As one of the developed regions in the national pharmaceutical and chemical industry, Taizhou City has 114 pharmaceutical and chemical enterprises. The foul smell emitted from the factories here has improved a lot compared to before, and a pollution hazard discovered by reporters locally three years ago has been rectified. (China Business Journal)
On September 3, the sky over Taizhou Bay was blue, with white clouds drifting.

In the Jiaojing Waisha Yantou Pharmaceutical and Chemical Park, a sister who runs a snack shop near a factory told reporters from China Business Journal that the foul smell emitted from the factories here has improved a lot compared to before. Three years ago, our reporter discovered a pollution hazard locally that has now been rectified.

However, our reporter found that most of the raw material pharmaceutical companies on both sides were quiet, and the security guards indicated that the factories were undergoing maintenance. A secretary of the board from a listed company in the park told reporters that maintenance is necessary for all pharmaceutical and chemical enterprises, at least once a year, usually scheduled during high temperatures or the New Year period. The impact of environmental inspections on large enterprises is limited.

Our reporter noticed that several listed companies in the park are expanding new projects.

Difficult changes

According to incomplete statistics, as one of the developed regions in the national pharmaceutical and chemical industry, Taizhou City has 114 pharmaceutical and chemical enterprises.

The Zhejiang Province chemical raw material drug production (export) base is currently the only national-level chemical raw material drug production and export base in the country. The base consists of two geographical sections: the Waisha Yantou Pharmaceutical and Chemical Park on the south bank of Taizhou Bay and the Chuan Nan Park on the north bank, with a planned total area of 30 square kilometers.

The Waisha Yantou Pharmaceutical and Chemical Park in Jiaojing was established in October 1998. This area was considered to have good atmospheric diffusion conditions and a large environmental capacity due to its proximity to the sea, leading many chemical enterprises to relocate here. By 2011, the three blocks of Waisha, Yantou, and Sanshan had 33 enterprises.

While the park developed rapidly, environmental pollution also became increasingly severe.

A widely criticized fact is that the Waisha Yantou Pharmaceutical and Chemical Park is adjacent to the urban area, and chemical odors frequently occur.

In 2011, Taizhou City initiated the industrial transformation and upgrading of the pharmaceutical and chemical park, using "retreat, transfer, and upgrade" as fundamental approaches to further optimize spatial layout, product structure, and enterprise structure, reducing organic waste gas emissions from the source and striving to promote the sustainable development of the pharmaceutical and chemical industry. The number of pharmaceutical and chemical enterprises in the Jiaojing Park was reduced from 33 to 7, and all 142 high-pollution synthetic and fermentation intermediate projects were withdrawn.

In November 2014, our reporter visited the Yantou Pharmaceutical and Chemical Park for an on-site interview. Near the Jiangdi side of the Xindong Port factory area, the reporter saw a white fiberglass pipe extending directly into the drainage pipe of the Jiaojing. This pipe extended from a small house connected to the wall of the Xindong Pharmaceutical factory, passing through the levee and directly buried in the mud by the river. The river surface near the drainage outlet had turned black and yellow for nearly a hundred meters, and the reporter could smell a pungent odor near the drainage outlet.

At that time, the Jiaojing Branch of the Taizhou Environmental Protection Bureau responded that the pipe was a rainwater discharge outlet for the nine rivers north of the pharmaceutical park, and it was possible that historically accumulated sewage had entered the rainwater pipe and discharged into the Jiaojing.

When the reporter arrived at the drainage outlet, the weather was clear, and black "rainwater" was still continuously discharging into the Jiaojing.

In response, the Jiaojing Branch replied to our report in November 2014, stating that the pollution accumulation in the ten rivers over the decades, along with the tidal fluctuations of seawater, had resulted in wastewater with different odors and colors accumulating outside the enterprise walls, which was discharged through the drainage pipe during low tide. Currently, a comprehensive rectification plan for the ten rivers has been issued, and the drainage channel project has entered the bidding stage, with bids expected to open in late November.

