opportunities for API market, and the output of API is growing At the same time, due to the increase of production cost and environmental protection cost pressure in Europe and America, as well as the improvement of process technology, production quality and drug market registration and certification capacity of API manufacturers in China, a large number of API enterprises have accelerated their transfer to China, and the production scale of API industry in China is constantly increasing According to statistics, in 2017, the total output of raw chemicals in China reached 3.478 million tons, a year-on-year increase of 1.6% Generally speaking, the global crude oil price has been on the rise Moreover, due to the unstable market, the suppliers hold a wait-and-see attitude, and the price of API will be affected more or less Reference sources: 1 Global bulk drugrawmaterialsmarket procurementintelligent report 2 Budget support, remediation of API monopoly, and the proposal of saying goodbye to "shortage" of short drugs 3 Overview of API industry development 4 The oil price has been adjusted by more than half, and it is estimated that the probability of increase is high 5 China has become the world's second largest producer of APIs and the largest exporter of penicillin after the United States It states that: this view only represents the author, not the position of drug intelligence network Welcome to exchange and supplement in the message area; if you need to reprint, please be sure to indicate the author and source of the article.