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Generic Drug Opportunities in Global Markets

Generic drugs have moved quickly over the last 30 years into a position of dominance in drug markets around the world.

In 2018, generic drug savings totaled $293 billion in the U.S. based on 4 billion generic prescriptions (90% of all dispensed prescriptions). This yields a 10-year savings of about $2 trillion.

While some countries have historically been slower than others to embrace generics, things are changing.

A big part of the change comes courtesy of COVID, of course, which reminded us that supply chains aren’t perfect. The result among numerous governments has been an increasingly laser-like focus on moving at least some portion of the supply chain onshore to reduce supply disruption risks and (in some cases) implement price controls on specific medications.

Generic Drug Acceptance Around the World

One example is Latin America. The region bears watching, as Latin American nations continue to build research and development capabilities to produce biologics with expired patents. From the small molecule perspective, we’ve witnessed this ourselves. Over the last 12 to 18 months, Neuland has seen a noticeable upswing in interest for drug substances from a wider range of Latin American pharmaceutical companies.

Some regions (e.g., sub-Saharan Africa) continue to fight against generics skepticism. Often, cultural resistance can be traced to underlying structural issues, such as organizations undermining the credibility of generics for economic reasons, a lack of incentive to prescribe (or dispense) generics, or the absence of regulatory or health authorities to enforce product standards.

In Africa, it isn’t all bad news, by any stretch. Africa’s population boom has seen a fast-growing aging population likely to experience increased prevalence of age-related health issues:

“In addition, the growing middle class has more disposable income than earlier, leading to changing lifestyle patterns. This brings on its own set of problems. There is increased danger of heart-related diseases, high obesity rates and other lifestyle-related illnesses. In this respect, Africa is fast catching up with the West. Yet, its tropical climate makes it host to a large number of infectious diseases such as malaria, tuberculosis, polio, meningitis, cholera, yellow fever and hepatitis to name a few…Hence in the coming years there will be significant demand for generic drugs and medicines in Africa.”

It isn’t necessary, however, to travel far afield to find different approaches to generics. Europe, as a whole, is an excellent case in point:

“[T]he attitude of physicians and pharmacists towards generics still varies a lot worldwide, even between Northern and Southern European countries. In the Nordic countries trust in the quality of generics is higher than that in the Southern countries, with concerns only over their taste, packaging and appearance, since this may affect patients’ understanding and acceptance.”

Asia-Pacific has been a different tale of generics adoption. In spite of the significant structural differences in healthcare systems across the region, there is widespread use of incentives to increase the use of generic drugs to achieve cost optimization targets. 

KPMG: Generic Medications and Asia-Pacific Health SystemsWhen it comes to generic medicine market penetration (see KPMG chart, right), there remains a great deal of disparity.

As mentioned above, legislation has played a major role in generics adoption in some countries. The most obvious example is the Hatch-Waxman Act, which paved the way in the U.S. for a wave of generics that now dominate 90% of the volume of the U.S. market (up from 63% in 2008), but other countries have launched similar initiatives.

What Does the Future Hold for Generics?

Some experts have pointed to a shift in dosage form as a key opportunity for generics. Oral generic drugs (e.g., capsules and tablets) remain the largest segment by far – representing a majority of the total market share. But other dosage forms are gaining ground, as economical drug delivery technologies in the injectables and topical segments improve. For example, the relatively youthful generic injectables market is projected to experience 3X growth over the next decade.

Continued margin pressures remain a restraint on the segment’s growth, as the gross margins of generic medicines have been tightening for years. The global average gross margin of generic drugs has been in a decreasing trend for years (for example, it fell from an average of 45.19% in 2011 to 43.56% in 2015). This trend is projected to continue.

Here are 4 other key factors affecting generic drug adoption:

  • Patent Cliff
    While we may be a few years past the steepest portion of the patent cliff (approx. 2008-12), it continues to pose a key threat to some drug company pipelines. Plenty of cliffhangers still remain. 36 drugs face patent expiration and generic entry in 2021-2022. And the number of blockbusters going off patent will increase in the coming years according to KPMG:

  • Cardiovascular Disease
    Cardiovascular disease, including coronary artery disease (CAD, or coronary heart disease – CHD), cerebrovascular disease, peripheral artery disease (PAD), and aortic atherosclerosis represents the single biggest disease segment of generic medications.A study published last year in the Journal of the American Heart Association reported in a study of 12 cardiovascular disease/hypertension medications:

“The average availability of the select medications was 54% in low‐ and lower‐middle‐income countries and 60% in high‐ and upper‐middle‐income countries, and was higher for generic (61%) than brand medicines (41%). The average patient median price ratio was 80.3 for brand and 16.7 for generic medicines and was higher for patients in low‐ and lower‐middle‐income countries compared with high‐ and upper‐middle‐income countries across all medicine categories. Affordability was lower in low‐ and lower‐middle‐income countries than high‐ and upper‐middle‐income countries for both brand and generic medications.”

The key takeaway is that medicines to treat cardiovascular disease suffer from low availability and high costs, especially in low‐ and sub‐middle‐income countries.\

  • Domestic Capacity Expansion in Underserved Regions
    The expansion of global drug manufacturing to regions like sub-Saharan Africa, MENA or South America will continue, and generics will undoubtedly continue to increase market share by volume. The growth ramp is likely to be:
      1. shorter in countries which are seeking to onshore (or reshore) drug substance manufacturing to strengthen their domestic supply chains, and incentivize emerging industry.
      2. longer in nations or regions where generic drug skepticism remains high and little government action has or will be taken to manage drug pricing, quality or availability.
  • Regulatory Harmonization
    One factor which will play a key role in generic medicine penetration is regulatory harmonization, and the degree to which GMP standards will continue to converge into a widely-accepted single global standard. The 2019 agreement between the FDA and the EMA is one such example, easing the way for manufacturers who operate in both markets (U.S. and E.U.) with a more unified approach to regulation.

The generic drug industry is driven by many stakeholders. Consumers demanding low-cost alternatives to expensive brand-name drugs are a key driver. In countries with mature generic markets, acceptance of generic medications is high. Populations in nations which lack robust healthcare and regulatory infrastructure exhibit higher degrees of distrust towards generics, though such resistance continues to decline. As supply chains become more ‘local’ around the world, robust quality assurance systems are put in place, and advocacy/education & price control/incentive programs are leveraged, generics adoption will only further increase.


