Market Structure and Industry Characteristics

China has emerged as a global key production and supply hub for chemical intermediates, with the industry's market size reaching 1.37 trillion yuan in 2024—up 6.2% year-on-year from 2023, outpacing the GDP growth rate during the same period and showcasing strong demand resilience. Regionally, East China remains the core concentration area, with Jiangsu, Zhejiang, and Shandong provinces collectively accounting for about 62% of the nation’s total production capacity. Among them, Jiangsu Province stands out, thanks to its well-developed network of chemical industrial parks, contributing over 480 billion yuan in intermediate product output in 2024—more than 35% of the national total.

In terms of market competition, the industry is characterized by a concentration at the top, with a long-tail distribution among smaller players. In 2024, the top 10 companies collectively captured 28.6% of the market share, an increase of 7.3 percentage points compared to 2020. Leading enterprises such as Zhejiang Longsheng, Xinhua Pharmaceutical, and Jiuzhou Pharmaceutical have strengthened their competitive advantages through technological upgrades and vertically integrated strategies. Notably, Jiuzhou Pharmaceutical’s revenue from its intermediates and CDMO businesses reached 7.83 billion yuan in 2024, representing a year-on-year growth of 14.6%.

Directions for Technological Innovation and Industrial Upgrading

Green production and efficient synthesis technologies have become the core direction for industry upgrades. The application of new technologies such as continuous-flow chemistry and biocatalysis is continuously breaking through the limitations of traditional processes: For instance, Merck has adopted microreactors to produce a diabetes drug intermediate, reducing reaction time from 8 hours to just 15 minutes while cutting energy consumption by 60%. Additionally, by leveraging enzyme-catalyzed synthesis, they’ve improved the atom economy of chiral intermediates like (S)-o-chlorophenylglycine—from 62% to 91%—significantly minimizing environmental pollution.

The integration of AI technology is injecting new momentum into intermediate research and development. IBM Watson, when applied to the screening of antidepressant drug intermediates, reduced the number of candidate compounds from 5,000 to just 200, while boosting the success rate threefold—dramatically enhancing R&D efficiency. Meanwhile, the rise of the CDMO model has become a key indicator of industry upgrading. In 2024, companies specializing in custom manufacturing services saw their revenues grow by an average of 11.7%, outpacing traditional mass-production firms by approximately 5.5 percentage points, underscoring the sector's growing shift toward high-value-added service offerings.

Regulatory and Supply Chain Management Requirements

The production and supply of intermediates must comply with stringent regulatory standards. The FDA requires that intermediate manufacturing adhere to the GMP Annex on "Good Manufacturing Practices for Active Pharmaceutical Ingredients," such as ensuring that cephalosporin intermediates are produced in Class B cleanroom environments (per ISO 14644-1). In terms of supply chain management, the 2023 shutdown of a key supplier of sartan-class drug intermediates—a disruption that halted 30% of global production capacity—underscored the critical importance of supply stability. Today, companies like Pfizer have already established robust backup systems by securing relationships with more than three qualified suppliers, ensuring the resilience and security of their supply chains.