The biological drug products market is expanding, especially in emerging economies. With the improvement of living standards in those countries, the number of patients accessing drug treatments is growing rapidly. In Brazil alone an estimated 40 million people joined the middle class between 2000 and 2010. In China rapid economic growth and the emergence of a middle class with growing disposable income in the last decade have contributed to an increased demand for high-quality healthcare services. In India the number of middle class households (earning between $4,413 and $22,065 a year) is estimated to increase more than four-fold, from $32 million in 2010 to $148 million by 2030.
Countries that are growing in size and wealth are looking to establish more domestic industries to support a growing population that can afford to buy more goods and services. In particular, government-driven incentive programs are multiplying to encourage local investments in biologics production facilities. For example, if a company in Brazil decides to build a modern manufacturing plant to produce a product for the local market, the government will buy this product from the company. Companies that do not have plants in Brazil will eventually be eliminated from the market for a particular product. In India the government has been proactive and supportive in driving the growth of the biotechnology sector by offering grants and tax incentives, and implementing investment-friendly regulations.
Since the mid-1980s, South Korea is by far the best example of government support for the biotechnology industry. One of the fastest-aging countries demographically in the Organization for Economic Co-operation and Development (OECD), South Korea needs to prepare for and deal with the rising incidence of chronic diseases such as diabetes, Alzheimer’s and Parkinson’s. The government provides various incentives such as tax reductions or cash grants to companies targeting treatment of those specific diseases.
In other cases, governments apply a protectionism strategy favoring a model where drugs must be produced locally to be eligible for local healthcare system reimbursement or to be available for patients. In Russia, for example, local pharmaceutical companies are able to meet only a small percentage of the country’s requirements and 80 percent of drugs are imported. To change this situation, Russia is implementing extreme protectionist policies such as a law that allows discriminatory procurement practices by giving the government the right to enforce a ban on foreign goods in public procurement tenders.
At the same time, some biologics blockbuster patents going to public domain lead to development of multiple biosimilar programs, benefiting the broader population with lower treatment costs. With more than 200 biosimilar drug development programs – spanning from research to Phase III – in China, Brazil, India, Turkey and Russia alone, biosimilars are becoming a public health challenge and a large business opportunity in many countries.
This overall situation is leading to a new “for country in country” strategic trend in biopharmaceutical industry supply chains where biopharmaceutical companies are considering localizing small scale production facilities to serve specific countries or regions.
However, there is a high level of risk related to investments in emerging countries. Political instability can be of great concern in some countries, turning a winning market environment into a real no-go in a matter of months. Economical fragility and a government’s inability to fund existing incentive programs often limit attractiveness of those markets. Also, the limitation – or absence, in some cases – of healthcare systems, as well as relative complexity of drug reimbursement processes may limit populations’ access to drug treatments.
Companies interested in investing in biologics in emerging countries such as Brazil, Russia, India, China and in middle-eastern and Asian-Pacific countries must solve an equation which consists of investing quickly to be the first to enter, lowering the financial risks and ensuring drug products cost of goods sold (COGS)are competitive and affordable. The key to this equation is the flexible factory concept.
The flexible factory concept is a single-use facility designed with ease of use, minimized contamination risk and flexibility in mind. A wise implementation of single-use technologies allows drug manufacturers to get the best possible outcome from those technologies: easy and fast re-purposeability for a variety of processes, increased capacity with rapid changeovers between batches, minimization of SIP/CIP steps with associated time and costs savings. The ability to run some of the process steps closed and continuously also allows fewer cleanroom classifications and reduced capital expenditures while increasing facility flexibility and adaptability to meet local market demand.
Despite the introduction of single-use new technologies, the majority of biotech processes and facilities still contain a number of stainless steel and multi-use equipment. At EMD Millipore, a subsidiary of Merck, the company made the decision to move away from this traditional setup and implement full single-use processes at both the laboratory and manufacturing scale. This change from multi-use to single-use was developed in parallel with the revamping of EMD Millipore’s Biodevelopment Center in Martillac, France, as well as part of the company’s global strategic development of flexible facilities concepts.