"Blood" pollution control part of the raw material companies trapped in the survival crisis

In the face of local governments' successive introduction of strict regulations on environmental protection and the introduction of new regulations on pharmaceutical wastewater discharge, raw material drug companies have increased their input under the pressure of the policy, which has left the country with pollution. High equipment investment and operating costs have brought huge cost pressures. Some small raw material companies have lost their skills. The survival of the fittest in the industry is a foregone conclusion.
According to Yu Guanwen, senior consultant of the Pharmaceutical and Pharmaceutical Industry Association, the cost impact is not particularly large for those environmental protection advanced companies. For example, Zhejiang Hisun Pharmaceutical Co., Ltd. will respond to the new regulations and increase the total cost by 5%. For other large bulk drug companies, the total cost Increased by about 10%. The industry believes that for companies that have always ignored pollution control, a 10% increase in costs will be fatal.
“In order to cope with the pressure on environmental protection, the General Plant invested 100 million yuan to build a sewage treatment plant in 2002. It started construction in 2003 and was operated in 2004. It processes 30,000 tons of sewage every day and puts in more than 30 million operating costs each year. This year will also increase the purchase of more than 10 million equipment and pipe network transformation." Northeast Pharmaceutical Factory Environmental Protection, a person in charge told this reporter.
According to public information, there are a number of companies that are environmentally friendly in the industry. For instance, the environmental protection expenditure of the Shijiazhuang Group is as high as 350 million yuan, the investment in environmental protection of North China Pharmaceutical and Hisun Pharmaceutical is 200 million yuan, and the environmental protection operating expenses of Northeast Pharmaceutical, Lukang Pharmaceutical and Xinhua Pharmaceutical are as high as 30 million yuan. In sharp contrast to this, in the past two years, companies that have been suspended due to environmental protection have also been seen.
CITIC Securities analyst Luo Chunlei said that during the investigation, according to the forthcoming “Pollutant Industry Water Pollutant Emission Standards”, many small businesses simply couldn’t keep up the standards, and many large companies were also struggling. In accordance with the final standards in the regulations, many places even exceed the standards set by Western countries and the World Bank. She believes that in accordance with the new regulations, those ordinary enterprises with a single product investment will invest 230 billion yuan in production capacity, of which one hundred million yuan will be used for environmental protection. The key is high investment in fixed assets.
"The raw material drug companies will face two major difficulties in fund operation costs and technical problems in pollution control. Small, poorly-tolerated enterprises will be closed." Yu Guanwen pointed out.
Yu Mingde, executive vice president of the China Pharmaceutical Enterprise Management Association, told this reporter that it is sooner or later to propose standards, but the sooner the problem is raised, the more difficult it will be for the company to start. We must actively face the long-term interests. As long as companies are determined to increase their input, technology is not the biggest obstacle, because companies have already taken the lead and technologies are different. No matter what method is used, the route is different and the technology is different, but in the end The result is the same, and the cost will definitely increase. Forced enterprises to increase investment, strengthen management, improve the level of technology, and reduce costs. If it does not govern now, it will be a devastating blow to the enterprise when it is shut down or relocated.
Of course, the new regulations also have certain problems. On the one hand, there are too few varieties covered by the new standards, insufficient data collection, lack of effective ways for individual varieties of environmental protection, and unclear problems with advanced technologies; on the other hand, according to industry experts, the environmental indicators have been increased. The harder it is, because the ultimate control of environmental protection indicators comes from all aspects of production. The higher the index requirements, the greater the difficulty of deep processing, and the cost of the later environmental protection indicators is 3 to 5 times higher than before.
Yu Mingde suggested that large-scale facilities be established in places where production of chemical raw materials and intermediates is concentrated, and that a number of enterprises should jointly invest to achieve resource sharing and rapid compliance. In addition, special funds shall be raised to establish environmental protection funds, subsidies and rewards shall be given to outstanding enterprises, and penalties shall be perfected for backward enterprises with environmental protection. We hope to establish a pollution control mechanism at the enterprise level and with the government's secondary treatment. “The state should adopt preferential policies for high-quality enterprises and at the same time strengthen penalties. At present, the state is studying and formulating pollutant discharge taxes.” Yu Guanwen also suggested.
After the crisis, high-quality companies will follow the market's take-off. “The cost of sewage will multiply and the profit margin of products will shrink. Due to the limited discharge of pollutants, our production capacity will be difficult to release. To tell the truth, it is very difficult for us now!”, a large state-owned company Insiders of raw material companies complained to this reporter. In the short term, even if raw material companies with good control of emissions are faced with new regulations, they will not be much better, and even more important are those companies that have always ignored environmental protection.
In the time when thousands of troops have passed the single-wood bridge, a large number of vulnerable people will fall into the water. The high threshold of sewage will also make a number of companies shut down. “In the past, there were dozens of companies in the production of a variety of products, resulting in uneven products in the market, the new regulations will help increase industrial concentration.” Yu Guanwen, a senior consultant of the Chemical Pharmaceutical Industry Association pointed out.
"Some small businesses have decided that they cannot implement pollution control and they cannot do anything in the face of the status quo. Closing will be closed," said Yu Mingde, executive vice president of the Chinese Pharmaceutical Enterprise Management Association.
However, the elimination of a group of backward companies, it will take off a market, according to industry experts predict that last year, the chemical raw material pharmaceutical industry may accumulatively complete sales revenue of about 200 billion yuan, accumulative total profits of more than 12 billion yuan. At present, there are roughly 1,500 companies in the country that are mainly based on the production of APIs.
An expert on large-scale raw pharmaceutical companies, who did not wish to be identified, believes that after strict implementation of the new regulations, only a few of the sub-sectors in the API sector will survive. In this way, companies that rely partly on improving technology, increasing investment, improving management, and focusing on controlling costs will weather the difficulties and achieve a final victory. And after the difficult times may come sweet fruit - some companies will enjoy the more than 10 billion markets that are now shared by more than a thousand. There is no doubt that companies now occupying monopolistic positions in the sub-sectors and having advanced discharge control capabilities will further consolidate their market position.
At present, this situation has already begun to emerge. "Because of the restrictions on pollutant discharge, many small-scale enterprises cannot produce, the production capacity is reduced, and the supply and demand of certain products are uneven in the market, which is one of the reasons for the current price increase of some raw material medicines." CITIC Securities Luo Chunlei believes.
In addition, analyst Zhou Rui of CIC Securities expressly stated in an interview with this reporter that the regulations will increase industrial concentration and barriers to entry, so that domestic raw material medicine companies rely on low environmental protection barriers to reduce the price competition with foreign companies. This will help improve the profitability of the industry and increase the profitability of products.

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