Abstract:With the continuous development of the pharmaceutical industry in mainland China, the marginal improvement of the demand for borosilicate glass in the pharmaceutical field has driven the demand for industry products to rise, and the technological breakthrough of domestic enterprises has gradually increased the localization rate. Affected by the new crown epidemic, since the second half of 2020, the domestic demand for borosilicate glass has grown rapidly, and with the blessing of rising product prices, the prosperity of the domestic borosilicate glass industry has improved significantly, and the scale of the borosilicate glass market in the mainland has grown rapidly from 2020 to 2021, and the scale of the borosilicate glass market will further increase to 1.314 billion yuan in 2022. The main competitors in the pharmaceutical glass industry, such as Linuo Special Glass, Kibing Group, Shandong Pharmaceutical Glass, Zhengchuan Co., Ltd., Cangzhou Four Star, Kaisheng Junheng, etc., are actively developing the borosilicate pharmaceutical glass business to expand production capacity and seize the market.
1. Definitions and Classification
Glass is an amorphous inorganic non-metallic material, which is generally made of quartz sand, soda ash, feldspar, etc. as the main raw materials, and a small amount of auxiliary raw materials are added to melt and solidify at high temperature. Borosilicate glass is a kind of special glass, borax and boric acid are added to the raw materials for production, and the glass composition contains boron trioxide (B2O3). According to the B2O3 content, borosilicate glass can be divided into three categories: high borosilicate glass (B2O3 content ≥12%), medium borosilicate glass (8%-12%), and low borosilicate glass (B2O3 content ≥5%). Borosilicate glass is referred to as neutral glass or 5.0 medical glass or grade A material, and is also known as type I glass in the world. Borosilicate glass has a lower expansion coefficient and good chemical stability, and is a safer material for storing chemicals, but it is difficult to produce and has higher technical control requirements, and is an international mainstream pharmaceutical glass material. According to the manufacturing process and use, borosilicate glass can be divided into two categories: molded bottles and tubular bottles.
Second, industry policies
1. Competent authorities and regulatory system
The borosilicate glass industry belongs to the pharmaceutical packaging materials industry, and the competent government department is the State Drug Administration, whose main responsibilities are: formulating policies, planning and supervising the implementation of drugs and pharmaceutical packaging materials, participating in the drafting of relevant laws, regulations and departmental rules, formulating national standards and classification management systems for drugs and pharmaceutical packaging materials, and conducting administrative supervision and technical supervision on the research, production, circulation and use of drugs and pharmaceutical packaging materials. China Pharmaceutical Packaging Association is a self-regulatory organization of the pharmaceutical packaging industry, its main responsibilities are: to publicize and implement the relevant national guidelines, policies and regulations, to do a good job in the quality supervision and industry norms of the pharmaceutical packaging industry, to formulate the development plan of the pharmaceutical packaging industry, to promote the development of the industry, to organize investigation and research on the market dynamics of pharmaceutical packaging materials, containers, machinery and related pharmaceutical excipients, to transmit market information in a timely manner, to organize and carry out cooperation and research on pharmaceutical packaging technology, to promote the new technology, new materials, new processes of pharmaceutical packaging, New equipment and consulting services, publicize and implement national standards, participate in the formulation and revision of industry standards, and organize the formulation and release of association standards voluntarily implemented by the industry.
2. Industry-related policies
Borosilicate glass is a subdivision of pharmaceutical glass. For the pharmaceutical glass industry, pharmaceutical packaging materials are directly related to the quality and safety of drugs and people's health, and have always been a key industry supervised by the state. The "Good Manufacturing Practice for Pharmaceutical Packaging Materials (Draft for Comments)" clarifies that pharmaceutical packaging material manufacturers establish an important basis for the establishment of a quality management system for pharmaceutical packaging materials, which is the basic requirement for the production management and quality control of pharmaceutical packaging materials, and further further improves the quality control of pharmaceutical packaging materials enterprises from the whole process of pharmaceutical packaging material production and all key factors affecting the quality of pharmaceutical packaging materials. The Action Plan for the High-Quality Development of the Pharmaceutical Industry (2023-2025) proposes to focus on improving the resilience and modernization level of the pharmaceutical industry and the medical equipment industry, enhancing the supply capacity of high-end drugs, key technologies and raw materials. The "Catalogue for the Guidance of Industrial Structure Adjustment (2024 Edition)" lists new pharmaceutical packaging materials and technologies as an encouraged category.
