A growing geriatric population, rapid growth in biopharmaceuticals sector and technological advancements in manufacturing is driving the global active pharmaceutical ingredients (API) industry , which is a high value and rapidly growing business. While the API market is growing at a healthy rate of nearly seven per cent a year, High Potency APIs market is witnessing a much faster growth rate of double digits.
The international sales of APIs was around $120 billion in 2016, including captive manufacturing and will grow to nearly $200 billion by 2021. The global sales of High Potency APIs or HPAPIs are estimated at $10 billion in 2016.
A visible trend on the global landscape of APIs is that small molecules dominate and account for about 80 per cent of the market. The number of small molecules approved by the FDA in the last four years has averaged around 20 to 30 annually.
The late stage pipeline of over 600 small molecules provides over 3000 short-term outsourcing opportunities based on multi-step syntheses and the trend towards outsourcing is increasing. By 2020, about 230 small molecule blockbuster drugs will be on the market, according a report by the SAI Industrial LLC, an international business consulting firm.
“The resurgence is driven by chemical drug development in the areas of anti-viral, oncology, immunosuppressant and anti-diabetic therapy classes. In addition, there is a recent shift in focus to high-quality, local suppliers provides further opportunity for the United States and Europe manufacturers,” stated the SAI report.
Globally China is ranked first, followed by India. The value chain is heavily influenced by the world of big and generic pharma. Fine chemical manufacturers have experienced shifts in the product philosophy due to historical market factors which has translated into widespread under-utilization of assets, noted the SAI report.
Fine chemical manufacturers and CMOs (contract manufacturing organisations ) serve two purposes in the pharmaceutical market. One is for the supply of fine and specialty chemicals. The other is for the custom synthesis of advance intermediates and APIs. Advanced formulation services are typically provided by specialized CMOs not affiliated with fine chemical companies like for instant sterile injectables.
For the top 50 suppliers of small molecule APIs, the market is still highly diffused. The top 20 companies account for less than 40 of the market, stated SAI.
Growth trends indicate that the business is now driven by small molecule development and will continue for the near future. While many competitors compete in this business around the globe, no company dominates. The top 10 manufacturers only account for 25 per cent of the business and the leader is estimated to have only a five per cent share. The pharmaceutical development is still concentrated in the United States and Europe. The industry is interested in a dependable supply chain in terms of development, delivery and quality and, as a result, local supply is becoming important.
The Asian players will continue to play a role in the business, but much of the manufacturing is focused on commodity compounds and less sophisticated manufacturing know-how. Therefore, SAI stated that there are many opportunities for companies looking to expand their businesses.
US and EU display API prowess
The API market in the US displays a high level of competition, with mergers and collaborations between various key players such as Teva Pharmaceutical Industries Ltd., Sandoz (Novartis AG), Mylan Inc., and Allergen Plc. Additionally, demand for biological APIs is high in the region, as technological developments in the pharmaceutical industry are paving the way for newer biotechnology drugs. These expansion strategies intensify the competition between the global players, which is a result of expected high growth in the API market.
In Europe, pharmacists are offered incentives for substituting branded drugs with generic versions, which contributes to the growth of the API market in the region. Regulations also play a vital role in the API market, as the law disallows development of generic APIs in Europe until patent expiry. However, the governments of various countries in Europe have started supporting the manufacture of generic drugs post the financial crisis. Patent expirations of major blockbuster drugs in Europe during the forecast period would fuel the growth of the API market in the near future.
Demand for generic drugs is increasing not only in developed countries but also in developing and underdeveloped countries in South America and Africa. Brazil’s health authority Agência Nacional de Vigilância Sanitária (ANVISA) allows the procurement or manufacturing of APIs only for companies registered with ANVISA. Moreover, foreign companies find it difficult to enter the generics market in Brazil, as nearly 80 per cent of the market is controlled by the four local companies namely, EMS, Medley, Eurofarma and Ache/Biosintetica.
China, India growth engines of future
Asia Pacific ranks second due to the factors such as availability of low-cost production facilities and cheap labour in countries such as India and China. The cost difference ranges from 30 to 60 per cent if the drugs are manufactured in China or India compared to other countries. Hence, China and India are expected to witness significant growth in the near future due to increasing in production capacities and presence of a large number of global and domestic players. Thus, Asia-Pacific is the most competitive market in API and the competition is expected to intensify between India and China, as these are the most attractive destinations for pharmaceutical manufacturing.
