CPhI 2015 Annual Report summary: Part iii

CPhI experts warn USA trade laws are too heavily in favour of big pharma and that a future heparin incident may lead to a backlash against outsourcing and drug shortages


Generics, sterile and outsourcing forecast for continued growth, with QbD and technology commons seen as vital to safeguard manufacturing standards


SUMMARY of part iii:

Dilip G Shah, CEO at Vision Consulting Group

· The renewal of Trade Promotion Authority (TPA-2015) by the US Congress gives powers to the President to fast track the mega trade deals: a trade deal among 12 pacific rim countries and a trade and investment agreement with the European Union

· The inconsistency between the demands on the Pacific Rim countries and the US domestic law could lead to the 11 Pacific Rim countries paying more for the medicines and providing justification to reverse policies of Obama Administration

· The brand name industry will be a major beneficiary of the trade pacts. It will be able to improve its price realization in the low-priced markets. It will be able to delay generic competition in all markets, including the US and the EU.

· The generics decline will be discernible from the end 2017, if the TPPA is signed in 2015, it would begin from 11 Pacific Rim countries and accelerate with the conclusion of TTIP in 2016. The decline will extend to the US and 28 EU countries, besides members of NAFTA (2) and EFTA (4). The full blown impact of these mega trade deals will be felt by 2020

Vivek Sharma CEO - Pharma Solutions, Piramal Enterprises Ltd

· Outsourcing in the Sterile Injectable segment is still skewed towards US, followed by the EU. We anticipate this market to continue growing at 10% annually for the next 5 years and US to remain the most preferred outsourcing destination

§ Drivers for growth are preference to outsource high-potents, de-risking of supply chain by pharma (i.e. a second source or product manufacturing), emerging markets for generics, and specialized technology of outsourced providers

§ Drug Delivery Systems like Liposomes, PEGlyation, Depot Injections will see a spurt in the growth – especially in therapeutic segments that require efficient targeting of drugs

§ While biological drugs have a larger part of the injectable market, the small molecule injectables will have the higher growth

§ In the future, we see a continued demand for injectable drugs especially in drug delivery systems and Pre-Filled Syringes


Prabir K. Basu, Pharma Manufacturing, OPEX and cGMP Consultant

§ Basic pharmaceutical research results should not be proprietary, but should be shared in public to create a viable knowledge base for the common good

§ Warns if a major incident several times bigger than the heparin crisis happens, there may be a knee-jerk reaction from the FDA or the US Congress about outsourcing leading drug shortages

§ FDA should train and support private certified inspectors, to monitor outsourcing facilities abroad and these facilities abroad should be inspected on a regular basis. The entire cost of this should be borne by the industry – i.e. companies who have chosen to outsource products

§ Implemented QbD and the implementation of ICH Q9 will reduce the need for FDA inspection of manufacturing facilities, while ensuring a greater degree of quality of the medical products


Alan Sheppard Principal, Global Generics, Thought Leadership at IMS Health

§ Generic medicines stimulate innovation, both within the generic sector and the discovery and development of new medicines

§ Any existing negative incentives should be removed without delay if the full benefit of generic medicines is to be realised. Positive measures aimed at increasing usage of generics can provide a far more sustainable solution to cost containment rather than the arbitrary lowering of prices of generic medicines

§ Sustainable policies for pricing and reimbursement are essential if generic medicines are to be an effective resource in controlling long-term costs


Madrid, 13 October 2015: CPhI Worldwide, (#cphiww) organised by UBM EMEA, today announces the findings of its 2015 annual report (part iii, entitled: 'Push-pull factors on growth') live from CPhI Worldwide 2015 in Madrid. Four World-renowned experts – Dilip Shah, CEO at Vision Consulting Group; Vivek Sharma CEO - Pharma Solutions, Piramal Enterprises; Prabir Basu, Consultant; and Alan Sheppard Principal, Global Generics, Thought Leadership at IMS Health – look at the implications of US trade law regulations on generics access, the growth of steriles manufacturing and outsourcing, and the positive impact QbD, 'technology commons' and 'outsourced regulators' could bring to bear on improving manufacturing standards.

The overall findings reveal that our experts are apprehensive on both the trend towards outsourcing and generics growth. Outsourcing is predicted to grow strongly, particularly in lower cost regions, but without proper oversight, we may be at risk of single negative incident casing a knee-jerk reaction and drug shortages.


For generics, the panel predicts that in the EU, USA and the developing world they offer clear benefits to reduce healthcare expenditure. Alan Sheppard, strongly argues we need to act now and start reducing any current negative incentives to increased generics adoption, and that we need a sensible pricing solution to increase use of generics rather than policies to lower their cost. In his article, he outlines how generics stimulate innovation in both the generics sector through improved efficiencies, but also, in drug discovery and development, and pharma should be less weary of their global impact.

However, Dilip Shah warns that the reauthorisation of the TPA-2015 will fast track the mega trade agreements that are poised to have the unwanted effect of significantly slowing global access to generics. The clear implication is that these changes are being put in place to benefit big pharma at the expense of patients, generics companies and healthcare bodies. He predicts that as soon as 2017 we will begin seeing a slow down in the generics market, with the full impact of these 'mega trade deals' being felt in 2020. The most notable effect will be a reduction in generic competition, an increased ability for pharma to dictate prices in emerging markets and an easier process of patent extension. Dilip, commented: "If the TPPA is signed in 2015, it would begin from 11 Pacific Rim countries and accelerate with the conclusion of TTIP in 2016. The decline will extend to the US and 28 EU countries, besides members of NAFTA (2) and EFTA (4). The full-blown impact of these mega trade deals will be felt by 2020".

