Research on the current status and trends of the development of my country’s veterinary drug industry

Development Status and Trend Analysis of China’s Veterinary Drug Industry Since the New Century

Since the beginning of the new century, China’s economy, science and technology, culture, and other fields have witnessed significant development, with many industries experiencing rapid growth. China’s veterinary drug industry has also made considerable progress. However, compared to Western European and American countries, China’s veterinary drug industry still has many shortcomings and weaknesses. Therefore, this chapter, based on extensive data collection, statistics, and analysis of China’s veterinary drug industry, aims to present the current development status and derive trend analysis from five aspects: R&D development and trends, production development and trends, sales and usage development and trends, regulatory development and trends, and industrial economic development and trends.

(1) Japanese Veterinary Drug Market and Usage

The sales and usage stage is the final process of veterinary drug products moving from R&D to production and then to application. It is also a crucial stage where the product truly realizes its effects and value. This section will introduce the development and trends in the sales and usage of China’s veterinary drug industry, mainly focusing on five aspects: key commonly used biological products, key commonly used chemical drugs, key commonly used traditional Chinese veterinary medicines, innovative sales models, and curbing antimicrobial resistance.

Key Commonly Used Biological Products

• By Animal Type: From 2012 to 2018, China’s veterinary vaccine market was mainly dominated by pig and poultry vaccines. The market size of both pig and poultry vaccines increased, while their market share decreased. The market size and market share of vaccines for other animals increased. In the future, China’s veterinary vaccine market will still be dominated by pig and poultry vaccines, and their market size will increase. However, the market for other animal vaccines (such as cattle, sheep, dogs, cats, etc.) will also increase with the demand for pets and changes in the breeding structure.
• Compulsory/Non-Compulsory Immunization: It is evident from the market size and market share that the market and market share of China’s compulsory immunization vaccines for pigs decreased from 2012 to 2017, reaching a low of 1.289 billion RMB and 24.49% in 2017. Conversely, the market and share of non-compulsory immunization vaccines for pigs increased, reaching a high of 3.975 billion RMB and 75.51% in 2017. There was a slight rebound between 2017 and 2018, but overall and in the future, the market and market share of compulsory immunization vaccines for pigs will be smaller than those of non-compulsory immunization vaccines. Similarly, the market and market share of China’s compulsory immunization vaccines for poultry decreased from 2012 to 2014, increased from 2014 to 2015, and then continued to decline from 2015 to 2018, reaching a low of 893 million RMB and 24.34% in 2014. The market and share of non-compulsory immunization vaccines for poultry showed the opposite trend, reaching a high of 3.165 billion RMB and 69.99% in 2018. The overall future trend is that the market and market share of compulsory immunization vaccines for poultry will be smaller than those of non-compulsory immunization vaccines.

Under the premise of unchanged other conditions, porcine circovirus type 2 inactivated vaccine, pseudorabies live vaccine (Bartha-K61 strain), and porcine reproductive and respiratory syndrome vaccine will remain common vaccines for pigs in China in the future. In the future, Newcastle disease and infectious bronchitis combined live vaccine (LaSota strain + H120 strain) and Newcastle disease live vaccine (LaSota strain) for chickens will be the main selling products, with annual sales still reaching tens of billions of doses.

(2) Key Commonly Used Chemical Drugs

Premixes:
Since 2012, the main premixes have been bacitracin zinc premix, monensin premix, and salinomycin premix. From the trend lines, it can be seen that the sales of salinomycin premix and monensin premix have been continuously increasing since 2012, with monensin premix sales reaching a peak in 2018 (1.07 million tons) and salinomycin premix sales peaking in 2016 (2.49 million tons). The sales of bacitracin zinc premix have been decreasing since 2012, reaching a low in 2018 (2.09 million tons). Due to policy reasons, bacitracin zinc premix will be removed from the list of drug feed additives in 2020.

Injections:
Florfenicol injection, analgin injection, and ivermectin injection ranked among the top three in sales. Among them, the sales of florfenicol injection decreased from 6 million tons in 2012 to 3 million tons in 2018, but still remained above 3 million tons annually. This is closely related to China’s antibiotic reduction action and the medication policy of using less medication and using the right medication. The trend of analgin injection is similar to that of florfenicol, decreasing from 4.0364 million tons in 2012 to 1.5155 million tons in 2018. The sales of ivermectin injection did not change significantly each year, maintaining at around 2 million tons. Prediction: Among livestock and poultry injections in China, antibiotic, antipyretic analgesic, and anthelmintic chemical drugs are commonly used.

