It’s been said that a rising tide lifts all boats. But considering the state of pharmaceutical manufacturing in 2014, some boats are being lifted higher than others. Although the state of the pharmaceutical manufacturing union is strong, the continuing growth in the global demand for affordable prescription and over-the-counter drugs is challenging the industry in new ways to be able to manufacture enough safe, high quality drugs cost effectively and efficiently to meet demand. Similarly, the prominent western economic powers, traditionally North America and Europe, are imposing quality standards on companies selling pharma products in their countries. Both China and India are playing their own major role in contributing to worldwide global drug production capacity in the face of a globalizing industry and demand for drugs, but are facing increased pressure to assure they are making therapies, APIs and excipients to global standards of quality.
DEMAND ON THE RISE
According to the IMS report “The Global Use of Medicines: Outlook through 2016,” until recently the industry experienced several years of slowing growth, but certainly not any net decline. For example, the global market for medicines was expected, and reached a low point of 3-4 percent growth in 2012. However, IMS analysts forecast it to jump to a 5-7 percent growth rate by 2016. Total spending on medicines globally is projected to rise to $1 trillion in 2013 and to $1.2 trillion by 2016, says IMS Institute for Healthcare Informatics. In the report “Generic Drugs: World Market 2013-2023,” pharma industry analyst firm Visiongain predicts markets for generic drugs will reach $156.9 billion by 2016, reflecting a compound annual growth rate of 5.5%. Visiongain set the U.S. market at $43.1 billion for generics in 2011, making it the world’s largest national market for generics, followed by Germany, a distant second, at $8.6 billion. Visiongain says “the generics market is expected to achieve significant revenue growth over the forecast period owing primarily to the greater demand for cost-effective generic medicines.”
It’s by now well known that patent expiries peaked in 2012. According to IMS, the industry experienced its lowest annual growth during that
period. Murray Aitken, executive director, IMS Institute for Healthcare Informatics noted that, “The trillion-dollar spending on medicines we forecast for 2016 represents a rebound in growth that will accentuate the challenges of access and affordability facing those who consume and pay for healthcare around the world.”
IMS Institute identified a number of dynamics that are indeed playing themselves out as their analysts revealed in 2012, including the slowing of spending by developed economies. In 2014 the global pharmaceutical market continues to experience the impact of patent expiration. Global pharmaceutical manufacturing production is shifting from branded to generic as blockbuster drugs lose patent protection. Generic drugs now account for more than 70% of all prescriptions issued in the United States. Like branded pharma, these manufacturers are also facing challenges from increased government price controls in many parts of the world. Also affecting global production capacity is the rise of contract manufacturing organizations’ (CMOs) prominence in the global drug manufacturing universe.
Patheon, now currently operating as DPx after merging with DSM, is a case study of how market forces are affecting CMOs and the biologic portion of the industry. Harry Gill, senior vice president, quality and continuous improvement, for (then) Patheon, notes: “We are observing a shrinking fixed asset base among large Pharma, as there has been 4% compound annual growth rate (CAGR) decline since 2007.”
In 2012, says a recent 2013 Frost & Sullivan report “Global Pharmaceutical Contract Manufacturing Market,” the global pharmaceutical contract manufacturing market generated $13.43 billion in revenue and a CAGR of 6.6% through 2017. Solid dose formulations comprise the largest segment, says Frost, constituting 49.8% of the total CMO market. However, injectable dose formulations are identified as a primary outsourcing growth driver through the forecasted period with a strong 13% CAGR.
Ajinomoto Althea, a specialist in cGMP-compliant manufacturing and aseptic filling of sterile injectable therapies, is also producing protein delivery technologies for recombinant protein and parenteral products. According to Ajinomoto Althea’s Jack Wright, vice president sales and marketing, “One of the biggest market trends that will impact …our business specifically in the years to come, is the increase in outsourcing by Pharma and Biotech companies. The improvements in the CMO market environment stem primarily from new drug approvals, greater funding of biotechnology companies and demand for new services.”