API Production: Building a Process Safety Culture

It is important to distinguish between occupational and process safety hazards. Personal or occupational hazards resulting in injuries like slips, trips, falls and cuts impact one individual in a workplace. Process safety hazards, however, may result in major accidents such as fires and explosions or involve the release of dangerous materials. Working in the pharmaceutical manufacturing industry may bring many rewards, but it also has an element of risk. We often work alongside hazardous chemicals, in both labs and manufacturing spaces. Some in the industry operate with (or in proximity to) heavy equipment and industrial machinery.

For those in harm’s way, the Environment, Health & Safety (EHS) group is arguably one of the most important teams in a pharma plant. The EHS team coordinates all safety program components, including occupational safety, plant safety, process safety and more.

It is important to distinguish between occupational and process safety hazards. Personal or occupational hazards resulting in injuries like slips, trips, falls and cuts impact one individual in a workplace. Process safety hazards, however, may result in major accidents such as fires and explosions or involve the release of dangerous materials. These potentially severe incidents can have catastrophic effects resulting in multiple injuries and fatalities. Process safety hazards pose a threat not only to workers inside a plant, but also to the nearby public.

Among the various areas of EHS responsibility, the process safety group is responsible for minimizing the risks that come with handling chemicals. Their key task? Running tests to identify potentially hazardous reactions and developing the steps necessary to control the release of hazardous material and energy from process operations.

Managing the Increased Risk of Hazardous Reactions During Scale-Up

In any situation where chemicals are being used, there is a risk. In pharmaceutical manufacturing, that risk increases exponentially during scale-up from the lab bench to commercial scales. When higher quantities of chemicals are used, the chance for a reaction is much greater. Challenges which arise during scaling typically involve heat-loss behavior, which can elevate pressure or create heat-related safety issues. The principal factor in determining severity is the energy present in the chemical process, which is directly related to the quantities of chemicals in use. The effects of scale-up – namely, from laboratory or pilot to full commercial scale – has a significant impact on the balance between heat generation and heat loss.

Performing a proper process safety assessment is required for any chemical process to be executed at volume. At scale, hazardous reactions can have severe consequences – whether it is an operator injury, facility or equipment damage, or the loss of time to meet deadlines. In some cases, process safety failures may lead to financial loss and a tarnished corporate reputation. Performing a proper process safety assessment is required for any chemical process to be executed at volume. At scale, hazardous reactions can have severe consequences – whether it is an operator injury, facility or equipment damage, or the loss of time to meet deadlines. In some cases, process safety failures may lead to financial loss and a tarnished corporate reputation.

In the worst-case scenario, there can be significant loss of life, such as the 1984 release of methyl isocyanate in Bhopal where thousands of people died, or the effects on plants and humans from long-term exposure to dioxins at Love Canal in New York. Process safety focuses on ensuring that no organization or community need endure such an incident.

How Important is Process Safety?

According to the authors of the Organic Process Research & Development article (Process Safety in the Pharmaceutical Industry—Part I: Thermal and Reaction Hazard Evaluation Processes and Techniques):

“The most seasoned practitioners of process chemistry and engineering would agree that safety is of paramount importance in running on scale and cannot take a back seat to any other process characteristics.”

We agree, and that’s why we have created a culture of “safety first, quality always.” This philosophy is part of ‘The Neuland Way.’ We are a quality-conscious and value-based company committed to making a difference in people’s lives – which means safety always comes first for our team and our customers.

Begin with a Trained and Experienced Team Running Safety Tests

All chemical accidents are preventable, provided enough is known about the process details and the science. For this reason, the process safety team is always comprised of a highly trained staff with deep knowledge of chemistry. Neuland’s process safety personnel are scientists who understand the details of the process in question and have a holistic awareness of manufacturing at scale.

To safely execute a chemical process, the process safety lab (PSL) performs a series of tests which offer a predictive analysis of the following:

  • Pressure build-up and energy liberated
  • Exotherms
  • Onset temperatures and criticality classes 1 through 5
  • Static charge
  • Flammability
  • Physical and chemical properties of the material being used and produced
  • Anything else related to OHC 1-5

The results of these tests lead the team to make suggestions for the next steps. That could mean moving forward as planned, or it could mean making adjustments to meet safety protocols. The PSL remains constantly alert to any process changes, examining processes and running tests as needed.

Tests, of course, are a big part of what the process safety team does. But this begs the question – how much safety analysis is enough?

We rely on the team’s expertise to help make the right decision of what constitutes sufficient analysis. Based on their experience, they may perform a basic ‘fit-for-purpose’ assessment while prioritizing safety in the beginning stages. However, as the molecule advances into larger batches to meet developmental supplies for Phases 1 through 3, process safety development must shift to developing an efficient, efficacious and reproducible process. As process safety experts, they do whatever it takes to thoroughly understand the potential hazards in both the lab and the plant.

Safety as a Part of Team Culture

The goal of any process safety team is to do the right thing to protect the organization and the wider community. At Neuland, we recognize that safety isn’t just a series of steps we take to avoid disaster. It’s part of our culture, and it preserves the integrity of what we do.


Earth Day 2021: Reinventing Business As Usual

Within the pharmaceutical and biopharmaceutical industries, 2020 has – indeed – caused a rethink of ‘business as usual.’ April 22 is Earth Day and this year’s theme is Restore our Earth. On their website, Earthday.org states “When life around the globe returns to normal, our world cannot return to business-as-usual.”

It’s a powerful message indicating we stand at a crossroads, with different choices available to us on how we reestablish our lives. Do we pick up where we left off in 2019, ignoring 2020? Or do we use this opportunity to re-invent ourselves, our businesses and our communities?

Within the pharmaceutical and biopharmaceutical industries, 2020 has – indeed – caused a rethink of ‘business as usual.’

We’ve seen this across multiple fronts – from never-before-seen levels of collaboration to comprehensive reevaluations of supply chains. We’ve written on both topics – with the former (global collaboration in the fight against SARS-CoV-2) an unheralded, remarkable achievement, and the latter (the elevation of supply chain concerns) all too predictable, in light of worrisome events & trends over the last decade or so.