Antipyretic Analgesic and Anti-inflammatory Drugs:
From 2012 to 2018, the overall trend of sales of veterinary antipyretic analgesic and anti-inflammatory chemical injections in China was a year-on-year decrease, from over 9 million tons in 2012 to over 4 million tons in 2018. Among them, the sales of analgin accounted for the majority, with millions of tons sold annually. The sales of analgin injection peaked in 2012 and 2016, at 4.0364 million tons and 5.9658 million tons, respectively, but the sales of analgin showed a clear downward trend. Similar to analgin, the sales of paracetamol injection showed a year-on-year decrease, from 1.5769 million tons in 2012 to 0.3627 million tons in 2018. Other drugs such as compound aminopyrine injection, dexamethasone sodium phosphate injection, and antacidine injection had sales of hundreds of thousands of tons each year. Among these, the usage of antacidine showed an upward trend, reaching 1.4023 million tons in 2017 and 1.1767 million tons in 2018, and its proportion in the total sales of antipyretic analgesic and anti-inflammatory drugs also increased year by year. Prediction: The usage of antipyretic analgesic and anti-inflammatory chemical drugs will decrease or tend to stabilize, and due to the expansion of drug indications and the development of new drugs, the choice of veterinary drugs will become more diversified.

Vitamin Injections:
Compound vitamin B injection, vitamin C injection, vitamin B1 injection, and sodium selenite vitamin E injection are commonly used. Overall, from 2012 to 2018, the sales of injectable vitamins in China showed a downward trend, from over 3.9609 million tons in 2012 to 1.7236 million tons in 2018. Among them, the largest usage was for vitamin C injection and compound vitamin B injection, and the sum of the two accounted for an increasing proportion of the total injectable vitamins in that year, reaching 81% in 2018. Notably, the sales of sodium selenite vitamin E injection and vitamin B1 injection plummeted from over 2 million tons to over 300,000 tons between 2012 and 2018. Prediction: Compound vitamin B injection and vitamin C injection are the main vitamin injections in the market.

Aquatic Animal Chemical Disinfectants:
The total volume was highest in 2012 at 33 million liters, and then the sales of disinfectants remained between 12 and 20 million liters, with the lowest volumes in 2014, 2016, and 2018 at 12 million liters. Among these, povidone-iodine solution had the highest sales, followed by benzalkonium bromide solution and compound iodine solution. The sales of povidone-iodine solution gradually decreased to 6 million liters in 2018, benzalkonium bromide solution decreased from 6 million liters to 3 million liters in 2018, and the average annual sales of compound iodine solution were around 3 million liters. Prediction: Under the premise of unchanged other conditions, the total volume of aquatic animal chemical disinfectants will tend to be between 12 and 20 million liters, and povidone-iodine solution will be the main aquatic animal chemical disinfectant.

Chemical Disinfectants:
From 2012 to 2018, the commonly used chemical disinfectants in China mainly included povidone-iodine solution, dilute glutaraldehyde solution, and compound phenol solution. The overall usage showed a trend of first increasing and then decreasing, with the largest usage in 2014 reaching 74 million liters and the smallest usage in 2018 at 28 million liters. In terms of proportion, povidone-iodine solution has always been the mainstay of chemical disinfectants, consistently accounting for more than 70%. Prediction: Regarding chemical disinfectants, the sales of povidone-iodine solution will decrease or tend to stabilize, but in terms of annual usage, povidone-iodine is still the main chemical disinfectant.

