Transcript THOMSON REUTERS PRESENTATION TEMPLATE

Downward Trends in Traditional Sourcing
Markets and the Rise of Pharmerging Markets
Kate Kuhrt
CPhI Virtual Experience
October 2010
© Thomson Reuters 2010
Agenda
• Key drivers of sourcing decisions
– Quality
– Cost
• Evolution of various sourcing markets
• Predictions about the future
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About Thomson Reuters Generics & API Intelligence
• 20 years experience in tracking API manufacturing and generics
• An industry pioneer in research and analysis of global API
manufacturing activity
• Develop and market the Newport database family
• More than 300 customers and 3,000 users across 43 countries in
the Innovator, Generic, OTC and API manufacturing industries
• Serving the needs of
– Business Development & Licensing Professionals
– Portfolio Selection Teams
– R&D and Regulatory Specialists
– API Sourcing Specialists
• Team based in Portland, Maine, USA
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Many Drivers of Sourcing Decisions,
Including…
• Capabilities
• Capacity
• Quality
• Speed
• Relationships
• Cost
• Regulations
• Risk
• PR
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World generic API manufacturing landscape
166
256
Established
Less Established
287
Potential Future
Local
1486
Experience in
supplying regulated
markets
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Source: Newport Premium™
Of the 400+ experienced manufacturers…
• Close to 1/3 are located in India and China
• Only 160 are pure API players
USA
94
127
India
China
14
Italy
15
Japan
Spain
36
Germany
34
67
Others
53
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Source: Newport Premium™
Comparing Indian API Manufacturer
Ratings, 2006 to 2010
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Source: Newport Premium™
Comparing Chinese API Manufacturer
Ratings, 2006 to 2010
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Source: Newport Premium™
Comparing Italian API Manufacturer Ratings,
2006 to 2010
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Source: Newport Premium™
Challenges in the European API Sourcing
Market
• Constraining SPCs in Italy introduced in 1991
• No Bolar provisions until 2006
• Reluctance to change
• Expensive labor
• Environmental controls
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Drivers for India as a Major API Sourcing
Destination
• No product patents until 2005
• Cost advantage
• Rich talent pool
• No language barrier
• Improving IP protection
• Large and increasing number of FDA
approved facilities
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Drivers for China as a Major API Sourcing
Destination
• Rich talent pool
• Leadership in certain product classes over India
– Fermentation-based APIs
– Steroid APIs
– Intermediates
– Base chemicals
• Cost advantage
• Improving IP and anti-counterfeiting environment
• Better infrastructure than India
• Government support for R&D
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US DMF Filings (1999 – 2009)
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Source: Newport Premium™
FDA Inspections of API Manufacturers (2001 –
2009)
Number of Inspected Plants
35
31
30
25
23
20
20
20
16
17
15
14
16
13
10
10
10
99
6
3
China
19
13
Italy
11
8
9
7
5
12
India
4
7
9
9
3
0
2001
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2002
2003
2004
2005
2006
2007
2008
2009
Source: Newport Premium™
Progression of Indian Manufacturers
Risk
Cost
NCE
NDDS
CRAMS
WW Formulation
WW API
Domestic FD, API
Source: Piramal Investor Presentation 2008
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Total ANDA Approvals by Indian Generics
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Source: Newport Premium™
US ANDAs belonging to Chinese companies
• Only 3 companies with final ANDA approvals
• All approved ANDAs have been acquired
– Zhejiang Huahai (Huahai US Inc)
• ANDAs for 5 products acquired from Kali, KV,
Par, Actavis
• Nevirapine tentative approval under PEPFAR
– Beijing Pharmaceutical (Beijing Double Crane)
• ANDAs for 2 products acquired from Ranbaxy
– Yabao Pharma Group (Beijing Yabao)
• ANDAs for 2 products acquired from Par and
Ivax
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Challenges in Indian and Chinese Sourcing
Markets: Cost
Cost Type
Labor
China
$
Environmental
Energy
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Europe
U.S.
$$$
$$$
$
$
$
$$
$
$
$$
$$
$$
$$
$
$
$
$$$
$$
IP Protection
cGMP
Monitoring
India
$$
$$$
Additional Challenges in Indian and Chinese
Sourcing Markets
• Language barrier in China
• Inadequate infrastructure in India
• Uneven enforcement of rules in China
• Possibility of fraud
• Long-distance management
• Lack of senior level talent in top level management, QA, IP
protection
• Focus on quick targets rather than long-term opportunities
• Cultural differences
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Looking Ahead
?
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Will Manufacturing Move to the 2nd Wave
Emerging Markets?
• Little experience with regulated markets
• Small API industry
• Limited Dose capabilities
• No indications of significantly better price at
acceptable quality than in India or China
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What’s Next for India?
• Increased emphasis on FD for regulated markets
• Increased CRAMS business
• Greater reliance on China for APIs and advanced
intermediates
• Increased costs as Chinese materials become
more expensive
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What’s Next for China?
• Strengthened SFDA oversight
• Greater EHS, waste treatment enforcement
• Increased costs of labor
• Improvements in quality, technical packages, IP
• Additional companies will expand into finished dose
for regulated markets
• Many companies will stay focused on local market
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What’s Next for Europe?
• Benefitting from increased focus on reliability and
quality in Europe, US, Brazil
• Focus on niche products (high potency, peptides,
controlled substances) and biopharmaceuticals
• Innovative technologies
• Global production facilities and strategic
relationships
• Forward integration into dose
• Further consolidation
© Thomson Reuters 2010
Thank You!
Kate Kuhrt
Director, Generics and API Intelligence
Thomson Reuters
+1 207 871 9700 x26
[email protected]
© Thomson Reuters 2010