In the spirit of Earth Day, another ‘rethink’ is warranted. This one doesn’t come out of the blue, but – like supply chains – has slowly (but inevitably) crept into the industry’s consciousness: green chemistry.

Green Chemistry and the Pharma Industry

Green chemistry (‘sustainable chemistry’) concentrates on chemical processes which reduce or (preferably) eliminate entirely the use of hazardous chemicals and reagents, along with the waste they create. Drug manufacturing waste management and pollution control involves a significant amount of technology and infrastructure, such as multi-effect evaporators, vertical thin film dryers and reverse osmosis facilities.

The global pharma industry – like many others – has historically suffered from waste and pollution problems. Even today, drug manufacturing waste generation remains largely unregulated. (At Neuland, our EHS department is tasked with working on exciting initiatives aimed at reducing our ecological footprint – and customer costs.)

Different countries have addressed (or not) this issue in different ways, though it is by no means a problem that has been solved anywhere around the world. Regulations have emerged to mitigate the challenges (again, with different countries and regions doing more – or less). Industry-driven initiatives such as green chemistry and zero liquid discharge (a closed-loop cycle that minimizes or eliminates discharge of any liquid effluent by recycling and treating all wastewater), however, may hold the true keys to more sustainable drug production – driven by business decision-making, rather than via regulation…a change process which ultimately tends to be more effective.

Among pharma, green chemistry has never been particularly trendy, but for those drug manufacturers who have paid attention it is important. In fact, setting aside its earth-friendly, ‘Go Green!’ attributes, it just makes good business sense.

Why?

Green chemistry can save companies money. Here are some of the economic and business advantages green chemistry offers, according to the U.S. Environmental Protection Agency (EPA)...Green chemistry can save companies money. Here are some of the economic and business advantages green chemistry offers, according to the U.S. Environmental Protection Agency (EPA):

  • Higher yields for chemical reactions, consuming smaller amounts of feedstock to obtain the same amount of product
  • Fewer synthetic steps, often allowing faster manufacturing of products, increasing plant capacity, and saving energy and water
  • Reduced waste, eliminating costly remediation, hazardous waste disposal, and end-of-the-pipe treatments
  • Better performance so that less product is needed to achieve the same function
  • Reduced use of petroleum products, slowing their depletion and avoiding their hazards and price fluctuations
  • Reduced manufacturing plant size or footprint through increased throughput
  • Improved competitiveness of chemical manufacturers and their customers

We discussed some of the green chemistry practices we apply in a post back in 2014:

“At Neuland, we optimize input materials such as chemicals, solvents, fresh water as well as energy and process conditions in order to minimize environmental impact and health and safety hazards. For example, once an API production process has been developed, we then carry out process improvement initiatives to further maximize efficiency and reduce the impact of waste. All of our treated effluents are recycled to achieve Zero Liquid Discharge status.”

The fact is, green chemistry is not only good for the planet (and ultimately human health), but it is also good for the industry’s bottom line.

The fact is, green chemistry is not only good for the planet (and ultimately human health), but it is also good for the industry’s bottom line.     It is our obligation to recognize that we – as an industry and as individuals – can do better. That we must do better – for our health, for our communities and for humankind. It is our obligation to recognize that we – as an industry and as individuals – can do better. That we must do better – for our health, for our communities and for humankind.

Got anything planned for Earth Day 2021? Head on over to our Facebook page and share!

Did you know? > More than 1 billion people now participate in Earth Day activities each year, making it the largest civic observance in the world. Learn more at earthday.org.


The Dizzying Confusion of Drug Pricing Regulations

In the U.S., skyrocketing drug prices are as much a hot-button issue as ever, with the nation spending more than $500 billion a year on prescription medicines. In 2019, drug pricing was expected to be a top drug industry issue heading into the New Year. Things changed in 2020. The pharma industry (and the whole world) was…well…slightly distracted.

Drug pricing, however, didn’t just simply disappear as an issue. In the U.S., skyrocketing drug prices are as much a hot-button issue as ever, with the nation spending more than $500 billion a year on prescription medicines.

U.S. spending on drugs may be high, but U.S. use of prescription drugs is not. From a 2019 article at The Conversation:

“[I]t is not like Americans are overly reliant on prescriptions drugs as compared to their European counterparts. Americans use fewer prescription drugs, and when they use them, they are more likely to use cheaper generic versions. Instead the discrepancy can be traced back to the issue plaguing the entirety of the U.S. health care system: prices.”

Policies and proposals to solve abnormally high prices abound. President Trump’s Most Favored Nation model, which would have slashed “drug pricing through a nationwide ‘demonstration program’ based on the lowest price in 22 countries of 50 widely used drugs in Medicare” was recently blocked from implementation. President Biden had previously endorsed different legislation which would “cap drug prices based on an index of six countries, and empower the Secretary of HHS to negotiate for further discounts.”

Is Drug Pricing Regulation Beneficial?
In the cases of the proposals supported by both U.S. Presidents, there is much apprehension over who will end up paying the difference when it comes to regulated pricing.  Concerns that doctors will switch patients to cheaper – and perhaps less effective – drugs swirl around worries that less commonly prescribed drugs may see prices rise to offset the decreases.

Price regulation, however, isn’t all bad. In fact, it can be quite important. One example would be the price of hepatitis C vaccines in the U.S.

A 12-week course of antiviral treatment for hepatitis C – which can eliminate the virus from the body – can cost as much as $84,000. A single Sovaldi pill (one of the hepatitis C antivirals) is reported to cost as much as $1,000. While the introduction of generics or other competing products generally helps drive prices lower, there are still limits on when – and even if – a U.S. health insurer will cover treatment. It has been noted that where drug purchasing power is low, regulation could be helpful – such as in the case of hep C vaccines in the U.S.

There is certainly another side to this model. Where health insurance coverage is in place for a majority of people, increased regulation can be less helpful…and may, in fact, become intrusive or harmful. Over-regulation can stifle industry innovation, and restrain the investment needed to fund drug discovery, development, clinical trials and commercialization.

