CCM Data & Primary Intelligence




 Benchmarking on PAP and Paracetamol Production
                                      ...
CCM Data & Primary Intelligence
Description:


The consumption of paracetamol, which takes the most important position amo...
CCM Data & Primary Intelligence
-          Iron reduction of p-nitrophenol                                                ...
CCM Data & Primary Intelligence
-         Estimation on profit                                                            ...
CCM Data & Primary Intelligence
of PAP is xxxxt/a in 2008.


Though overseas PAP manufacturers mostly adopt more advanced ...
II-1 Introduction to processes for PAP production

PAP was prepared firstly by Bayer and Caro in 1874, with p-nitrosopheno...
Table II-1.3 -1 Comparison among different technologies, Oct- 2008
                                            Investment
...
The production of
                                                      paracetamol after          The yield is improved t...
Table IV-1.1-2 General situation of Jiangsu Zhongming, Nov-2008
  Technology improvement                 Employees        ...
Table IV-1.1-4 Income statement of Jiangsu Zhongming in 2007
                                                             ...
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Benchmarking on pap and paracetamol production in china

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The consumption of paracetamol, which takes the most important position among NSAIDs, has kept growing worldwide, which promotes the production of PAP, the key raw material of paracetamol.

As one of main paracetamol manufacturers in the world, China's paracetamol export has constituted 30%-40% of the total paracetamol consumed in the world. On the other hand, process of PAP and paracetamol in China is improving, largely attributable to the governmental environmental protection policy.

However, China’s PAP manufacturers’ profit has been further squeezed by the growing investment in environmental protection and the global economic depression in 2008.

To further penetrate into the industry, especially the production process, CCM has produced a report of Benchmarking on PAP and Paracetamol Production in China, which will provide you with the answers to the following questions:

 What are the developing status and trends of the production processes of PAP and paracetamol in China?
 What are the production costs of these process by theoretical model?
 What are the actual production cost and total profit of benchmark enterprises of PAP and paracetamol in this report in China?
 How are the total profit comparison between benchmark enterprises of PAP and paracetamol?
What are the financial analysis of benchmark enterprises in 2007?
 What are the prospective technologies of PAP production in China till 2015?

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Benchmarking on pap and paracetamol production in china

