API Market Challenges

Boris Jenniches, Head of Global marketing APIs and Standard Excipients at BASF SE, tells Pharmaceutical Technology Europe about the impact of the financial crisis on the API market.
Sep 01, 2011
Volume 23, Issue 9

How has the recent financial climate, coupled with rising energy costs, affected the market and prices of APIs?

The increasing cost of crucial manufacturing input factors, such as energy, raw materials and labour, have been a severe threat to less competitive producers. Many producers have had to reduce their base costs and increase their prices, which has made the market even more competitive. The increasingly volatile business environment has also led pharma companies to seek strong and sustainable partners.

In our experience, customers have clearly understood the need for price increases as they depend very much on the reliability and flexibility of a good producer. In the rapid upswing following the financial crisis, many producers were unable to scale up their production fast enough to cope with the sudden growth in demand. At our company, we collaborated with customers to optimise product flow and stock levels globally.

What implications do the emerging markets offer to Western API providers?

Pharma companies have expressed strategic interest in building their positions in emerging markets. We consider the emerging market as very important locations and drivers for business development. During the financial crisis, the dip in the emerging markets was much lower than that in the more established regions, and they were also the first ones back on the growth track. There is a rapidly growing demand in the emerging markets for APIs, however, and companies will need to ensure that they have sizeable capacities that can keep up with the demand.

We expect the growth in these regions to continue and we have expanded our presence accordingly. These regions are important for both the growth of our established products and new, innovative products.

When working in a well-established part of the API market how challenging is it to remain innovative and competitive?

Competitiveness is key in the market for well-established APIs. At our company, our strategy us to focus on the portfolio of APIs were we have a leading position in terms of size and cost position. For example, we are the world leader for Ibuprofene and we continue to optimise and expand our production in Bishop (US) to stay ahead of the competition in terms of quality and cost.

We have also developed products that help our customers to reduce their manufacturing costs. Our Ibuprofen DC85, for example, is a direct compressible formulation that allows for very high speeds in tabletting processes.

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