(3) Key Commonly Used Traditional Chinese Veterinary Medicines

• Powders:
  Commonly used drugs include Fuzheng Jiedu San (扶正解毒散), Jingfang Baidu San (荆防败毒散), Qingwen Baidu San (清瘟败毒散), Baitouweng San (白头翁散), and Huanglian Jiedu San (黄连解毒散). From 2012 to 2018, the sales of traditional Chinese veterinary medicine powders in China showed a trend of first increasing and then decreasing, with the highest sales of 311.9239 million tons in 2013 and the lowest sales of 109.2851 million tons in 2018, a decrease of nearly two-thirds. In terms of individual products, the sales of all four products decreased by 1/2 to 2/3 from 2012 to 2018. Over the past seven years, except for 2017 when Jingfang Baidu San accounted for 52.56% of the total sales of powders, the proportion of the sales of the five powders in the total sales of powders in the remaining years did not change significantly. The use of powders will decrease in the future, but Fuzheng Jiedu San, Jingfang Baidu San, Qingwen Baidu San, Baitouweng San, and Huanglian Jiedu San will still be the main ones.
• Injections:
  The main ones include Astragalus Polysaccharide Injection (黄芪多糖注射液), Banlangen Injection (板蓝根注射液), Houttuynia cordata Injection (鱼腥草注射液), Andrographis Injection (穿心莲注射液), and Bupleurum Injection (柴胡注射液). The sales of traditional Chinese veterinary medicine injections showed a trend of first increasing and then decreasing from 2012 to 2018: the highest sales reached 14.0458 million liters in 2013, with sales of Astragalus Polysaccharide Injection at 4.9084 million liters, Houttuynia cordata Injection at 3.5859 million liters, and Banlangen Injection at 2.3334 million liters in that year; the lowest sales were only 5.5824 million liters in 2018. The sum of Astragalus Polysaccharide Injection, Banlangen Injection, and Houttuynia cordata Injection accounted for 71.97% of the total sales in that year. Prediction: In the future, Astragalus Polysaccharide Injection, Banlangen Injection, and Houttuynia cordata Injection will be the main traditional Chinese veterinary medicine injections in the market.
• Oral Liquids:
  Shuanghuanglian Oral Liquid (双黄连口服液), Qingjie Heji (清解合剂), Yangshuhua Oral Liquid (杨树花口服液) generally have sales in the hundreds of thousands to millions of liters, while Sini Tang (四逆汤) and Gongying Qinglan Heji (公英青蓝合剂) have very low sales of only tens of thousands of liters. Overall, the sales of traditional Chinese veterinary medicine oral liquids showed a trend of first decreasing and then increasing, with the highest sales of 25.23 million liters in 2015 and the lowest sales of 14.6778 million liters in 2014. The proportion of Shuanghuanglian Oral Liquid sales each year was above 40%, reaching a peak of over 70% in 2018; while the sum of sales of Sini Tang and Gongying Qinglan Heji each year (except 2016) was less than 10% of the total. Prediction: In the future, Shuanghuanglian Oral Liquid will still be the main traditional Chinese veterinary medicine oral liquid sold annually.
• Tablets:
  From 2012 to 2015, the total annual sales of traditional Chinese veterinary medicine tablets in China showed a downward trend, with the highest sales of 1386.18 tons in 2012 and the lowest sales of 852.39 tons in 2014 and 2015. Among them, the sum of annual sales of Huanglian Jiedu Tablets (黄连解毒片), Qingwen Baidu Tablets (清瘟败毒片), and Dahuang Sodium Bicarbonate Tablets (大黄碳酸氢钠片) accounted for more than 71% of the total annual sales. In addition, the annual sales of the above three individual products gradually decreased. The sales of Huanglian Jiedu Tablets and Qingwen Baidu Tablets were halved or even reduced by three-quarters from 2016 to 2018. Overall, the sales of traditional Chinese veterinary medicine tablets in these three years remained between 470 million and 558 million tablets. Prediction: The usage of traditional Chinese veterinary medicine tablets will decrease in the future, which may be related to the convenience of work for veterinarians and farmers. The use of Dahuang Sodium Bicarbonate Tablets may increase, while the use of Huanglian Jiedu Tablets and Qingwen Baidu Tablets may decrease.
• Granules:
  Banqing Granules (板青颗粒), Gancao Granules (甘草颗粒), Qiqing Baidu Granules (七清败毒颗粒), and Sihuang Zhili Granules (四黄止痢颗粒). The sales of traditional Chinese veterinary medicine granules showed a year-on-year upward trend: the lowest was 2839.79 tons in 2012 and the highest was 3999.13 tons in 2017. In terms of individual products, Banqing Granules increased year by year, from 405.9 tons in 2012 to 2042.6 tons in 2018. The proportion of sales of Gancao Granules, Qiqing Baidu Granules, and Sihuang Zhili Granules in the total sales of that year gradually decreased, and by 2018, the sum of these three was less than the sales of Banqing Granules. From the above, it can be seen that in the category of traditional Chinese veterinary medicine granules, the sales of granules will increase in the future, and veterinarians and farmers will be more inclined to use Banqing Granules.