In his article, Vivek Sharma of Piramal predicts a hugely positive outlook for global steriles sales and anticipates that we will see a significant expansion – 10% per year – in this market over the next 5-years. The drivers for growth in outsourcing are primarily coming from a need for big pharma to de-risk its supply chain, using secondary manufacturing sites. It is also telling that pharma is seeking specialist CDMOs with technological capabilities beyond that of in-house pharma. In the longer term, it is foreseen this will lead to a consolidation amongst increasingly large players offering bespoke biologics and sterile services.

Novel drug delivery systems, and pre-filled synergies are also a key factor in growth, as they overcome potential compliance issues. Interestingly, whilst currently far smaller than the biologics sector, small molecule injectables are predicted to experience the fastest rate of growth. In the near team, drug delivery systems like Liposomes, PEGlyation, Depot Injections are also projected to see a spurt in the growth – especially in therapeutic segments that require efficient targeting of drugs.

Prabir Basu in contrast sees a mixture of opportunities and threats facing pharma manufacturing. In his view, we need to start evolving our approach to regulation; primarily, we need to start encouraging the sharing of techniques (technology commons) for the good of the industry – rather than keeping the majority of manufacturing process as proprietary. Forebodingly, he also warns that if we don't think about our approach to quality and outsourcing there is a possibility of another heparin type incident. Such an event, may even result in an overreaction to outsourcing by regulators and ultimately lead to crucial drug shortages as the industry attempts to adapt.

Pharma is presently focused on transferring its manufacturing outsourcing to the lowest cost base, rather than taking an approach of improving costs through process efficiencies - as many other industries have successfully achieved (notably the car industry in Japan). Prabir's supposition is that these cost reductions may, in part, be lower simply due to a lower regulatory compliance, and FDA is unsuitable to monitor facilities on a global scale with the required regularity. He does however, put forward an innovative solution, whereby the FDA trains a fleet of private certified experts that can inspect all facilities globally at least once per year and the costs should be born out by the industry (rather than by the US government as is currently the case with the FDA). Then, once these new quality cultures are embedded, QbD will reduce the need to inspect facilities so often, as process controls will be tighter.

Chris Kilbee, Group Director Pharma at CPhI: "Our goal at CPhI Worldwide is to provide a platform for the industry to share information, debate best practices and support pharma innovation. To help achieve this, in 2015, we expanded our content initiatives to include the CPhI annual report, alongside the pharma insight briefings, the pharma awards, exhibitors' showcase and the pharma forum. We strongly encourage all our attendees and the wider industry to study the annual report findings closely. For instance, the conclusions that generics, high-potents, steriles and outsourcing are forecast for renewed growth means it is vital that CPhI Worldwide provides a global hub for partnerships to be harnessed through the ingredients zones at CPhI and through our sister brands ISCE, P-MEC and Innopack respectively. Ultimately, it is the dissemination of these trends, potential industry threats and predictions that will sustain further growth over the medium- and long-term. CPhI is the global stage for this debate and our exhibitors and attendees should use these vital insights, alongside our other content initiatives, to ensure they have the best strategic analysis and information to support the most productive business decisions at the show and over the next year".


The unedited articles will be featured within the CPhI Annual Report (parts i-iv), for more details or to review part iii of the annual report online, please visit: http://www.cphi.com/europe/networking/cphi-pharma-insights


Please also join the debate on Twitter and look out for our live tweet chat at CPhI Worldwide 2015 using the hashtag (#cphichat2015) – which will be displayed throughout the event.




Notes to editors


About CPhI


CPhI drives growth and innovation at every step of the global pharmaceutical supply chain from drug discovery to finished dosage. Through exhibitions, conferences and online communities, CPhI brings together more than 100,000 pharmaceutical professionals each year to network, identify business opportunities and expand the global market. CPhI hosts events in Europe, Korea, China, India, Japan, South East Asia, Turkey and Russia and co-locates with ICSE for contract services, P-MEC for machinery, equipment & technology, InnoPack for pharmaceutical packaging and BioPh for biopharma. CPhI provides an online buyer & supplier directory at CPhI-Online.com.


For more information visit: www.cphi.com


The UBM EMEA annual schedule of Pharmaceutical events includes; CPhI, ICSE, P-MEC and InnoPack Worldwide (13-15 October 2015, IFEMA- Feria de Madrid, Spain); CPhI, P-MEC, ICSE and BioPh India (1-3 December, 2015 at the Bombay Convention and Exhibition Centre, Mumbai, India); InformEx (02-04 February, 2016); CPhI Russia (30 March – 01 April, 2016 at JSC VDNH (VVC), Pavilion 75, Hall A, Moscow); CPhI, P-MEC and Innopack South East Asia (06-08 April, 2016 at the Jakarta International Expo- Jakarta, Indonesia); CPhI, ICSE, P-MEC, BioPh and InnoPack Japan (20-22 April, 2016 at the Big Sight Exhibition Centre- Tokyo); CPhI Istanbul (1-3 June, 2016 at the ICC Istanbul Congress Center, Istanbul, Turkey); CPhI China and P-MEC (21-23 June, 2016 at SNIEC, Shanghai, China); CPhI Korea (23-25 August, 2016).




UBM EMEA connects people and creates opportunities for companies across five continents to develop new business, meet customers, launch new products, promote their brands, and expand their market. Through premier brands such as TFM&A, Internet World, IFSEC, MD&M, CPhI, Cruise Shipping Miami, the Concrete Show, and many others, UBM Live exhibitions, conferences, awards programs, publications, Websites, and training and certification programs are an integral part of the marketing plans of companies across more than 20 industry sectors.


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