The booming oncology research and rising cases of cancer, diabetes, and other cardiovascular diseases have created a sizeable demand for dedicated treatments, thereby driving the high potency active pharmaceutical ingredient (HPAPI) market, according to a report.
The global HPAPI market is expected to reach US$25.1 billion by the end of 2023. This market which was at US$12.6 billion in 2014 is likely to exhibit a CAGR of 7.8 per cent between 2015 and 2023, according to a research report released by Transparency Market Research.
The oncology drugs segment has been the leading segment of the global high potency active pharmaceutical ingredient market. The introduction of innovative drugs is the primary growth driver for the oncology segment
Targeted therapy is a relatively new aspect of cancer treatment. It helps medical professionals make use of new drugs that can specifically target cancer cells while doing little to no damage to healthy cells. It is an increasingly popular field of research and development in the medical industry and the global HPAPI market forms a major aspect of it. APIs or HPAPIs are heavily used in targeted cancer therapy. The primary driver for the global HPAPI market, therefore, is the advancement made in its use in the field of oncology.
According to a study released by the IMS Institute for Healthcare Informatics, more than 20 tumour types are being treated with one or more of the 70 new cancer treatments that have been launched in the past five years, with the sustained surge in innovative therapies driving the global oncology market to $107 billion in 2015.
Annual global growth in the oncology drug market is expected to be 7.5 – 10.5 per cent through 2020, reaching $150 billion. Wider utilization of new products—especially immunotherapies—will drive much of the growth, offset by reduced use of some existing treatments with inferior clinical outcomes.
Sustained level of innovation expected through 2020. The pipeline of oncology drugs in clinical development has expanded by more than 60 per cent during the past decade, with almost 90 per cent of the focus on targeted agents. The median time from patent filing to approval for oncology drugs in 2015 was 9.5 years, down from 10.3 years in 2013. A series of initiatives, including the FDA Breakthrough Therapy designation introduced in 2012, may be contributing to the reduction. In the past three years, three molecules were approved within four years of patent registration.
The availability of new cancer treatments varies widely around the world. Of the 49 oncology New Active Substances analyzed that were initially launched between 2010 and 2014, fewer than half were available to patients by the end of 2015 in all but six countries: the US, Germany, UK, Italy, France and Canada. This reflects manufacturers’ efforts to file for registration in each country, as well as the regulatory process and timing. Targeted immunotherapies are available in most developed countries, but none of the emerging markets outside of the European Union has yet registered these treatments. Even when available through the regulatory review process, not all cancer drugs are accessible to patients due to lack of reimbursement under public insurance programs.
The growth in costs of oncology therapeutics and supportive care has accelerated since 2011. The annual growth rate in cancer drug costs has risen from 3.8 per cent in 2011 to 11.5 per cent in 2015, at constant exchange rates. Growth in the US market increased from 2.0 per cent to 13.9 per cent in the same period. The US now accounts for about 45 per cent of the global total market for therapeutics, up from 39 per cent in 2011, due in part to the strengthening of the US dollar and more rapid adoption of newer therapies. In the US, cancer drugs now make up 11.5 per cent of total drug costs, up from 10.5 per cent in 2011.
The distribution of cancer drugs is shifting due to reimbursement changes and expanded use of targeted therapies. The mix of oncology drugs distributed through hospitals/clinics and retail channels varies widely across countries and reflects differences in healthcare practice, reimbursement and mix of formulations. In European markets including Italy, Spain and the UK, costs have shifted to hospital channels during the past five years, while in Canada, France and the US costs have increased more rapidly in retail channels.
In the US, cancer drugs dispensed through retail channels now account for more than one-third of total costs, up from 25 per cent ten years ago and typically covered by pharmacy benefits. This reflects a shift in the mix of new therapies toward oral medicines, eliminating the need for injection or infusion in a physician’s office or outpatient facility. Nearly 40 per cent of the total costs of targeted therapies in the US are now for oral formulations, up from 26 per cent in 2010.
A promising pipeline of targeted therapeutic drugs will also help the market progress in the coming years. These drugs have minimal side effects and impact targeted areas, thereby helping the patient to recover faster with no lingering after effects. These positive perceptions surrounding HPAPIs combined with the near-expiration dates of blockbuster drugs, which will offer several generic drug manufacturers a chance to offer affordable drugs, will further the market’s growth.
Analysts predict that the patent expiry of blockbuster drugs such as Herceptin, Rituxan, and Humira will pave the way for generic drug manufacturers, thereby making these drugs affordable to a wide number of patients. Consistent research and development to mimic branded drugs will create alternative and cost-effective treatments for patients across the globe, thereby augmenting the growth rate of the market.
The cost containment strategies adopted by companies through outsourcing are favouring market growth. This has brought down the cost of drugs drastically, making them affordable to a larger audience. The positive result of this trend is seen on the increased focus of companies on drug development and commercialization.
The leading players in the global high potency active pharmaceutical ingredient market are Sigma-Aldrich Corporation, Cambrex Corporation, Dr. Reddy's Laboratories Ltd., Novasep, Lonza Group, Novartis AG, Pfizer, Inc., and WuXi AppTec. The individual revenue shares of these players range between three per cent and four per cent of the overall market, which has made the competitive landscape exceptionally fragmented, says TMR.
"Companies operating in the global HPAPI market must focus on cost containment to maintain their profit margins," recommends the lead author of this research report. To reach out to the mass markets, the time is now ripe to focus on bridging the gap between technical expertise and outsourcing, the author adds. To gain the first-mover advantage and to remain a significant occupant in the market, players are increasingly building strategic partnerships.
Increasing outsourcing of manufacturing activities by the HPAPI companies have drastically brought down the cost of drugs. It has also translated into the expansion of geographical spread of the market, thereby pushing HPAPI revenues upward. This change in strategy and supportive regulatory framework to safeguard patent infringement has also allowed pharmaceutical companies to focus on commercialization of drugs and drug development, thus allowing the companies to strengthen their pipelines. The noteworthy reduction in financial burden is expected to be an impactful market driver.
Development of drugs that are aimed at specific results has also substantiated the demand for HPAPI drugs. Furthermore, the biggest advantage of minimal or no side effects of these drugs is making them a preferred therapy option in the healthcare sector.
However, despite the impending patent expirations of high revenue generating blockbuster drugs, the market for branded HPAPIs will remain larger than its non-branded counterpart thanks to the high cost of branded drugs.
The capital intensive nature of high potency API manufacturing activities has been the major barrier for the market. Furthermore, the need to hire exceptionally skilled labor for drug development and production is also acting as a restraint for the overall market. Moreover, the lack of universality in establishing norms regarding occupational, health, and environmental safety while researching and manufacturing high potency APIs is also threatening the growth of this market.
Asia Pacific is the expected to be the most lucrative market for high potency active pharmaceutical ingredients due to the soaring contract manufacturing activities in the region. Analysts predict that China will surpass Japan’s current share of 40 per cent in the Asia Pacific market by the end of 2025. This change will be a result of low labour costs in China, well-equipped manufacturing plants, and supportive foreign exchange policies.
India will also be an upcoming high potency active pharmaceutical ingredients market due to the growing concentration of pharmaceutical manufacturing activities in the country. In the forecast period, the country is expected to be the hub for generic drug manufacturing. The growing investments by key players in India are also anticipated to boost this market in the near future. During the forecast period of 2015 to 2023, the Asia Pacific HPAPI market is expected to rise at a CAGR of 10.1 per cent.
The fragmented nature of this market will result in strategies to acquire and merge with regional players to gain the first-mover advantage.