Penicillin

Penicillin Global Market Outlook:

• The global penicillin market is around 50,000–60,000 MT in 2022 and is almost stable in the past few years

• The European regulated suppliers cater to global big pharma companies and Chinese non-regulated players cater to non-regulated markets

• China is the major region of supply with an installed capacity of 100,000 MT, however, utilization rate is 30–40 percent. 90 percent of the Chinese production are exported

Cost Structure of Penicillin

Prices of raw materials account for major share of the production cost. The European labor costs are comparatively more than Chinese labor costs.

Price Drivers

• Penicillin chrysogenum accounts for 50–60 percent of the total cost of penicillin

• This cost component includes fees for water, electricity, Heating, Ventilation and Air Conditioning and other operations, which consume power

• Utilities cost are usually stable, unless the production volume increases drastically

• Labor costs might increase in the long term, considering the lockdown measures. Only 20–30 percent of the labor are allowed to work in factories

• China labor costs range from 10 percent to 15 percent, which is comparatively lesser than labour costs in developed geographies, like Italy Austria and Slovakia

• Other expenses include SG&A expenses, depreciation costs, etc., which contribute to 8–10 percent of the cost structure

Porter's Analysis on Penicillin

Supplier Power

• Supplier power is medium, as the market is fragmented

• Regulated players have more power, as there are only a few regulated players catering to the regulated markets

Barriers to New Entrants

• Non-availability of raw material locally is a most common barrier. No other major barriers are identified

Intensity of Rivalry

• The market is being fragmented, the intensity of rivalry is also high

• Competition exists among certified manufacturers to supply Penicillin to the developed markets

Threat of Substitutes

• Tetracyclines, macrolides, quinolines, aminoglycosides, etc., are other substitutes, which are used as alternatives for penicillin. These are most commonly used antibiotics, used in penicillin allergic patients across the globe

Buyer Power

• Although several manufacturers are available in the market, choosing a supplier who has DMF or CEP-approved suppliers are crucial

• Buyer power is moderate, since the number of buyers in the market is also high