On September 3, our reporter saw on-site that a small house connected to the wall had been demolished, and four or five overhead sewage pipes were installed along the inner side of the levee. The treated wastewater from the enterprise enters the park's sewage treatment plant through "one factory, one pipe." The rainwater drainage channel has been completely converted into an open channel, and the water accumulated in the channel appears normal.

However, the overview of the comprehensive rectification project for the nine rivers (pharmaceutical park section) shows that the main river channel is approximately 2.8 kilometers long, with many pharmaceutical enterprises on both sides, and the current water quality is classified as inferior V, belonging to black and odorous water bodies. Due to historical reasons, the river water of the nine rivers is interconnected with the polluted groundwater in the park, and despite multiple rounds of rectification by the district government, the results are still not ideal.

The transformation and upgrading of the Waisha Yantou Pharmaceutical and Chemical Park still has a long way to go.

Huahai Sample

Huahai Pharmaceutical, located in the Linhai Park, is one of the largest suppliers of raw materials for perindopril and sartans in the world. In recent years, the company has vigorously developed its foreign generic drug business, leveraging its integrated production advantages of intermediates, raw materials, and formulations.

Data shows that Huahai Pharmaceutical achieved revenue of 2.35 billion yuan in the first half of 2017, a year-on-year increase of 18.53%; the total profit attributable to shareholders of the listed company was 295 million yuan, a year-on-year increase of 14.12%.

However, its formulation segment grew faster than the raw material segment, with raw material revenue of 1.088 billion yuan, a growth rate of 11.63%, showing stable growth. The formulation segment had revenue of 1.159 billion yuan, with a growth rate of 18.94%. Among these, the growth rate of domestic formulations exceeded 30%.

On August 21, 2017, Huahai Pharmaceutical announced that its abbreviated new drug application (ANDA) for paroxetine enteric-coated capsules submitted to the US FDA had been approved. For Huahai, the approval of this product is a significant milestone. It is the first drug from a Chinese company to obtain first-generic qualification in the US through a patent challenge.

Currently, Huahai Pharmaceutical has a total of 43 products that have obtained ANDA numbers, of which 25 products have been launched in the US. It is expected that the number of ANDA approvals this year will exceed that of 2016, and the product portfolio for export formulations continues to diversify.

Huahai Pharmaceutical is just a typical example of the transformation of many raw material pharmaceutical enterprises in Taizhou. However, behind the transformation and upgrading is continuous capital investment.

Financial reports show that in the first half of 2017, Huahai Pharmaceutical's pollution discharge fees amounted to 64.58 million yuan, accounting for 2.7% of its revenue; R&D expenses were 177 million yuan, accounting for 7.5% of its revenue.

A large pharmaceutical company executive in the Linhai Pharmaceutical Park once told our reporter that the new set of sewage treatment facilities with a daily processing capacity of 2,500 tons and supporting high-concentration wastewater pretreatment facilities requires more than 50 million yuan; on the other hand, the operating cost of treating 1 ton of sewage is about 200 yuan, so processing 2,500 tons a day would cost 500,000 yuan, which adds up to astronomical figures over a year.

The head of the aforementioned pharmaceutical company believes that under the environmental protection storm, the raw material pharmaceutical industry has become a game for the "wealthy," and small and medium-sized pharmaceutical companies that cannot bear the burden will be eliminated even if they move to inland provinces. On one hand, they produce "common" raw materials and are unable to invest in environmental protection; if they do invest, there would be no profit for the company. On the other hand, economically developed coastal cities face pressure on the expansion of wastewater treatment plants and hazardous waste disposal centers, and the financial pressure on public environmental protection facilities in economically backward areas is evident.

Jin Min, the representative of Huahai Pharmaceutical, also stated to our reporter that we produce specialty raw materials, which are slightly different from other raw material manufacturers, so the gross profit margin of raw materials is very stable.