downward trends in traditional sourcing markets and the rise of pharmerging markets kate kuhrt cphi...
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Downward Trends in Traditional Sourcing Markets and the Rise of Pharmerging Markets
Kate Kuhrt
CPhI Virtual Experience
October 2010
© Thomson Reuters 2010
Agenda
• Key drivers of sourcing decisions– Quality
– Cost
• Evolution of various sourcing markets
• Predictions about the future
© Thomson Reuters 2010
About Thomson Reuters Generics & API Intelligence • 20 years experience in tracking API manufacturing and generics
• An industry pioneer in research and analysis of global API manufacturing activity
• Develop and market the Newport database family
• More than 300 customers and 3,000 users across 43 countries in the Innovator, Generic, OTC and API manufacturing industries
• Serving the needs of
– Business Development & Licensing Professionals
– Portfolio Selection Teams
– R&D and Regulatory Specialists
– API Sourcing Specialists
• Team based in Portland, Maine, USA
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Many Drivers of Sourcing Decisions, Including…
• Capabilities
• Capacity
• Quality
• Speed
• Relationships
• Cost
• Regulations
• Risk
• PR
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World generic API manufacturing landscape
166
256
287
1486
Established
Less Established
Potential Future
Local
Experience insupplying regulated
markets
Source: Newport Premium™ © Thomson Reuters 2010
Of the 400+ experienced manufacturers…• Close to 1/3 are located in India and China
• Only 160 are pure API players
127
67
53
34
36
15
14
94 USA
India
China
Italy
Japan
Spain
Germany
Others
Source: Newport Premium™ © Thomson Reuters 2010
Comparing Indian API Manufacturer Ratings, 2006 to 2010
Source: Newport Premium™ © Thomson Reuters 2010
Comparing Chinese API Manufacturer Ratings, 2006 to 2010
Source: Newport Premium™ © Thomson Reuters 2010
Comparing Italian API Manufacturer Ratings, 2006 to 2010
Source: Newport Premium™ © Thomson Reuters 2010
Challenges in the European API Sourcing Market
• Constraining SPCs in Italy introduced in 1991
• No Bolar provisions until 2006
• Reluctance to change
• Expensive labor
• Environmental controls
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Drivers for India as a Major API Sourcing Destination
• No product patents until 2005
• Cost advantage
• Rich talent pool
• No language barrier
• Improving IP protection
• Large and increasing number of FDA approved facilities
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Drivers for China as a Major API Sourcing Destination
• Rich talent pool
• Leadership in certain product classes over India– Fermentation-based APIs
– Steroid APIs
– Intermediates
– Base chemicals
• Cost advantage
• Improving IP and anti-counterfeiting environment
• Better infrastructure than India
• Government support for R&D
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US DMF Filings (1999 – 2009)
Source: Newport Premium™ © Thomson Reuters 2010
FDA Inspections of API Manufacturers (2001 – 2009)
3
6
9
16
23
8
1619
31
3
10 9
9
13
4
1413
20
7
10
20
17
12
79
11
9
0
5
10
15
20
25
30
35
2001 2002 2003 2004 2005 2006 2007 2008 2009
Num
ber o
f Ins
pect
ed P
lant
s
India
China
Italy
Source: Newport Premium™ © Thomson Reuters 2010
Progression of Indian Manufacturers
Domestic FD, API
WW API
WW Formulation
CRAMS
NDDS
NCE
CostRisk
Source: Piramal Investor Presentation 2008
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Total ANDA Approvals by Indian Generics
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US ANDAs belonging to Chinese companies
• Only 3 companies with final ANDA approvals
• All approved ANDAs have been acquired
– Zhejiang Huahai (Huahai US Inc)• ANDAs for 5 products acquired from Kali, KV,
Par, Actavis• Nevirapine tentative approval under PEPFAR
– Beijing Pharmaceutical (Beijing Double Crane)• ANDAs for 2 products acquired from Ranbaxy
– Yabao Pharma Group (Beijing Yabao)• ANDAs for 2 products acquired from Par and
Ivax
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Challenges in Indian and Chinese Sourcing Markets: Cost
Cost Type China India Europe U.S.
Labor $ $ $$$ $$$
Environmental $$$ $ $ $
Energy $$ $$ $ $
IP Protection $$ $$ $$ $$
cGMP Monitoring $$$ $$ $ $
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Additional Challenges in Indian and Chinese Sourcing Markets• Language barrier in China
• Inadequate infrastructure in India
• Uneven enforcement of rules in China
• Possibility of fraud
• Long-distance management
• Lack of senior level talent in top level management, QA, IP protection
• Focus on quick targets rather than long-term opportunities
• Cultural differences
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Looking Ahead
?
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Will Manufacturing Move to the 2nd Wave Emerging Markets?
• Little experience with regulated markets
• Small API industry
• Limited Dose capabilities
• No indications of significantly better price at acceptable quality than in India or China
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What’s Next for India?
• Increased emphasis on FD for regulated markets
• Increased CRAMS business
• Greater reliance on China for APIs and advanced intermediates
• Increased costs as Chinese materials become more expensive
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What’s Next for China?
• Strengthened SFDA oversight
• Greater EHS, waste treatment enforcement
• Increased costs of labor
• Improvements in quality, technical packages, IP
• Additional companies will expand into finished dose for regulated markets
• Many companies will stay focused on local market
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What’s Next for Europe?
• Benefitting from increased focus on reliability and quality in Europe, US, Brazil
• Focus on niche products (high potency, peptides, controlled substances) and biopharmaceuticals
• Innovative technologies
• Global production facilities and strategic relationships
• Forward integration into dose
• Further consolidation
© Thomson Reuters 2010
Thank You!
Kate Kuhrt
Director, Generics and API Intelligence
Thomson Reuters
+1 207 871 9700 x26
© Thomson Reuters 2010