The U.S. healthcare system has a reputation as a hands-off, high-cost-driven, free enterprise system. But it also illustrates how legislation and regulation can play an important role in furthering drug availability and affordability. There have been numerous programs such as the Orphan Drug Act (itself responsible for bringing hundreds of medicines to the market which otherwise would never have been developed), the Hatch/Waxman Act (which paved the way for much broader availability of generics), and many other initiatives.

The smaller the GDP, the bigger an issue drug pricing is.

Drug pricing is an issue that is magnified in smaller countries. Some nations, and especially those in the third world, struggle with higher prices. One study by the Center for Global Development found that some poor countries pay 20-30X more for basic medicines than others. This included the generic heartburn medicine omeprazole, and the pain reliever acetaminophen (paracetamol). One reason this occurs is safety:

“In many developing countries more expensive brand-name generics are widely used, because people are concerned about unsafe or counterfeit drugs. In the poorest countries, unbranded generics are only 5 percent of the pharmaceutical market by volume—in comparison to the US where unbranded quality-assured generics are 85 percent of the market by volume.”

“A robust market for generic drugs is a core part of an affordable health system. But in way too many countries, generic drug markets are broken and patients are paying the price,” said Kalipso Chalkidou, the director of global health policy at the Center for Global Development and an author of the study. “You need enough competition to keep prices low and quality assurance that consumers trust, or essential medicines are going to be much more expensive than they should be.”
From: New Study Finds Some Poor Countries Paying 20 to 30 Times More for Basic Medicines Than Others

This is the case in India, where branded generics – as opposed to unbranded generics – are widely used. What is the difference between a branded and unbranded generic? According to an article at Pharmacy Times (Branded Generics: Misunderstood, but Lucrative):

“Branded generics are prescription products and are not authorized generics, which are drugs made by or under license from the innovator company and sold without a brand name… IMS Health, which began tracking and reporting on branded generics in 2002, defines the category as including prescription ‘products that are either novel dosage forms of off-patent products produced by a manufacturer that is not the originator of the molecule, or a molecule copy of an off-patent product with a trade name.’ This definition is used by both the FDA and the United Kingdom’s National Health Service (NHS).”

The Challenges and Complexities of Regulating Drug PricesThe Challenges and Complexities of Regulating Drug Prices

A 2019 article by Stan Fleming at Forbes discussed the challenges of regulating drug prices:

“As difficult as compromise will be for an industry that is falling short of sustainable growth, it will also be a challenge for pricing boards. If affordability is the mandate, regardless of how low commissions set prices, they will face pressure to go farther still. Markets steer capital to where the need, and hence the value, is highest. Controls would do the opposite. The higher the medical need and the more patients treated, the greater will be the pressure to reduce prices.”

The bottom line is that drug pricing isn’t a binary issue in which you either support unfettered free market solutions or inflexible, obstructive regulation. There needs to be a middle ground. It’s a complex issue. As Fleming indicates, “Price controls would improve access to existing drugs through lower costs but reduce productive capacity.”

A balance will need to be found that allows for more realistic pricing – especially in those smaller countries which suffer from exponentially more expensive drugs, and in larger nations where certain drugs without competition are priced out of reach. The challenge, as it always is, will be to craft legislation which helps patients while averting negative impacts on the pharma industry…impacts which ultimately trickle down to the very patients such legislation is intended to help. One way to achieve this would entail some degree of regulation of essential lifesaving drugs in developing countries, while de-regulating other drugs generally.


Overcoming the Challenges of API Complexity

Pharmaceutical drug molecules are becoming increasingly complex, posing challenges in formulation development and manufacturing. This is particularly true of small molecule drug APIs and peptides, both of which have a growing tendency towards complexity.

Our approach to these challenges in both cases is to begin with the end objective in mind by applying a variety of capabilities early in the process to support the later stages of drug development. These include:

  • Particle sizing and reduction
  • Process and complex chemistry
  • “Route scouting” to find new synthetic production routs for APIs
  • Reducing complexity
  • Eliminating hazardous or expensive solvents
  • Shortening the production cycle
  • Finding solutions to other technical problems

The importance of this type of process understanding was underscored in an article by Pharma’s Almanac, which argued that it has become central to successful drug synthesis:

“As small molecule APIs become increasingly complex, the development of robust, high-yielding, and cost-effective synthetic routes becomes more challenging. Strategies that emphasize a high level of process understanding facilitate more effective route design and analytical method development.”

In many cases with small molecule drugs, the primary challenge is solubility, which impacts the bioavailability — and thus the efficacy — of the drug. This has been a growing problem for many years as drugs have become increasingly insoluble. Sanjay Konagurthu, senior director of science and innovation, Pharma Services for Thermo Fisher Scientific, summed up the problem in a recent article published by PharmTech:

“Small molecules are still the largest segment of drug development in the industry. Oral and injectables dominate the pharmaceutical pipelines. In terms of oral drug delivery, it is currently estimated that 70–90% of small molecules in the pipelines have solubility and bioavailability challenges. This number has doubled compared to over 10 years ago.”

The article goes on to recommend that outsourcing partners should play a crucial and integral role in formulation strategy. A partner can provide expertise in CMC, technology, and regulatory affairs, or can act as a traditional pharmaceutical R&D department for the sponsor company. In addition, a knowledgeable CMO partner can help bolster product knowledge throughout all phases of a program lifecycle.

As a class, peptides have grown more complex as technologies and methodologies emerge to construct ever-larger chains. Even in their smallest, most simplified forms, peptides have always been a particularly difficult drug class due to challenges with bioavailability.

Despite their many advantages — including lower toxicity, high potency, and high selectivity — they tend to break down quickly, especially in the stomach. This has typically led to them being delivered by injection or infusion, but these alternatives have their own challenges since peptides also degrade rapidly in the bloodstream. The need to use such delivery mechanisms also impedes broader market acceptance.

In the last two decades, however, technology and research have enabled drug manufacturers to realize the full promise of this class by making it possible to synthesize specific peptide chains precisely and cost-effectively. The changes have come about thanks to multiple advances in chemistry, biology, genomics, dosage formulation, combined with rapid shifts in our understanding of human health and exponential improvements in technology (from computational power & informatics to spectrometry, imaging and more).