  1. 1. CCM Data & Primary Intelligence Benchmarking on PAP and Paracetamol Production in China - The second edition Researched & Prepared by: Guangzhou CCM Information Science and Technology Co., Ltd Guangzhou, P. R. China Nov. 2008 Copyright by Guangzhou CCM Information Science and Technology Co., Ltd (P. R. China) Any publication, distribution or copying of the content in this report is prohibited. Website: http://www.cnchemicals.com Tel: +86-20-3761 6606 Fax: +86-20-3761 6968 Email: econtact@cnchemicals.com Website: http://www.cnchemicals.com Email: econtact@cnchemicals.com Tel: +86-20-3761 6606 Fax: +86-20-3761 6968
  2. 2. CCM Data & Primary Intelligence Description: The consumption of paracetamol, which takes the most important position among NSAIDs, has kept growing worldwide, which promotes the production of PAP, the key raw material of paracetamol. As one of main paracetamol manufacturers in the world, China's paracetamol export has constituted 30%-40% of the total paracetamol consumed in the world. On the other hand, process of PAP and paracetamol in China is improving, largely attributable to the governmental environmental protection policy. However, China’s PAP manufacturers’ profit has been further squeezed by the growing investment in environmental protection and the global economic depression in 2008. To further penetrate into the industry, especially the production process, CCM has produced a report of Benchmarking on PAP and Paracetamol Production in China, which will provide you with the answers to the following questions: What are the developing status and trends of the production processes of PAP and paracetamol in China? What are the production costs of these process by theoretical model? What are the actual production cost and total profit of benchmark enterprises of PAP and paracetamol in this report in China? How are the total profit comparison between benchmark enterprises of PAP and paracetamol? What are the financial analysis of benchmark enterprises in 2007? What are the prospective technologies of PAP production in China till 2015? Main content: No. Content Page Executive Summary 4 Introduction and methodologies 8 I Review of PAP & paracetamol industry 10 I-1 Brief introduction to paracetamol industry in China 10 I-2 Brief introduction to PAP industry in China 13 II Brief introduction to various technologies of PAP and paracetamol 16 II-1 Introduction to processes for PAP production 16 II-1.1 Industralized technologies of PAP in China 17 Website: http://www.cnchemicals.com Email: econtact@cnchemicals.com Tel: +86-20-3761 6606 Fax: +86-20-3761 6968
  3. 3. CCM Data & Primary Intelligence - Iron reduction of p-nitrophenol 17 - Catalytic hydrogenation of p-nitrophenol 18 - Catalytic hydrogenation of nitrobenzene 20 II-1.2 Technologies under research 21 - Electrolytic reduction of nitrobenzene 21 - Other findings 25 II-1.3 Comparison among the above four technologies 26 II-2 Introduction to processes for paracetamol production 27 II-2.1 One-step method 27 II-2.2 Two-step method 28 III Detailed introduction to most popular methods of PAP and paracetamol 30 III-1 Technology for PAP 30 III-1.1 Description of production process and theoretical model of raw materials by iron 30 III-1.2 Description of production process and theoretical model of raw materials by 33 III-2 Technology for paracetamol 37 III-2.1 Brief description of production process 37 III-2.2 Flow chart of paracetamol production 38 III-2.3 Theoretical model of raw materials 38 IV Estimation on cost and profit of PAP and paracetamol 40 IV-1 In PAP enterprises 40 IV-1.1 Jiangsu Zhongming (adopting PNCB technology) 40 - Basic situation in Jiangsu Zhongming 40 - Financial analysis of Jiangsu Zhongming in 2007 42 - Estimation on raw material cost 47 - Estimation on manufacturing cost 47 - Estimation on management cost 49 - Estimation on total production cost 49 - Estimation on profit 50 IV-1.2 Liaoning Tianbao (adopting PNCB technology) 52 - Basic situation in Liaoning Tianbao 52 - Financial analysis of Liaoning Tianbao in 2007 55 - Estimation on raw material cost 60 - Estimation on manufacturing cost 60 - Estimation on management cost 61 - Estimation on profit 61 IV-1.3 Liaoning Jinhua(adopting NB technology) 62 - Basic situation in Huludao Jinhu 62 - Estimation on raw material cost 63 - Estimation on manufacturing cost 64 - Estimation on management cost 64 Website: http://www.cnchemicals.com Email: econtact@cnchemicals.com Tel: +86-20-3761 6606 Fax: +86-20-3761 6968
  4. 4. CCM Data & Primary Intelligence - Estimation on profit 65 IV-1.4 Comparison among above three manufacturers 66 IV-2 In paracetamol enterprises 69 IV-2.1 Hebei Jiheng 69 - Basic situation in Hebei Jiheng 69 - Actual flowchart in Hebei Jiheng 70 - Financial analysis of Hebei Jiheng in 2007 72 - Estimation on raw material cost 77 - Estimation on manufacturing cost 78 - Estimation on management cost 79 - Estimation on total production cost 80 - Estimation on profit 80 IV-2.2 Lu'an Pharm 82 - Basic situation in Lu'an Pharm 82 - Financial analysis of Lu'an Pharm in 2007 83 - Estimation on raw material cost 83 - Estimation on manufacturing cost 89 - Estimation on management cost 89 - Estimation on total production cost 90 - Estimation on profit 91 IV-2.3 Comparison between Hebei Jiheng and Lu'an Pharm in profit 93 V Forecast on PAP & paracetamol industry in China 95 V-1 