(4) Innovative Sales Models

Traditional veterinary drug distribution methods include the following three:

(1) Manufacturer —— (National General Agent) —— Provincial Agent —— Municipal Agent —— Breeding Users

(2) Manufacturer —— (National General Agent) —— Provincial Agent —— Large Breeding Groups

(3) Manufacturer —— (National General Agent) —— Large Breeding Groups

These three models, based on government control over foreign enterprises and the convenience for foreign-funded enterprises to conduct business in China, mean that most foreign-funded enterprises establish national general agents in China (such as China National Agricultural Means of Production Group Corporation). Traditional sales models are called channel sales.

Profit sources of traditional veterinary drug distribution methods: Manufacturers set the ex-factory price (i.e., the purchase price for national general agents/provincial agents) and the retail price (strictly implemented by national general agents/provincial agents/regional agents for customers). The product prices between the national general agent, provincial agents, and regional agents are generally determined by the superior supplier. Based on comprehensive services to end-users, it is necessary to ensure a certain product profit margin between agents at all levels.

Innovative Veterinary Drug Distribution Models:

(1) In recent years, with the improvement of people’s breeding concepts and the increasing national requirements for breeding environmental protection, the degree of intensive breeding has become higher and higher. For example, the rise of breeding groups such as Wens, New Hope, Mengniu, and Zhengbang means that they have high requirements for the effectiveness of veterinary drug products and the usage of veterinary drug products is also very large. This has also prompted various veterinary drug manufacturers to reform traditional sales models. More and more veterinary drug production enterprises are organizing professionals with higher skills and stronger marketing capabilities to establish large customer departments/strategic marketing departments/key account (KA) marketing departments to directly connect with breeding groups, providing one-to-one, personalized, and customized services by using professional skills to solve various problems faced by breeding groups, thereby promoting the sales of veterinary drug products. The manufacturer directly supplies products, or supplies to the breeding group through the provincial agent in the area where the breeding group is located. This model is called the direct sales to large customers model.

Profit sources of the direct sales to large customers model: Manufacturers directly set product prices for large customers, and to prevent cross-selling caused by inconsistent prices, large customer prices are generally the same for all group customers; manufacturers communicate with provincial agents to determine the product prices for large customers, and also to avoid cross-selling, large customer prices are generally the same. In addition, based on the customer’s recognition of product quality and effectiveness, each manufacturer and supplier will carry out certain customer relationship management activities, which is also a type of expense.

(2) With the rise of e-commerce, more and more agricultural and animal husbandry e-commerce platforms (Pig E Net, Taobao, Ai Yangniu, Jiuzhou Internet, etc.) have also adapted to the development of the times and carried out online sales activities of veterinary drug products. Although this is conducive to product circulation, the prices vary greatly, the quality of products cannot be guaranteed, and customer technical services are even less available. The government’s crackdown on online sales of fake and inferior veterinary drugs is also common. The product quality issues, price system issues, and technical service issues involved in the online sales of veterinary drugs need to be resolved urgently.

(5) Significant Achievements in Curbing Antimicrobial Resistance

In 2018, the total amount of antibiotics used in China’s breeding production decreased by 29.05% compared with 2017, achieving “zero growth” in antibiotic use two years ahead of schedule. In 2018, the amount of antibiotics used per ton of animal products produced in China’s breeding production was 140g, returning to the level of 2009. Compared with some EU countries in 2015, it was better than Spain, Italy, and Belgium. This confirms the effectiveness of China’s comprehensive management and reduction of veterinary antibiotic use and is also an important stage achievement since the Ministry of Agriculture and Rural Affairs released the Action Plan to Curb Antimicrobial Resistance of Animal Origin Bacteria in 2017.