The result has been a growing use of synthetic peptides in therapeutics, diagnostics, and antibody production. They’re also being used as tools for understanding biological processes.

Confronting API Complexity

Whether due to the solubility challenges mentioned above, the need for increasingly complicated delivery methodologies, the emergence of high-potency compounds or other characteristics of small molecule or large peptide chemistry, pharmaceutical drug discovery and subsequent process development continue to grow in complexity.

 

Neuland has expertise in both solution phase and solid phase synthesis methodologies. We’ve also developed proprietary technology, a preparative HPLC technique which delivers 10 to 20 times better throughput compared to the standard preparative HPLC technique. These capabilities enable Neuland to offer the highest quality peptide products at competitive rates. Contact us for more details.


Weighing the Potential for APIs and Finished Dosage Forms in Emerging Markets

New markets for drug manufacturers are emerging worldwide in regions that have typically purchased and imported drugs in finished dosage forms. While this shift has been underway for a few years, the focus on drug manufacturing self-reliance has surged in response to supply chain security concerns that came to light during the COVID-19 pandemic.

As a result, global interest in sourcing APIs to manufacture drugs locally is growing. Here’s a quick overview of potential opportunities in key regions.

Sub-Saharan Africa

According to a recent report by McKinsey & Company, most of sub-Saharan Africa currently relies on imports for up to 70-90% of over-the-counter and prescription drugs. The resulting strain on both government and household budgets has many regional leaders considering the promotion of more local production.

Most countries in the region are still at the earliest stages of pharma industry development. Only Kenya, Nigeria, and South Africa have industries of moderate size – and almost all of them source APIs from other manufacturers. This is partly because most countries in the region lack a chemicals sector (and infrastructure) needed for API production, and partly because the cost of locally produced APIs would likely be 10 to 15 percent more expensive than imports – notably from India.

While the report acknowledges many benefits local drug production could bring to the region, development of a local industry is likely to take several decades at least. In the near term, the report suggests that drug-product formulation is the better bet until new technologies lower the costs of producing APIs locally.

Middle East/North Africa (MENA)

Pharma markets in the MENA region vary considerably depending on where you look. An analysis of the region by CHEManager, for example, notes that Saudi Arabia imports 85 percent of pharmaceuticals because of its high spending power and cultural preference for foreign brands. Egypt, by contrast, produces 90 percent of its drugs domestically, with a much larger slice of its market share made up of generics.

Manufacturing and distribution networks are strengthening in the region, especially in Morocco, Tunisia, and Algeria. These are building on already-strong and established markets in Egypt and Israel. CHEManager also stresses the importance of the Gulf Cooperation Council (GCC), a multinational partnership consisting of Bahrain, Oman, Saudi Arabia, Kuwait, the UAE and Qatar, which is working to standardize drug prices and reduce regulatory barriers. Notable among their efforts is a free trade agreement with India. This is likely to increase generic penetration into the Middle East market and grow demand for imported APIs as MENA companies continue to ramp up domestic manufacturing.

Latin America

Latin America’s high-growth economies, rapid urbanization, and aging populations are driving a growing pharmaceutical market. According to Mordor Intelligence, the region’s pharma industry is expected to register a CAGR of 6.8% between 2020 and 2025. Foreign investment from India, the U.S. and Europe are on the rise, thanks to growing domestic drug consumption, low manufacturing costs and government incentives.

Pharma Manufacturing and other industry-watchers consider Brazil one of the most promising pharma markets in the region. This is partly due to its population, which is the sixth largest in the world. Steady growth is another factor — about 7 percent year over year from 2015–2020, despite a recession from 2014–2017. According to the São Paulo pharmaceutical industry business association, Sindusfarma, the Brazilian Ministry of Economy registered 418 pharma manufacturing plants in the country in 2018.

Like many countries, Brazil currently imports about 90 percent of its APIs from India and China. COVID-19 has led to discussion of incentives to bolster local production of APIs. One analysis also anticipates significant growth in Columbia, which several companies have tapped as a regional production and distribution hub.

Asia-Pacific

The Asia-Pacific region (APAC) has been called “the new life sciences” frontier by L.E.K. Consulting. A recent special report from L.E.K. highlights a variety of attractive market entry opportunities for pharma companies. With more than 60 percent of the world’s population, regional healthcare expenditures in APAC are projected to grow by 7 percent annually to US$2.4 trillion by 2022, outpacing growth in both the U.S. and Europe. While most manufacturers have typically focused on the large markets in Japan and China, lucrative opportunities are also emerging in Taiwan, Korea, Australia, Singapore, Indonesia, and Thailand.

While APAC is a convenient geographical category, the APAC market itself is highly fragmented and there’s no one-size-fits-all approach. For example, developed markets like Australia and Singapore have advanced healthcare systems and policies that make it easy to establish a local or regional presence. Emerging markets like India and Vietnam offer different opportunities – notably from growing middle classes that want higher-quality options than the universal healthcare their countries provide. The L.E.K. report divides the region into five categories, each with different entry recommendations.

Neuland Labs: Global Partners in Potential

Interested in pursuing opportunities in any of these regions? Neuland can help you make the most of opportunities around the world by supporting your efforts with strong global regulatory experience, complex chemistry expertise and bulk manufacturing capabilities. Contact us today to learn more.


Economic Nationalism or Global Cooperation? How About a “Thank You,” Instead?

I saw this lede for an article (Bio/Pharma, People, Perseverance, and Hope) about 2020 by Rita Peters at PharmTech and smiled. It captured the state of life sciences this past year perfectly:

After a difficult year, bio/pharma science delivers promising results.

It’s hard to imagine the amount of turmoil we’ve endured. From an unknown, uncharacterized disease in January, to the first vaccines entering circulation in December. In between, tests were developed & deployed, treatment modalities were implemented…and refined. A score of FDA Emergency Use Authorizations (EUAs) were approved for use. Technologies were adapted. Trials were recruited and run. Regulators reviewed the findings. Approval was given. Product was shipped.

Less than 12 months from initial disease discovery to a publicly available vaccine.    

Just think about what that represents in terms of progress – for science generally, for healthcare, for our ability to confront health threats in real-time.

