CPhI Worldwide, organised by UBM Live, has announced the launch of the CPhI Pharma Insights USA market report. A joint venture with InformEx, the report provides a comprehensive analysis of the American market. Conducted amongst all major domestic manufacturers and key intentional companies, the report’s principal intention is to examine domestic perceptions of the buoyancy within this market and how these contrast with international perspectives on investing in the US.
Overall the report concludes that the US market remains the most dynamic pharma economy in the world and that structural changes are presenting new and contrasting opportunities. For USA-based pharmaceutical companies, the key trend is the repatriation of generic production, with increased investment opportunities and imminent acquisitions taking place predominantly overseas- 12.5 per cent are undertaking a domestic acquisition with a further 25 per cent internationally. However, in contrast to this situation, 30 per cent of international companies are principally looking for acquisitions within the US. This suggests that domestic firms are looking for international sites to lower manufacturing costs, whilst overseas firms require a domestic base from which to fully penetrate the regional healthcare economy.
It is particularly illuminating that over 70 per cent of domestic respondents forecast such growth in domestic production of generics- a trend that goes against recent history and natural outsourcing economics. The new dynamic is the result of rising concern about the safety of generics produced overseas, which is providing a path for generics production to return to the US- particularly for off-patent prescription drugs and branded OTC products.
Domestic companies continue to thrive with the majority of their trade (over 60 per cent) and net sales coming from within the US.. However, the interest in international acquisitions shows the desire to expand in higher growth markets and, possibly, to increase potential domestic margins via lower costs.
In contrast, the international companies we surveyed only receive a minority of their sales, most under 10 per cent, from the US, a surprising finding given the magnitude of the market. However, many are planning domestic rather than international acquisitions, showing that international firms are trying to increase their revenues from the US..
The relative split of sales from the USA market received by international companies is likely a direct result of nearly 75 per cent of those companies not yet having facilities in the US. Among these firms the consensus is that exporting drugs directly to the US remains prohibitive due to a complicated regulatory framework and a protective market.
Interestingly, however, both international and domestic companies agree that FDA regulatory changes provide more opportunities than threats. Over 80 per cent of USA based companies strongly believe they are well placed to adapt and respond to changes thanks to their tacit knowledge of the country and experiences with the regulator, in comparison to just over 50 per cent of international firms. Interestingly, larger European players believe these impending changes also present significant opportunities. However, smaller companies argue they are being regulated out of the market as they simply “do not have the resources to deal with a complex regulatory system.”
Surprisingly, over 75 per cent of domestic companies do not perceive drugs manufactured in the US as any safer than those produced in the EU, whilst over 50 per cent of international firms view the US production far more positively.
The report concludes that structurally the key aspects to continuous growth and success in the US pharma market are its technical capabilities as well as its mature regulatory and IP guidelines. These factors continue to attract the world’s biggest and most innovative pharma companies, providing a safe place to undertake research and investment with the ultimate goal of selling backed by a stable and profitable economy.
Over the next few years the US pharma economy will continue to show growth with a predicted annualized rate of up to four per cent. In fact, both domestic and international players are actively increasing exposure here and are optimistic about their growth strategies.