The pharmaceutical industry in China is among the six most polluting sectors, and recent developments signal a major shift in environmental regulation. The China Chemical Pharmaceutical Industry Association recently announced that the new "Drug Industry Pollutant Emission Standard (Draft)" has been finalized and is expected to be officially implemented next year. This move marks a significant challenge for chemical and pharmaceutical companies, as it introduces stricter environmental requirements that will test their compliance capabilities.
Previously, pollution control standards for the pharmaceutical sector were limited to setting limits on raw material indices, with other waste treatment processes following general guidelines from the broader chemical industry. However, these outdated rules are no longer sufficient to address the growing environmental concerns of both the industry and regulators. The new standard aims to set specific emission limits for APIs (Active Pharmaceutical Ingredients), chemical drugs, and biopharmaceuticals, with stricter limits on certain pollutants.
For instance, the COD (Chemical Oxygen Demand) pre-discharge limit for chemical raw materials has been reduced from 1000 mg/L to 500 mg/L, while the final discharge standard has dropped from 300 mg/L to 150 mg/L. A three-year transition period is provided for companies to adapt. According to the State Environmental Protection Administration, this strict regulation is necessary due to the severe environmental damage caused by many pharmaceutical firms in the past.
As a result, environmental protection costs for chemical and pharmaceutical companies are expected to rise significantly. Major players like North China Pharmaceutical Co., Ltd. have already invested 200 million yuan to meet current standards. Shijiazhuang Pharmaceutical Group has allocated 350 million yuan for environmental upgrades, while Haizheng Pharmaceutical invested 130 million yuan. Guangji Pharmaceutical, which was previously exposed for excessive pollution, now needs to increase its sewage treatment investment by 31 million yuan, bringing total spending to 43 million yuan to meet the new standards. Additionally, annual sewage treatment costs are projected to rise by around 20 million yuan once the new facilities are operational.
While large companies can absorb these increased costs, smaller firms with weaker environmental controls may struggle. The new standards require all new enterprises to comply from the start, and existing ones must complete renovations within three years. This could lead to many small and outdated manufacturers shutting down due to non-compliance. At the same time, the higher entry barriers will make it harder for new companies to enter the market, leading to a more regulated and competitive industry.
Despite the challenges, industry insiders believe the new standards also present opportunities. Currently, 20% to 30% of Chinese pharmaceutical companies already meet the new requirements, and others can achieve compliance through improved practices. Biopharmaceutical companies, which generally produce less pollution, are likely to be less affected. According to officials from the State Environmental Protection Administration, some small firms lack proper infrastructure and operate inefficiently, harming both the environment and the industry's reputation. Raising the bar helps promote healthier development and a more sustainable industry structure.
The China Chemical Pharmaceutical Industry Association estimates that this year’s environmental spending by pharmaceutical companies will reach several billion yuan. While this is a substantial investment, it is seen as essential to improving the industry’s public image. If properly enforced, the new standards will help eliminate inefficient players and foster long-term, sustainable growth in the sector.
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