The official Word of the Year may not have been ‘unprecedented,’ (‘pandemic’ and ‘lockdown’ were apparently winners), but 2020 certainly was unprecedented. As anyone in the pharma industry will tell you, it was astounding…and the result of a great deal of dedication and hard work by teams spread around the world.

Rita Peters (rightfully) concludes the article by thanking those whose work has impacted us all. I cannot agree with her more, and wholeheartedly second her words:

“As the year closes, Pharmaceutical Technology extends its appreciation to the bio/pharma professionals and companies who worked tirelessly to drive science-based solutions to the pandemic. Your efforts—often misunderstood or criticized as being too slow by the public and policymakers—were heroic.

We also owe gratitude to the front-line healthcare workers who made personal sacrifices to care for others; and all essential workers who kept everyday life near normal for everyone else.

You are the story of 2020.”

As we turn our attention to 2021, many challenges remain.
Just as barriers to global trade appear to have risen higher than they’ve been in years, we’ve finally started creating a blueprint for global collaboration against disease. We’re standing at a crossroads.

Along one path, a global, cooperative path towards healthcare and drug supply chains.

Along the other path lies individual nations focused on supply chain self-reliance – which will likely come at the expense of collaborative innovation and speed.

Ultimately, of course, the future will likely be a combination of both.

On the one hand, our global response to COVID – while certainly not without its flaws – demonstrated the industry’s ability to work with regulators, governments, academia, non-profits and even each other to address an immediate threat to human health. That’s pretty intoxicating. It would be both reckless and difficult to step back from our ability to ‘globalize problem-solving.’

At the same time, no country – or company – is immune to the challenges posed by supply chain risk. In previous posts (e.g., here and here), we’ve discussed steps we’ve taken at Neuland to mitigate and control risks. These efforts by industry are here to stay. Companies have already started scrutinizing projects across the lifecycle for potential supply chain risks – and are taking actions to mitigate risks accordingly.

The jury is still out on supply chain reshoring. Much will depend on how unwavering political leaders will continue to be in their push to reshore an industry with such complex and far-reaching supply chains. Widely-publicized drug supply disruptions or shutdowns in recent years have brought ever-increasing attention to supply chain management. But COVID19 – and the initial threat of drug disruptions early in the pandemic – forced a major reconsideration of supply chains. The urgency to bring an entire industry onshore in many countries has already run headlong into reality,   with a narrower focus emerging on medications most at risk for disruption.

So where does this leave us for the remainder of 2021?
Unfortunately, it leaves us with some global unsteadiness and uncertainty. On the bright side, while we’re still waging war against a virus, our arsenal of tests, treatments, vaccines and resources is much better equipped than it was a year ago. And for that, we owe our thanks to everyone who made that possible.

So I leave you again with Rita Peters words of gratitude, extending appreciation “to the bio/pharma professionals and companies who worked tirelessly to drive science-based solutions to the pandemic. Your efforts—often misunderstood or criticized as being too slow by the public and policymakers—were heroic. We also owe gratitude to the front-line healthcare workers who made personal sacrifices to care for others; and all essential workers who kept everyday life near normal for everyone else. You are the story of 2020.”


Improving Investigations: An Inspector’s Perspective

Facility inspections continue to be on the minds of both drug manufacturers and regulators. Over the past year, we’ve discussed the challenges surrounding inspections Facility inspections continue to be on the minds of both drug manufacturers and regulators. Over the past year, we’ve discussed the challenges surrounding inspections in our Maintaining Quality and Supply During COVID-19 blog post, as well as providing an update on current Regulatory Guidance for Facility Inspections.

While the official guidance relating to inspections during the pandemic is useful up to a point, it only goes so far in dispelling confusion and providing useful advice. So it was refreshing to see a far more candid and direct blog recently written by Callum McLoughlin, an inspector at the U.K. Medicines and Healthcare Products Regulatory Agency (MHRA) Inspectorate. This piece contains a wealth of useful insights, which are summarized below.

In this post, McLoughlin draws on his recent inspection experience and current deficiency data to highlight some of the most common issues they encounter at companies of all sizes and operating models. In particular, he stresses the importance of the Corrective and Preventive Action (CAPA) system and investigations. His preamble notes that “roughly 10% of deficiencies raised in [the most recent] period were directly attributable to poor investigations”, and that these “could also be the root cause of other deficiencies too”.

So, What Do Inspectors Observe?
When inspecting, GMP inspectors are looking for “evidence that the investigation and Corrective and Preventive Action (CAPA) system is operating in a state of control.”

Red flags that suggest this is not the case include:

  • Investigations being raised long after the event occurred or taking an unreasonable time to complete
  • Root cause analysis being raised as a CAPA to enable premature deviation closeout
  • A large proportion of CAPAs being overdue or being extended
  • Human error being listed as a frequent root cause

McLoughlin is also wary of situations where root causes are deduced based on past experience rather than evidence:

“Professionals in industry have a lot of experience and knowledge, however this can sometimes mean that a theoretical root cause can be concluded based on previous experience – this is especially true if investigators are not given freedom to apply relevant challenge to all relevant processes and systems. This can lead to conclusions being reached based on assumption rather than an evidence-based investigation.”

What About Human Error?
There’s no question that human error can be a potential root cause. But before citing human error, a thorough investigation is needed to evaluate all other system and process-related variables.

“A common manifestation of this is where companies take the view that long-standing procedures and methods work perfectly and cannot be improved, with errors associated with the task attributed to individuals not following instructions accurately. When the same or a related problem has occurred on several occasions and with different people this is a clear indicator that human error is unlikely to be the true root cause.

Human error should only be cited as root cause when all other system and process related variables have been ruled out. It is plausible that, where human error is a potential root cause, the true root cause could be deficiencies in the training system, an overly complex or difficult to follow procedure, or perhaps other factors such as inappropriate multi-tasking and distraction. It is unlikely that ‘remind/re-train the operator’ will ever be an effective CAPA in such circumstances.”