Forecast on market 95 V-2 Forecast on technology 95 V-3 Competitive power of Chinese paracetamol 97 VI Site visit reports 101 Executive summary: (Note: The following summary is based on the situation in 2008 and maybe different to what it is nowadays. Please be noted.) - Technologies of Chinese enterprises In the past decade, China’s paracetamol and PAP industry has boomed quickly, and both of their output grows with CAGR of more than xx%. Chinese manufacturers mainly adopt iron reduction method and catalytic hydrogenation of p-nitrophenol to produce PAP, among which iron reduction method accounts for xx% of the total capacity currently. XXX Co., Ltd. is the largest PAP producer in China, with PAP capacity of xxxxt/a in 2008. XXX Co., Ltd. is the only Chinese PAP producer that adopts catalytic hydrogenation of p-nitrophenol, and its capacity Website: http://www.cnchemicals.com Email: econtact@cnchemicals.com Tel: +86-20-3761 6606 Fax: +86-20-3761 6968
  5. 5. CCM Data & Primary Intelligence of PAP is xxxxt/a in 2008. Though overseas PAP manufacturers mostly adopt more advanced technologies including catalytic hydrogenation of nitrobenzene and electrolytic reduction of nitrobenzene, these technologies are still under research now in China. - Cost and profit of Chinese enterprises Production cost of PAP of Chinese enterprises ranges from USDxxxx/t to USDxxxx/t in November 2008. It is noted that cost of raw materials constitutes more than XX% of the total production cost. It even approaches xx% in XXX Chemical Plant and xx% in XXX Co., Ltd., two companies CCM has visited and investigated. CCM estimates that the profit level of Chinese PAP manufacturers is actually very low. Profit of PAP in XXX reaches USDxxxx/t, which it is only USDxxxx/t in XXX in November 2008. During the corresponding period, their quoted price of PAP is USDxxxx/t and USDxxxx/t respectively, whereas, Chinese paracetamol producers disclosed that they were often able to purchase domestic PAP at a price of about USDxxxx/t. Paracetamol production is mature in China and the production cost among different manufacturers is nearly the same. To those armed with complete equipment such as XXX, though they have heavy burden on paying for interest and amortization and the production cost is high, they can gain more profit for higher price and larger production scale. - Forecast on PAP and paracetamol production Motivated by demands from both domestic and international markets, Chinese paracetamol will keep on developing relatively rapidly in the coming several years. It is estimated by CCM that the annual growth rate of paracetamol output will amount to nearly xx% in the coming five years. Character of CCM' Report: The aim of this report is to provide powerful assistance to the strategy group and the management team in making correct decision as how to penetrate the ever-increasing China market and how to catch the maximum commercial opportunities. The report is formulated independently by CCM’s professional market researchers, based on the first-hand and primary data which are analyzed by scientific methodology, confirmed with both manufacturers/end users/traders and legal authorities, and presented in a logic way. Sample pages: Website: http://www.cnchemicals.com Email: econtact@cnchemicals.com Tel: +86-20-3761 6606 Fax: +86-20-3761 6968
  6. 6. II-1 Introduction to processes for PAP production PAP was prepared firstly by Bayer and Caro in 1874, with p-nitrosophenol as the raw material, by reducing p-nitrosophenol in acid agent (HCl) with tin as the reducer. Table II-1-1 Major PAP production technologies in China, 2008 Starting Technology Advantage Disadvantage Status in China,2008 material High product cost, Iron reduction Lower investment, mature serious pollution, Mainstream production method technology small-scale technology in China. production p-nitrophenol Only Anhui Bengbu Bayi Catalytic High product cost, Good product quality, Chemical Industry Co., Ltd hydrogenation catalyst tends to high yield, little pollution adopts this process, with capacity method lose activity. 20,000t/a in 2008 Low product cost, good Electrolytic High energy quality of production, high No application. reduction method consumption yield, little pollution Only Liaoning Huludao Jinhua Catalytic High yield, high quality, Fine Chemical Co., Ltd. once hydrogenation High cost in catalyst little pollutant adopted this process, but it has method (NB) nitrobenzene stopped it since 2004. No application, but being under Low product cost, little Electrolytic High energy study by universities like Peking pollutant, short production reduction method consumption University and Hebei University process of Technology Table II-1-3 Production situation of Chinese PAP producers, Nov- 2008 Iron reduction Catalytic Catalytic Electrolytic reduction of hydrogenation of hydrogenation of of nitrobenzene p-nitrophenol p-nitrophenol nitrobenzene Number of users 9 1 0 0 (Bengbu Bayi) (Liaoning Jinhua (Dongzhitaong has stopped this Pharmaceutical(Anhui) process since Co., Ltd. is inviting 2004.) investment) Current capacity(t/a) 107,700 20,000 0 0 Output in 2007(t) 76,000 15,000 0 0
