The logic behind drug price hikes is terrifyingly powerful.

How does the rise in AI and vitamin prices drive the market capitalization of Sinopharm Group?

The surge in chip prices, oil prices, and metal prices has led to extreme gains in their respective industry sectors. When it comes to pharmaceuticals, rising prices can be just as formidable.

Oil is the mother of chemical raw materials and the lifeblood of industry. The recent conflict in the US, Israel, and Iran has caused a spike in oil prices, which has also driven up raw material prices in China’s pharmaceutical industry, reflecting the resilience of China’s supply chain and strong infrastructure capabilities.

The increase in oil prices is affecting various aspects of the pharmaceutical industry—factory gate prices for gloves are rising, vitamin prices are soaring, penicillin prices are climbing, and leading companies in each niche are showing aggressive growth. Who hasn’t seen gains?

Currently, among these, the vitamin segment’s leading companies are the strongest, with the most solid logic.

01

Vitamin prices soar, Sinopharm Group reaches hundreds of billions in market value

Since the Venezuela incident, Sinopharm’s stock price has increased nearly 40% over about two months, and since the US-Israel conflict, it has risen nearly 20%.

Vitamins (such as Vitamin A, Vitamin E, etc.) are primarily derived from petroleum-based raw materials like isoprene, phenol, etc.

Sinopharm is the global leader in the vitamin sector. By the end of 2024, its annual production capacity for Vitamin A, Vitamin E, and Vitamin C will be 8,000 tons, 60,000 tons, and 45,000 tons respectively, ranking second, first, and third worldwide.

Similarly, methionine production depends on raw materials like methanol, propylene, and sulfur—products derived from oil or natural gas chemical systems, with prices highly correlated to international oil prices.

Sinopharm’s solid methionine capacity is 300,000 tons per year (with an additional 70,000 tons/year at the Shandong base coming online), and its 180,000-ton/year liquid methionine project was launched last year, making it the third-largest globally.

“Vitamin + methionine” accounts for the majority of the company’s nutritional products revenue, which makes up 64.86% of total revenue in the first half of 2025.

Taking vitamin varieties as an example, the reason for Sinopharm’s strong stock performance fundamentally comes down to a “double hit” of “price increases + changes in competitive landscape.”

Most core vitamin varieties were at their lowest prices in the past five years in the second half of 2025. Among them, Vitamin E, which is most sensitive to oil prices (due to longer synthesis pathways and raw materials closely linked to oil, high market concentration, and historical low prices), has already surged. Sinopharm’s capacity is the largest globally, and Vitamin A and Vitamin C prices have also followed suit.

(Source: Zhongtai Pharmaceutical, Wind)

This round of vitamin price increases is driven by cost factors. Comparing the vitamin price surge in 2024-2025, there are similarities but also fundamental differences.

In July 2024, an explosion at BASF’s Ludwigshafen plant caused a fire, reducing VA and VE capacities by 8,000 and 20,000 tons per year, accounting for 22.22% and 14.81% of global capacity. The explosion caused a sudden tightening of global vitamin supply, with some short-term supply withdrawals pushing prices sharply higher—Vitamin D3’s maximum increase exceeded 1,000%. The VA and VE capacities at this plant were delayed until April 2025 and July 2025 respectively, ending that cycle of vitamin price increases.

This current round of vitamin price hikes is driven by upstream cost increases. Major producers in Europe and the US are sourcing more expensive petroleum-derived raw materials, improving domestic production competitiveness. The price increase closely follows oil prices (aligned with Middle East conflicts). However, compared to 2024, the current price increases are less dramatic, leaving room for further growth as geopolitical situations evolve.

02

Disposable gloves: a sweet spot after risk clearance

The disposable glove industry is also at a crossroads of industry cleanup and rising key raw materials driven by oil prices. For example, the core raw materials for nitrile gloves—butadiene and acrylonitrile—are derived from petroleum cracking; PVC glove raw materials—vinyl chloride—also come from oil; polyethylene glove raw materials are closely linked to international oil prices.

Taking nitrile gloves, which have faster demand growth and higher production line requirements, as an example: raw materials account for about 40-45% of costs, with nitrile latex making up over 90% of raw material costs (butadiene to acrylonitrile ratio of 6:4). Energy costs account for 15-20% (varying by region, mainly coal and natural gas). The rest includes labor, depreciation, and amortization.