For more insights about the current state of inspection procedures, check out our December Update on Regulatory Guidance for Facility Inspections at NeulandLabs.comWhat Inspectors Like to See
In addition to the warning signs discussed above, McLoughlin also sketched out what “good” looks like from an inspector’s point of view. His inspectorate likes to see the following:

  • Effective investigations — Launched with the intention of identifying the true root cause and appropriate CAPAs. McLoughlin notes that investigations should look beyond the first probable root cause to rule out other possibilities.
  • Risk assessments — Evidence-based assessments should be detailed enough to cover all reasonable risks, rather than simply building cases to support prior decisions.
  • Consideration of patient safety — The impact of quality, safety, and efficacy risks on patients should be central to all investigations.
  • Systematic root cause analysis —McLoughlin recommends several proven approaches to root cause analysis that deliver “clear advantages.” A red flag for inspectors are the words “true root cause could not be identified” in your report.
  • A well-managed system — Investigation support systems should be monitored to ensure that they deliver meaningful information. In particular, McLoughlin calls for scrutiny during management reviews and escalation to keep the system in control when things go wrong.

For more insights about the current state of inspection procedures, check out our December Update on Regulatory Guidance for Facility Inspections. You can read McLoughlin’s full post here.


Europe Looks to Tighten Supply Chains

The last nine months have seen a complete re-evaluation of the risks inherent in global pharma supply chains. COVID-19 forced a doubletake in C-suites, but concern was already well on the rise. And while politicians the world over have focused on ‘bringing drug-making back home,’ the industry as a whole has been busy considering key mitigation strategies to avoid disruptions and shortages both in the near-term as well as strategically.

Supply chain security, a long-time fixation for us at Neuland, is finally getting attention. For years, aside from limited mishaps, the global pharma industry experienced the upside of globalization. More options. More sources, Faster turnaround times. Seamless distribution.

But the pandemic exposed the shortcomings. These shortcomings weren’t necessarily shortcomings of globalization itself, but rather an industry-wide failure to appreciate the reality of certain risks and the mitigation steps which suddenly become mission-critical when things go wrong.

To be fair, some supply chain issues have little do with COVID-19. Drug shortages for example, while an issue that emerged in the early days of the pandemic, are not a recent phenomenon. A July 2020 EU Report on the shortage of medicines noted that drug shortages increased 20-fold between 2000 and 2018…and 12-fold since 2008.

The EU report’s recommendations for strengthening drug supply chains among member nations are similar to those proposed or initiated elsewhere during 2020, such as the U.S. and India. Chief amongst them – and a popular stance in an increasingly weary and watchful world – securing or reshoring domestic sources of supply.

While the report calls for a relocation back to the European Union of pharma plants, this would appear – as with the U.S. – to be a longer-term strategic objective. Realistically, outsourcing – and supply chains which cross countries and continents – will continue, albeit with much more attention paid to supply-related issues.

 A Global Call to Improve Supply Chain Transparency
Transparency in drug manufacturing and distribution is already on the agenda, as the final elements of the US Drug Supply Chain Security Act take effect in the next few years. The focus on transparency will likely broaden, as supplier quality programs, precursor & intermediate sources, facility redundancies, and other measures which could have a downstream impact are more thoroughly scrutinized.

The good news is that there are a multitude of steps pharma companies and their suppliers have taken – and are increasingly taking – to control and manage supply chain risks.

Are Your Suppliers Also Competitors?
One more quick point, however, before we discuss some of the steps companies are already taking to reduce supplier risks. In growing numbers, API manufacturers are jumping into the drug game with generics – competing against their potential customers. Pharma companies evaluating their confidence in suppliers should consider whether today’s supplier is tomorrow’s generic competitor. The safest bet is to find an API supplier who is (and intends to remain) a pure-play API provider focused on maximizing the value of your drug.

It Starts with a Focus on Quality
COVID-related supply chain issues did not stem from quality issues, but plenty of other drug shortages, alerts and recalls have. Being at ease with a supplier’s quality system is no longer optional. It’s the only choice for companies worried about supply chain risks. Vendors should be thoroughly vetted, and a clear understanding of how their quality systems function should be ascertained.

A supplier quality checkup should focus in equal parts on both regulatory track records and their expertise with your specific developmental and commercial needs, namely, proven experience with your project’s chemical reactions and classes of molecules.

Building Redundancy is Key
Redundant production suites & multiple production sites in isolated facilities are another measure pharma company execs are increasingly looking for to better manage risk. Suppliers should have in place

internal supply chain risk mitigation capabilities. We discussed some of these capabilities in a 2019 post:

“In the event of a natural (or compliance) disaster, they will ideally have in place alternate sites or facilities capable of providing seamless supply, at the capacities and frequencies you require. In some cases, an API supplier may be willing to develop the process on your behalf and outsource the manufacturing to further secure supply chains.”

Backward Integration of High Risk Supplies or Processes
Those companies which have embraced backward integration are well-positioned to weather future supply chain disruptions. Backward integration – in which a company internally produces their own raw or starting materials – is a critical step towards securing and stabilizing the supply of active pharmaceutical ingredients. In-house synthesis reduces dependence on other – typically foreign – chemical manufacturers for precursors and raw materials.

It reduces risk by ensuring greater control over the process, and eliminates the need for multiple raw ingredient sources – a practice which can lead to product variance/consistency and quality issues.”

At Neuland, our efforts to backward integrate intermediates pre-dated the pandemic, and coincided with our acquisition of Unit III. This extended our capabilities to manufacture intermediates as needed. From our standpoint, exerting greater process control allows us to ensure production, compliance and quality targets are all consistent & predictable.

As we have seen in the U.S., India and now the E.U., concerns over supply interruptions have risen to become top-of-mind. While longer-term strategies to re-establish domestic supply sources may (or may not) prevail, a sharpened focus on supply chain risk mitigation efforts – extending to your supplier’s suppliers and beyond – is always a sensible approach.


Pharma Trends for 2021

Seven 2021 trends for the small molecule pharmaceutical and contract manufacturing spacesAfter 2020, trying to predict anything at all seems a bit reckless. Most of us are still trying to wrap our heads around last year — and hoping this year will follow a different trajectory. Looking back at the various trends outlined in January of last year, I think we can all be forgiven for not having seen the 800-pound gorilla named “COVID-19” sitting quietly by itself in the corner of the room.

COVID, of course, did happen. And while many predicted trends fell by the wayside, the industry has seen some significant changes.

