The market is optimistic that the outbreak of the epidemic will boost the demand for pharmaceuticals. Yesterday, it was reported that many European countries are facing a shortage of supply of antibiotics such as amoxicillin and cephalosporins, naming pharmaceutical and API manufacturers as beneficiaries, with China Chemical & Pharmaceutical (CCP), Standard Chem & Pharm, Savior Lifetec and Genovate Biotechnology rising during the trading session, and Nang Kuang Pharmaceutical, Synmosa, Chunghwa Chemical Synthesis & Biotech (CCSB), Sinphar Pharmaceutical and SYN-TECH Chen & Pharm rising by more than 8%. In fact, global drug shortages have been reported in recent years, and there was a wave of demand in Taiwan when the epidemic was at its peak. Recently, China has suddenly announced that it will gradually lift the blockade, resulting in an influx of people in hospitals.
In Europe, there are rumours of a shortage of amoxicillin and cephalosporin antibiotics due to the increase in the infected population and the supply chain not yet normalised after the lifting of the embargo, and the Chinese mainland's anti-epidemic measures have also caused manufacturers to face delays in the supply of pharmaceutical materials and packaging.
However, unlike general consumer goods, pharmaceuticals have to be vetted by the local authorities before they can be sold, so it is not easy to change orders unless they are already on the supply list. In addition to the Taiwan market, most domestic API and pharmaceutical manufacturers have focused on the Southeast Asian and US markets in recent years, with a low share of sales in China. Some domestic industry players also pointed out that they did get urgent orders, but the amount was not large.
However, if we look at the fundamentals, the domestic API and pharmaceutical manufacturers have been doing well in recent years, and have also achieved good results in their export expansion. The Standard Chem. & Pharm Corporation and its subsidiaries have achieved record profits in the first three quarters of this year and should continue to grow next year.
The performance of CCP and CCSB is expected to remain steady and upward next year. Formosa Laboratories's main APIs, such as cholesterol/phosphate-lowering polymers, are in short supply, and it has initiated production capacity expansion, as well as downward integration into injectables and CDMOs. Nang Kuang Pharmaceutical's two pharmaceutical products are expected to be evaluated for consistency this year and next year, which will also lead to stronger operational growth.