Third, the development process
Borosilicate glass material was invented and gradually promoted by Schott in Germany in 1889, and is widely used in the packaging of various injections, blood, vaccines and other drugs due to its excellent thermal shock resistance and water resistance. The development of borosilicate glass in China began in 1950, when China introduced foreign technology to produce borosilicate glass for the first time, but its development did not last long. In 1987, Baoji Pharmaceutical Glass Factory spent nearly 100 million yuan to import a complete set of first-class pharmaceutical glass production equipment and technology from Corning in the United States, but it was completely shut down after 7 years of operation. At this stage, borosilicate glass is still mainly directly imported finished products. It was not until 2004 that Shandong Pharmaceutical Glass introduced neutral borosilicate molded bottles to the market, becoming the first enterprise in China to master the production technology of neutral borosilicate glass molded bottles. Since 2021, major enterprises have entered the borosilicate glass industry, and the development of the industry has entered the third stage covering the whole industry chain.
Fourth, industry barriers
1. Barriers to entry
The production technology of borosilicate glass is high, including its melting, molding, annealing and other processes need to be accurately controlled. In addition, the application of borosilicate glass in the field of pharmaceutical packaging also needs to meet specific biocompatibility and chemical stability requirements, which further increases the technical difficulty. For new entrants, the lack of relevant technology accumulation and R&D capabilities makes it difficult to break through technical barriers in a short period of time.
2. Financial barriers
The borosilicate glass industry is a capital-intensive industry. On the one hand, the production of borosilicate glass requires a large amount of capital to be invested in equipment purchase, production line construction, raw material procurement and research and development. In addition, due to the particularity of the pharmaceutical packaging industry, enterprises also need to invest in testing and verification of safety performance such as biocompatibility and chemical stability. Downstream customers in the industry, especially large-scale customers, have a strong market position and often require suppliers to provide a certain credit period, which brings greater challenges to the cash flow of enterprises. In addition, the gradual deepening of industry supervision has put forward mandatory requirements for equipment performance, energy consumption level and environmental protection investment of enterprises, and the continuous change of downstream customers' demand for products has also forced enterprises to continue to invest in research and development funds to ensure continuous product innovation. These have put forward higher requirements for the financial strength of enterprises, and there are certain financial barriers for new enterprises in the industry.
3. Market access barriers
The application of borosilicate glass in the field of pharmaceutical packaging needs to meet strict regulations and regulatory requirements, and enterprises need to obtain relevant qualification certification and registration licenses before entering the market. The Drug Administration Law of the People's Republic of China, which came into effect on December 1, 2019, clearly stipulates that when approving drugs, the drug regulatory department of the State Council shall review and approve chemical raw materials, relevant excipients, packaging materials and containers in direct contact with drugs, and quality standards, production processes, labels and instructions of drugs. In addition, due to the particularity of the pharmaceutical industry, enterprises also need to establish long-term cooperative relations with pharmaceutical manufacturers in order to obtain stable orders. This takes a lot of time and effort for new entrants to build trust and relationships.
4. Brand barriers
In the field of pharmaceutical packaging, brand reputation and reputation are crucial to the survival and development of enterprises. Borosilicate glass companies need to have strong brand influence and market recognition in order to stand out in the fierce competition. For new entrants, it takes a lot of time and resources to build brand image and credibility.
Fifth, the industrial chain
1. Analysis of the industry chain
The upstream of the borosilicate glass industry is the energy and chemical industry, and the downstream is mainly the pharmaceutical industry. The upstream raw materials of borosilicate glass include soda ash, borax, quartz sand, boric acid, etc., and the energy sources are mainly coal, electricity and natural gas, and the downstream is mainly pharmaceutical enterprises. Borax, quartz sand and other raw materials belong to bulk industrial raw materials, and the borosilicate glass industry has strong bargaining power. Most of the downstream are large pharmaceutical companies, and with the aging of the population and the increase in residents' health expenditure, the space of the pharmaceutical industry is expanding.
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