  • Global collaboration exploded.
  • Supply chains were forced to become more robust, or at least to begin the transition to redundancy.
  • Research — and later development and clinical — programs scaled up at speeds never before imagined.

Remarkable things happened, and continue to happen, that will have a lasting impact on the industry.

So what can we expect in 2021?

Here are seven trends (admittedly more modest than developing vaccine candidates for a novel virus in six months) we forecast for the small molecule pharmaceutical and contract manufacturing spaces.

1.       Big Data & AI

Computers are still no match for the human brain. But there are many tasks they can perform faster or more efficiently — like sifting through vast amounts of data or keeping tabs on conditions in manufacturing facilities. And unlike us, they don’t need to sleep.

There isn’t enough paper in the world to record and store the growing tsunami of data in the pharma industry alone (not that we’d have the time to write, type, or print it all, much less make any use of it). Pharma manufacturers are already on the cutting edge of these technologies, using them to keep production lines moving at optimum efficiency, build models to predict drug effectiveness, and enhance clinical trials. Many manufacturers are watching this space for the industry’s next major technological breakthrough, and backing their bets with significant R&D funding.

It’s not just manufacturers that are getting into the act — regulators are starting to catch on to the potential for AI to help ensure compliance. And some firms are even using AI to guide merger and acquisition (M&A) choices. Which brings us to…

2. M&A activity

While pandemic shutdowns may have stalled some M&A activity, there are still plenty of big fish eager to gobble up smaller upstarts. This is true not only for pure pharma companies, but across contract manufacturing organizations (CMOs), contract research organizations (CROs), and contract development and manufacturing organizations (CDMOs).

Companies that have done well as a result of COVID-19 will be the most obvious targets, especially the mid-sized pharma and biotech firms that are playing key roles in the development of vaccines and virus testing. Digital firms also look attractive. The pandemic gave a significant boost to digital healthcare, and industry-watchers expect those trends to continue when things return to normal.

At the same time, many investors smell blood in the water among device manufacturers, pharma companies, and other firms not related to COVID-19. Many of these are struggling as a result of sharp declines in elective procedures, both from pandemic restrictions and patient fears of going anywhere near a medical facility. Bargain-hunters think many of these will be eager to deal once credit starts flowing more freely again.

3. Increased focus on impurities

In the last two years, the API world was turned on its head when genotoxic impurities (GTIs) were found in medications that had been approved years before. They were first discovered in a generic version of valsartan — even though the manufacturer had followed best practices to the letter — and later in ranitidine samples. (For more background, check out our recent blog post: “The Impact of Impurities on the Pharmaceutical Industry”).

Unsurprisingly, API manufacturers and their partners quickly scrambled to overhaul established practices and safety standards, and not just because global regulatory agencies started tightening the screws. After all, no sane company wants to negatively impact human health or lose a profitable product, much less face the fallout from a similar PR nightmare. Major investments in equipment and personnel are on track to continue well into the coming year, and probably beyond.

4. Deeper outsourcing partnerships

Contract organizations have growing incentives to expand their operations, boost efficiency, grow their reputations, and build long-term relationships with their clients. Expect more of the same in 2021.

Big pharma companies continue to expand their reliance on CMOs, CROs, and CDMOs. That’s good for the business of these partners, but it also brings them under more pressure to deliver top performance. Big Pharma also wants to cut costs by not owning everything anymore, so they’re looking for partners who can routinely provide a diverse range of services, not just handle isolated projects on an as-needed basis.

These trends continue to reshape the way contract sector does business (not to mention driving some of the M&A activity we covered earlier). Contract organizations have growing incentives to expand their operations, boost efficiency, grow their reputations, and build long-term relationships with their clients. Expect more of the same in 2021.

5. Regulatory backlash?

For global regulatory agencies, “COVID-19” might just as well have been spelled “CATCH-22.” Practically overnight, the on-site safety inspections they’ve historically relied upon to keep the industry safe became a significant safety risk in and of themselves. Rather than risking even greater drug shortages or delays in the development of treatments for the pandemic, regulators gritted their teeth and permitted unprecedented accommodations to inspection practices (when inspections weren’t simply delayed indefinitely).

Most – if not all – of the resulting guidance documents prominently featured the word “temporary,” and there were attempts to get back to something more like business as usual in August and September. Regulators backed off a bit when new virus surges began running wild, but their willingness to let the industry police itself will evaporate overnight as soon as vaccines, the lifting of travel restrictions, and other measures make it safe to perform on-site inspections again. When that happens, you can expect to see a rash of international inspections by the FDA, EMA, and other leading regulatory bodies. Whether this will be a full-scale effort remains to be seen, but a significant backlog has piled up in 2020. Woe to any sites that are found wanting.

6. Supply chain security

The global rush to secure domestic supplies and production capacity — whether in Brussels, New Delhi or Washington DC — is expected to continue. The victory of Joe Biden in the US presidential election is likely to reduce nationalistic trade policies somewhat, which may ease some of the pressure. Even so, many industry players had a significant scare when supply shortages started to bite, especially those that relied on a single source for critical APIs.

Keeping costs at rock-bottom is still a top priority, but after the pandemic it won’t be the only one. You can’t make a profit if you have nothing to sell. Efforts to address supply vulnerabilities are just getting started, and will take years to fully implement. Watch for more reshoring in the long-term, and a focus on redundancy and supply chain security in the short-term.

7. More Generics

Patent expirations will continue to drive the growth of generics in the coming year. An estimated 37 drugs came to the end of their exclusivity periods in 2020 – or soon will in 2021 – opening the field to generic alternatives.

Patent expirations will continue to drive the growth of generics in the coming year. An estimated 37 drugs came to the end of their exclusivity periods in 2020 – or soon will in 2021 – opening the field to generic alternatives.

Major names on the list include the HIV drug Truvada, which came of age at the end of September, but is holding on for at least another year.

2020 also saw the expirations of Afinitor, Chantix, NuvaRing, and Forteo, to name just a few. In 2021, six drugs will lose patent protection in February alone. In order of appearance, they include Feraheme, Fortical, Crixivan, Prevantics Maxi Swabstick, Cysview Kit, and Northera. No doubt there will be challenges and stalling tactics to preserve the most profitable pharma cash cows, but these efforts will only serve to delay the inevitable.