  7. 7. Table II-1.3 -1 Comparison among different technologies, Oct- 2008 Investment calculated Production Government’s Technology by 10,000t/a, Characteristic cost (USD/t) attitude thousand toward it USD Iron reduction 2,482~ 3,210 Limit Higher material consumption, high method 2,628 pollution, high iron content, easy operation, low cost Catalytic 2,628 Encourage Low pollution, low iron content, high cost hydrogenation of ~2,774 9,780 in catalyst p-nitrophenol Catalytic 3,212 21,900 Encourage Low pollution, high quality of product, hard hydrogenation of ~3,504 to operate, high cost in catalyst nitrobenzene Electrolytic 2,336 Encourage Low pollution, high quality of product, high reduction of ~2,628 3,650 cost in electricity, hard to operate nitrobenzene II-2.3 Technology under research in China For one step method, there are two ways of producing paracetamol under research in China now. One is started from nitrobenzene as “a” pathway and the other is started from phenol as “c” pathway described in chapter II-2.1. Table II-2.3-1 Key researchers on one-step technology of paracetamol production in China Status of the Researcher Institute or University Study Topic Achievement research Total yield is around 55%. The process of catalytic Boron trifluoride ether hydrogenation of solution is adopted instead of nitrobenzene, which is sulfuric acid as medium for Hebei University of similar to the two-step hydrogenation. Then No industrial Yanji Wang Technology method mentioned ammonia isn’t involved in application. previously, but it doesn’t acetylation, and thus the purify PAP, the waste water can be reduced. intermediate of The researcher got patent paracetamol. CN1569819 in 2005.
  8. 8. The production of paracetamol after The yield is improved to 60% acetylation, oximation by adopting To adopt efficient Xingquan Xi’an Modern Chemistry and rearrangement catalyst and control pH of Terminated Chen Research Institute reaction based on oximation. phenol. III-1.1 Description of production process and theoretical mode of raw materials by iron reduction technology Table III-1.1-1 Theoretical consumption of raw material of PAP in China, Oct- 2008 Oct-2008 May-2006 Raw materials Unit consumption Price, Unit cost, Price, Unit cost, (kg/kg) USD/kg USD/kg USD/kg USD/kg * p-Nitrochlorobenzene 1.60 0.88 1.41 0.69 1.10 ** Caustic soda (30%) 3.00 0.10 0.31 0.06 0.19 Iron powder (technical ) 1.50 0.55 0.83 0.31 0.47 Hydrochloric acid (30%,technical) 0.30 0.06 0.02 0.08 0.02 Magnesium oxide 0.01 0.12 0.00 1.25 0.01 Sodium metabisulfite 0.02 0.31 0.01 0.25 0.01 Total 2.58 1.80 IV-1.1 Jiangsu Zhongming Pharm-Chemical Co., Ltd. Table IV-1.1-1 Main equipment in Jiangsu Zhongming Name of equipment Number Unit capacity (Liter) Total capacity (Liter) Hydrolization reactor 6 10,000 60,000 Acidification reactor 6 10,000 60,000 Reduction reactor 9 10,000 90,000 Crystallization reactor 36 10,000 360,000
  9. 9. Table IV-1.1-2 General situation of Jiangsu Zhongming, Nov-2008 Technology improvement Employees Waste treatment Distribution Maintenance Transportation Debt Management Raw cost equipment materials supplier -Jiangsu Zhongming plans to -300 employees in -It has invested -It sells PAP mainly to Lu’an -At least -Mainly transports its -Little loan -Very simple, - Jiangsu invest about USD0.73 million total, among who 20 USD0.44 million in Pharm, Hebei Jiheng etc USD0.15 products through from bank. only a Yangnong to upgrade its production lines, are technicians. waste treatment –It owns self-support import & million per highway and the telephone in Chemical and it is going to adopt -Average salaries of - it firstly disposes waste export right year freight to Shanghai office Group technology of sulphur ordinary operators water by itself , and port is USD29.20 per hydrogenation to produce and administrators are then sends them to tonne of PAP PAP. USD146/month and special waste water -It has finished the trial USD292/month, treatment plant nearby production which adopts the respectively. technology mentioned above, and will possibly launch production in March 2009.
  10. 10. Table IV-1.1-4 Income statement of Jiangsu Zhongming in 2007 31-Dec-07 31-Dec-06 ITEM Unit: thousand USD Unit: thousand USD Sales 11,512.53 10,615.47 Less: Cost of sales 9,597.11 8,889.72 Interest expenses 190.29 159.15 Taxes and associate charges 0.00 175.44 Selling and distribution expenses 258.53 90.23 Administrative expenses 122.05 181.70 Financial expenses 23.03 0.18 Impairment loss 0.00 0.00 Add: Gain(loss) from investment 0.00 0.00 Operating profit / ( loss) 1,321.52 1,119.05 Add: Non-operating income 14.44 18.80 Less: Non-operating expenses 1,402.89 36.35 Total profit / (loss) -66.93 1,101.50 Less :Profit taxes 0.00 73.93 Net profit / (loss) -66.93 1,027.57 Source: CCM International Ltd. Table IV-1.1-12 Estimation on profit of Jiangsu Zhongming, Oct-2008 Item PAP, USD / kg Remark 1. Total income 3.13 Price + Return of VAT + Income for selling wastes Price 3.07 FOB Shanghai in Oct-2008 Return of VAT 0.00 This is not an export price, so no return of VAT. Other income after tax 0.06 From selling iron mud to steel factory Total production costs + VAT+ EAT & CT 2. Expense 2.90 + House tax+ Land holding tax + Others tax Total production costs 2.80 VAT 0.08 EAT & CT 0.008 House tax 0.0003 Land holding tax 0.003 Land area x Land holding tax Others tax (Pollutant discharge fee, stamp tax 0.01 and tax on vehicles and vessels use) 3. Gross Profit 0.23 Income - Expense 4. Profit tax 0.06 Gross profit×25% 5. Profit after tax 0.17 Gross Profit - Profits Tax

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