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Why is the price of APIs rising?

Why is the price of APIs rising?2019.11.05

Recently, SpendEdge, a well-known procurement intelligence solution provider, released a global raw material market procurement intelligence report, which provides an in-depth overview of bulk pharmaceutical raw material expenditure analysis, which can be used to obtain pricing insights in different regions.

Check top API manufacturers in OKCHEM:
Hunan Huari Pharmaceutical Co. ltd(citric acid, GMP)
Zhejiang Davi Pharmaceutical Co., Ltd (Methotrexate Sodium, ISO certified, GMP)
Taizhou Ian Trade Co.,Ltd (ISO Certified, GMP, DMF)
Hebei Guanlang Biotechnology Co., Ltd. (citric acid, potassium chloride)
Kaiping Genuine BiochemicalPharmaceutical Co., Ltd (Citicoline Sodium, GMP, KOSHER, HALAL)
According to BusinessWire, factors such as crude oil price volatility, regulatory expansion, rigorous and lack of innovative drug formulas will control the price movements of most pharmaceutical raw materials, leading to potential purchase price increases in the market. The government is actively improving the existing medical system, which will have a major impact on the growth of consumption in the global API market. It is expected that the category expenditure for this market will increase by more than $112 billion between 2018 and 2023.

The top three bulk drug price trends affecting the total cost of ownership of buyers in the market
The report indicates that prices in the bulk drug raw materials market will be driven by factors that have long-term negative effects on the purchasing situation in the market. There are currently no immediate remedies to counter these consumer accelerators. However, an in-depth understanding of price trends and supplier cost structures across regions will help buyers determine which areas can optimize their spending in the bulk drug raw materials market. The main factors driving the price increase of bulk pharmaceutical raw materials are: supply shortage, rising crude oil prices, and soaring R&D expenses of bulk pharmaceutical raw material suppliers.

API price trend

The report states that due to the suspension of production plants in key production areas, the global market for bulk pharmaceutical raw materials faces a serious supply shortage. According to the analysis of bulk pharmaceutical raw materials expenditure, such supply tightening and rising demand will lead to a sharp rise in the prices of bulk pharmaceutical raw materials. The rise in crude oil prices will have a ripple effect on the procurement of bulk pharmaceutical raw materials. Rising crude oil prices will force solvent suppliers to increase the price of hydrocarbons and oxygenated solvents used to produce pharmaceutical raw materials. Rising crude oil prices will also lead to higher prices for intermediate products, which will lead to an increase in operating costs for suppliers. Purchasing expenses will expand due to the increase in supplier R&D expenses. They are investing in new drugs or developing innovative technologies for manufacturing/business processes. Increasing purchase spending has largely evaded the buyer's return on investment. Acceleration of various expenditures will further increase this expenditure.
Major areas of the API market

In the Asia Pacific region, due to growing drug sales in countries such as India, Malaysia, China, South Korea and Indonesia, the Asia Pacific region will achieve the highest demand growth during the forecast period. The increase in sales is due to several health insurance plans offered by governments in these countries to improve their medical infrastructure. According to IMS statistics, during the period from 2010 to 2014, the market share of the pharmaceutical market represented by emerging countries such as China, Brazil, India and Russia increased gradually; the Chinese market grew fastest, and the market share increased by 8%. At 11%; at the same time, in the developed countries and regions represented by the United States, Europe and Japan, the pharmaceutical market share is declining year by year. The increased demand for biologics and biosimilars for the treatment of chronic diseases in North America will drive spending in the bulk pharmaceutical raw materials market in the region. Suppliers in North America are increasing their investment in biosimilars development through the use of recombinant DNA technology, which is expected to contribute to the growth of spending in the API market in the region.

In general, global crude oil prices have been on the rise, and because of the market instability, suppliers are holding a wait-and-see attitude, and the price of raw materials will be affected more or less.

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