In Western Europe, Indian generic API companies increased their market share from 15.9 per cent in 2008 to 19.2 per cent in 2012. More generally, Indian APIs and pharmaceutical companies have been filling approximately 39 per cent of the global market. Indian API firms are aggressively strengthening their credibility in regulated markets by obtaining approval for their products, therapeutic applications, and manufacturing facilities.
"From a global perspective, the API capability of India cannot be ignored. We account for the highest number of USFDA facilities pegged at 546 and EMA approved units besides other global regulatory agencies from Japan and Australia which enables it to take a big leap in terms of grabbing opportunity. Even though the country’s volume of production is lower compared to China, the global recognition on quality and variety of API products creates an opportunity to either partner with global players for marketing the APIs. It could also garner its revenues from being a preferred source of supply for global pharma bigwigs,”said GG Gurudatta, CEO, Estima Pharma.
Regulatory landscape of APIs
From a global perspective the majority of medicinal products manufactured in Europe and the North America contain APIs and excipients manufactured in Asia.
In response to this external input the regulators of North America, Europe and Japan have adopted the "International Conference on Harmonisation (ICH) Q7 Good Manufacturing Practice Guidance for Active Pharmaceutical Ingredients," based on endemic regulations that substantiate and even extend the WHO requirements in several areas of compliance.
European manufacturing authorization holders are obliged to ensure compliance to Good Manufacturing Practice (GMP) of their medicinal
products as per Article 46f of "Directive 2001/83/EC", which have since been made into legislation within the European member states.
Within the European Union, the ICH Q7 regulations have been established as "EU GMP Guideline Part II," with (nearly) identical terminology. Other countries such as Canada, Australia and Singapore have also adopted the ICH regulations - the latter via the "Pharmaceutical Inspection Co-operation Scheme" (PIC/S).
As is evident GMP regulations vary worldwide. The World Health Organization (WHO) has created a globally consistent basis for quality standards with the compendium "Quality Assurance of Pharmaceuticals."
Chapter two describes the GMP requirements for "APIs (bulk drug substances)".Hence holders of GMP certificates provided by competent national authorities, be it the Chinese State Food and Drug Administration (SFDA) or CDSCO in India continue to attract API audits.
Excipients to exhibit steady growth
The demand for excipients is expected to exhibit steady growth with the pharmaceutical excipient global market poised to grow at a mid-range single digit CAGR to reach $7.7 billion by 2022, according to a new study.
North America holds the largest share in the pharmaceutical excipient market due to rising demand for pharmaceutical and biopharmaceutical drugs and presence of a large number of excipient manufacturers in this region. Europe holds second major share followed by Asia-Pacific and Rest of the World.
Asia-Pacific is the fastest growing region for pharmaceutical excipients where emerging countries such as China and India are the major players due to low labour costs, increased outsourcing of inorganic & organic chemicals manufacturing and increasing governmental spending on health care.
According to Manoj Palrecha, managing director, Lake Chemicals, India accounts for 50 per cent of the production of these substance which are formulated alongside the active ingredients by companies. The remaining 50 per cent are sourced from China and Europe.
With regards to intermediates, 80 per cent of the intermediates are imported and these are largely from China. This indicates the level of dependence on this dragon land, said Palrecha.
Excipients approval in US and Europe
In United States, government bodies have established acceptable levels of excipients in dosage forms on an indirect basis. FDA (US) generally uses information submitted in an NDA (New drug application) or Drug Master File (DMF) to determine whether an individual excipient is safe. Excipient used must be ‘generally recognized as safe’ (GRAS). The excipients already included in NF are acceptable by FDA for use in formulations.
In Europe similar considerations apply. However, EC directive 91/507/EEC has classified ‘starting materials’ (active ingredients and excipients) into ‘starting materials listed in pharmacopoeias’ and ‘starting materials not in pharmacopoeias’. The requirements for excipients will be set out in a new CPMP guidelines: ‘Excipients in the registration dossier of a medicinal product’ (III/3196/91). The suggestions were that excipients need to be declared qualitatively and quantitatively on the labels of parenteral and other products.
Pharmacopoeial excipients conform with the requirements of the European pharmacopoeia or national pharmacopoeia of an EC (Excipient council) member state. Non pharmacopoeial excipients account of physiochemical properties which is needed along with data on the toxicology of the substance if relevant by regulatory authorities. In the case of new excipients, the dossier must be established on the new excipients and included in the Drug master file (DMF) system showing definition, its physicochemical properties, functions and its conditions of use along with bibliographic data on properties, chemistry and toxicology. The systematic data on the manufacture of the new excipient would be needed as for a new active ingredient along with stability data and other relevant information regarding impurities, contaminants, residues etc.