According to Open Source Pharma, prices of butadiene and acrylonitrile have increased by 84.43% and 45% respectively since the end of 2025, raising glove production costs by $3.5–$4 per box. Factory gate prices are expected to rise from $15.5–$16 to over $19 per box.

Beyond oil-driven cost increases, domestic leading manufacturers of disposable gloves are gaining market share through advantages in energy structure and capacity utilization, which are changing the competitive landscape.

From the outbreak of COVID-19 (2020-2021) to 2025, the industry experienced demand surges (supply less than demand), demand declines (supply exceeds demand), channel inventory digestion, capacity cleanup, and stabilization of prices.

For nitrile gloves, 2024 marked a move toward supply-demand balance, with capacity utilization rates first recovering to 55-60%, while PVC gloves hovered around 40%. In 2025, nitrile glove capacity utilization fluctuated significantly due to US-China tariffs—US imports shifted to Southeast Asia. As domestic manufacturers increased non-US customer share and US-China tensions eased, capacity utilization stabilized again.

(Source: Longzhong Information)

Once supply-demand balance is restored, the industry will return to stability. The segment with increasing demand—nitrile gloves—will enter a price rise phase, boosting profitability. The main competition is between domestic manufacturers and Southeast Asian producers. Before the pandemic, domestic companies held less than 30% of the global market share but have rapidly expanded, reaching over 40% in 2025, while Southeast Asian capacity growth has been limited.

Additionally, domestic firms are continuously innovating to reduce production costs (e.g., automating production lines), further strengthening cost advantages. Meanwhile, older Southeast Asian plants need higher prices to operate profitably.

(Source: Ping An Securities)

Domestic manufacturers’ cost advantages are strengthening, and export unit prices have shown signs of bottoming out since Q3 2025.

(Source: Ping An Securities)

Another factor is the difference in energy costs between Chinese and Southeast Asian glove manufacturers. For example, Inco Medical mainly uses clean coal, while top glove companies like Top Glove rely heavily on natural gas. Domestic energy costs are significantly lower (e.g., Chinese thermal coal at about $4.17 per MBTU vs. Malaysian natural gas at about $8 per MBTU).

In recent years, Inco has increased self-supply of nitrile latex, while Southeast Asian companies face rising import freight costs for nitrile latex, further widening the cost gap and impacting profit margins.

Recent trends of three domestic manufacturers show similarly aggressive growth.

03

Lagging varieties—Calcium Pantothenate?

After analyzing two strong-price-increase varieties, are there any that lag behind? Quite a few, and calcium pantothenate (Vitamin B5) might be one.

Calcium pantothenate prices are also highly influenced by oil prices, as production depends heavily on chemical raw materials like isobutyraldehyde, formaldehyde, and propionaldehyde. Since 2026, the absolute price increase has been modest—from early-year levels of 35-38 yuan/kg to 40-44 yuan/kg on March 13, a rise of about 15%.

Recently, major manufacturers have stopped reporting and signing contracts, a typical signal of coordinated price support.

From the supply side, over 80% of calcium pantothenate supply comes from Chinese companies, including Yifan Pharmaceutical and Brothers Technology, with Yifan leading globally at 8,000 tons capacity.

The advantage of domestic-led global supply is that if Chinese manufacturers form a price alliance and support prices together, the price increase could be very sharp. On the other hand, the lack of strong overseas capacity means less market demand transfer, which has a smaller impact—mainly driven by the previous coordinated price support.

How about the previous price increase cycle and its sustainability?

In the first half of 2021, environmental restrictions and low prices in previous years caused many small factories to exit, pushing prices from 60-75 yuan/kg to over 400 yuan/kg by May 2022.

Currently, prices at 40-44 yuan/kg have significant potential for further growth. With major manufacturers ceasing reporting and signing, combined with rising costs, we may be at the start of a new calcium pantothenate price cycle.

However, the previous price support for Yifan Pharmaceutical’s market value was not highly sustained. It remains to be seen whether this new trend can have a lasting impact.

Conclusion: The logic of price increases in the pharmaceutical sector can be very aggressive—it’s all about whether investors can keenly sense and seize this wave of alpha.