Dragon raises prices as China demand rises

The USA's Dragon Pharmaceutical has announced major increases in both prices and sales volumes for its main products, noting that, under favorable market conditions, it has been operating near its maximum capacity to meet rising customer demand.

During the first eight months ended August 31, 2007, the company has achieved significant increases in both price and sales volume for its main product 7-aminocephalosporanic (7-ACA). The market price for this active pharmaceutical ingredient in China, including value-added tax, has risen 27%, from 750 renminbi ($99.92) per kg in January 2007 to 950 renminbi per kg in August 2007, representing a record high price for the past two years. Total sales quantity of 7-ACA reached 360 tonnes, an increase of 38% compared with 261 tonnes of sales for the same period of 2006.

The prime reason for the increase is because the rising demand for 7-ACA has exceeded supplies. On one hand, the Chinese government's effort to expand its National Medical Coverage in the rural area has triggered a strong demand for the basic antibiotic drugs. On the other hand, export from China continues to increase as other international 7-ACA manufacturers outside the country continue to curtail their production levels. China is noted for its low-cost, large-scale production of APIs, and has fast emerged as a big player in the global market with an average growth rate exceeding 25%. During the first eight months of 2007, Dragon noted that it has maintained a utilization rate of over 90% for its production facility, compared to approximately 67% for the same period in 2006, in order to keep up with the demand from its existing and new customers.