Despite the highest number of patent expiries in history (some 40 in 2012), spending in the U.S. will grow by $35-45 billion over the next five years, representing an average annual growth rate of 1-4%, as newer medicines that address unmet needs are introduced and patient access expands in 2014 due to implementation of the Affordable Care Act, explains IMS. In Europe, growth will be in the -1 to 2 percent range due to significant austerity programs and healthcare cost- containment initiatives.
Health systems in pharmerging markets are also increasing spending on drugs, driven by rising incomes, better access to cost-controlled drugs and the effectiveness of government-sponsored programs aiming to increase treatment access — by limiting patients’ exposure to costs and encouraging greater use of medicines. Most analysts agree Pharma manufacturers will see flat growth in branded products through 2016. However, as noted, small molecule generics manufacturers are experiencing accelerating growth. Treatments for global priority diseases, such as malaria, tuberculosis and neglected diseases are also expected to improve and drive global pharmaceutical capacity expansion.
MORE DEMAND, BETTER PRODUCTION
Biologics manufacturers are also benefiting and reacting to expanding market opportunity. Biologics are expected to account for about 17 percent of total global spending on medicines by 2016, says IMS: “Seven of the top 10 global medicines by spending will be a biologic within five years.” The biopharma industry’s continued focus on process efficiency is being fueled by advances in biosimilars, smaller volume drugs, shorter drug lifecycles (faster trials, development cycles), and high-volume product manufacturing issues.
To evaluate the trends that are shaping the bioprocessing segment today, BioPlan Associates recently surveyed 450 global subject matter experts and senior participants on its Biotechnology Industry Council panel of bioprocessing professionals and asked them to identify the most critical factors and trends they expect will need to be addressed over the coming year. While “process efficiency” was a unifying thread, three clear sub-topics emerged: downstream processing; analytical methods development; and single-use system integration. This year, the industry will see an increase in multi-product
facilities, selective single-use adoption (both in clinical and commercial stage), a ramping up of continuous processing, and more advanced automation and monitoring. With downstream processing continuing to lag improvements in upstream, the industry will continue to look for better performing chromatography resins and consider alternatives to protein A.
Pharmaceutical manufacturers are responding to competition and change by decreasing manufacturing costs, primarily by increasing outsourcing to contract manufacturing organizations, onshore and off. Although they have closed many manufacturing plants, pharmaceutical manufacturers are building new capacity throughout the world, particularly biopharm plants, in high growth regions, using modular technology and disposable process equipment to reduce cost and risk.
In February, the FDA released “Guidance Agenda: New & Revised Draft Guidances CDER is planning to Publish during Calendar Year 2014.” Under the category, “Quality: Facility, Production and Process Control” FDA listed their agenda, which includes intended guidance on CMO Quality Agreements, GXP considerations for outsourced IT (cloud computing), and most notably for manufacturers “Quality Systems Approach to Pharmaceutical Current Good Manufacturing Practice.”
Since its inception 14 years ago, cGMP implementation has been executed by Pharma manufacturers with varying degrees of success. International regulators, especially the FDA, are pressing this agenda and remain committed to it, increasing their budgets and seeking revenues to help the entire global industry move toward its goals of drug quality and safety through manufacturing and process excellence.In her February 14 Blog, FDA director Margaret Hamburg noted after her visit to India, “In my talks with regulators and companies here in India, I have placed a great deal of emphasis on why quality matters. As I explained, quality is linked to product safety, and without a direct focus on quality, the potential for patient harm increases significantly. In recent years the FDA has identified significant lapses in quality by some companies operating in the U.S. and around the world. As a result, American consumers have had to endure greater risk of illnesses, recalls and warnings about the products many of them rely on each day. This is unacceptable. Consumers should be confident that the products they are using are safe and high quality, and when companies sacrifice quality — putting consumers at risk — they must be held accountable.”
