If making a forecast of the market for APIs (active pharmaceutical ingredients)in 2009, there are not enough favorable factors to say"optimistic"，and it would be too pessimistic to say "downslide"．Perhaps it is proper to say that the competition will be "fiercer"．
The aggravation of the global economic crisis will have a negative impact on almost every traditional sector. The capital shortage and the consumption contraction will at least affect the market consumption growth of medicines. As medicines are irreplaceable commodities, the pharmaceutical sector can be said to be a harbor of refuge from the financial storm. The margin of APIs as upstream products of the industrial chain will be further narrowed. Production enterprises will have to accelerate process modification to reduce their costs. Distributors will have to design ways to avoid trade risks.
The greatest challenge for the API sector in China today is the capacity surplus. It is also the major factor affecting the development of APIs．Generic medicines produced in China still have a cost advantage in the international market, but have no advantage in sales tactics and international market admission conditions. The safety of medicines and the reputation of brands need a long time for maintenance and operation. The way to the international market will therefore not be smooth. So it is essential for producers to develop their own characteristics for their very existence.
The year of 2009 will likely be the starting point of a new cycle for the API market. The price of APIs will increase from the low level.
1. Stable market demand for large- volume APIs at home and abroad China has become a supplier of APIs， additives, antibiotics, vitamins and analgesi-cantipyretics to the rest of the world. Price ups and downs are normal and reflect the dynamism of the supply/demand balance, with balance always being achieved in such price fluctuations.
The market demand for large-volume APIs such as basic antibiotics and major vitamin varieties will not be reduced because of the financial crisis．Only in their purchase and sales, players will have concerns over the use of capital. Traders will reduce their inventory and make quick purchase and quick sales. The transaction of spot goods in cash is a reliable method to avoid risks and losses. Such deals will possibly become an important method for the future trade of APIs. The number of purchase orders will be reduced and the cycle of long-term purchase orders will be shortened.
2. Price downturn of APIs The price of large-volume APIs in 2008 was on the low side at the beginning of the year, picked up in the middle of the year and went down again at the end of the year. The price of many large-volume APIs dropped rapidly and even to historic lows in the fourth quarter of 2008．The price of some APIs will stay at this low level in the first quarter of 2009．In the second quarter of 2009, the reform of healthcare sys- tem and the definition of basic medicines will be more certain and the pressure of the financial cri- sis will also be released to a certain extent. The market situation of large-volume APIs will likely have improvements at that time.