As China’s heating
season has approached, the government is taking actions to counter the higher
air pollution caused by heating processes. This affects especially the
pharmaceutical industry in Northern China, which belongs to one of the highest
polluting industries in the country. Reduced supply and higher prices are
likely to follow.
Enterprises
which are buying pharmaceutical products from China should inform themselves if
their suppliers are affected by the production limitations in the heating season
2017/18 in China. As a result, the supply from China might be limited and
prices could climb to a higher level when inventories are getting out of stock.
The
heating season in the northern part of China is traditionally ranging from
November to March. Hence, in this season, many high-polluting industries are
forced to suspend their production from the middle of November 2017 to the
middle of March 2018, in order to counter the high pollution caused already by
the heaters. Many enterprises are not allowed or only partly allowed to produce
drugs and pharmaceutical products for about 4 months in total, which is one
quarter of the year.
The
government emphasizes the importance, urgency and difficulty of atmospheric
pollution control, especially in the big cities in the Northern parts of China.
All in all, 28 cities will be affected by the suspensions, covering hundreds of
pharmaceutical enterprises which are located in the affected regions. Beijing
has announced to suspend the production of many polluting industries, like
steel, coal, agrochemicals and more, but each industry is treated differently,
based on the necessary of the products for the population and industry as well
as in the level of pollution.
For
the pharmaceutical industry, the government has published an announcement in
early November, that states the local authorities in China’s northern provinces
and cities should decide which productions are going to be suspended, the
duration of the suspension, and the depth of the suspension for pharmaceutical
enterprises.
According
to the announcement, active pharmaceutical ingredient (API) production in
China’s northern regions must be suspended if volatile organic compounds
(VOCs), are discharged. Notably, China is a major API-producing country, and
has the highest output and capacity of fermentation-type drugs in the world,
according to market intelligence form CCM. API production generates large
amounts of the three waste types waste gas, wastewater, and industrial waste,
and therefore causes serious pollution.
What’s
more, it is to be expected that overseas mergers and acquisitions by Chinese
enterprises will become more frequent and orderly in the coming year, despite a
drop this year. China’s enterprises wrapped up 572 outbound deals worth USD97.7
billion from H1 to H3 2017, down 39% in value from a year ago. In volume terms,
activity was down 15% year on year. After skyrocketing growth in 2016, the
pace of growth over the first three quarters of 2017 followed a more rational
pattern.
About CCM
CCM
is China’s market intelligence provider for the industries of agriculture,
chemicals, and food & feed.
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