In his recent blog post on pharmaevolution.com, Girish Malhotra, PE, president, EPCOT International, notes that despite ongoing product-quality issues, drug companies remain profitable. Malhotra explains that since profits are still being achieved with the current inefficient practices, leadership will remain resistant to improving its product development, business and manufacturing practices.
Malhotra predicts that over the next 5 to 15 years, that instead of becoming “process-centric,” as regulators hope, Pharma will stay “regulation-centric,” and “hedge in adopting many of the internal changes (manufacturing methods, technology and supply-chain improvements) that could improve profitability and move from the current quality by analysis/aggravation to a quality by design approach (QbD).”
Noting that this is due to regulatory constraints, Malhotra explains short patent lives for the ethical (brand) drugs are likely to impede innovation in manufacturing technologies. “Process-centricity, if adopted,” says Malhotra, “would allow companies to exceed regulatory requirements, which could also avoid many issues that have created public relations and financial headaches. Current regulatory guidelines and requirements discourage change. Since changing an existing process requires approval, it is still perceived to be a long and expensive step, and something to be avoided.”
Malhotra offers that because, in his view, not much is forthcoming from the industry to improve its manufacturing and business practices; regulatory bodies will pursue regulatory agendas that will force the industry to adopt better practices. “This tug of war will continue unless the industry takes the lead,” he says.
Although Malhotra is pointing a well-earned finger at generics manufacturers (one look at recent headlines concerning quality issues coming from India’s generics industry supports his assertion) not every generics producer is bereft when it comes to pursuing a regulatory approved quality agenda. Uri Hillel, head of R&D Quality and Corporate Quality & Compliance for Teva Pharmaceuticals, explained in an exchange with Pharmaceutical Manufacturing that Teva has worked on implementing guidelines defining Quality by Design (QbD) guidance and has adopted the QbD philosophy in its development of generic products. “For Teva, this means understanding the products, formulations and processes in depth, and submitting appropriate applications to the authorities using a more systematic development approach.”
Achieving appropriate quality outcomes is the generally understood goal of prevailing regulatory guidance, and those companies that adopt both QbD and (ICH Q10) Pharmaceutical Quality Systems will achieve the “desired state” of pharma manufacturing. And Hallel agrees: “By implementing QbD (ICH Q8, 9) together with ICH Q10 (which is an integrated part of QbD implementation), we can reach the ultimate goal: providing uninterrupted supply of affordable, high-quality medicines to our patient. This is the desired state for the customer and for the industry, while enhanced product and process understanding will facilitate substantial efficient tech transfers, higher rates of successful validation and timely introduction of new medicines to the patients.”
The manufacturing of pharmaceutical tablets is moving from its traditional batch process to continuous processing. While chemical and other industries have successfully implemented continuous manufacturing for many years, the drug industry has been slow to change due to the impact of FDA regulation.
Emerson’s Jim Lustri explains that for pharmaceutical the financial driver for the move to continuous manufacturing is a significant reduction in capital and operating costs. A batch process typically will have capacity utilization of 35%. This is caused by a significant amount of equipment usage lost to preparation, cleaning and scheduling.
“On the other hand,” says Lustri, “a continuous process can have a capacity utilization of over 80%.” Emerson says this means a continuous process can make the same amount of production in much smaller equipment. Additionally, continuous processes require less human activity to transport materials between units, so there is a savings in manpower as well.
TOWARDS A BETTER STATE
As demand for safe effective, high quality drugs at lower prices continues unabated, drug manufacturers and their financiers will respond because these are the market conditions in which the industry exists. Some companies will thrive and be profitable because they are adept at implementing change and instituting processes and procedures to improve the cost effectiveness and efficiency of their manufacturing operations. Others won’t be as successful and they are
already being shaken out of the Pharma universe. Regulators and politicians are adding their own pressures, but ultimately, pharmaceutical manufacturing will achieve a better state because so much is riding on the fact that they do.