Generics production predicted to return to the USA due to recent overseas quality concerns
USA manufacturers bullish in search for acquisitions: nearly 40% are planning one imminently, 25% internationally
- Generics production represents a huge area of growth for the US market, which is partially driven by rising safety concerns surrounding drugs manufactured overseas
- The USA pharma market continues to represent a huge profit opportunity thanks to a largely uncontrolled pricing market
- Both foreign and domestic companies are increasing investments for the coming years with many focused on the API sector
- Domestic companies see increased regulations as providing opportunities and allowing them to increase their competitiveness; however, international companies are more split, believing smaller companies are being regulated out
- There is widespread agreement over the industry's growing desire to increase efficiency due to future price control
- Overall growth forecast is up to 4% annually over the next three years
05 August 2014: CPhI Worldwide, organised by UBM Live, announces 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 USA.
Overall the report concludes that the USA 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% are undertaking a domestic acquisition with a further 25% internationally. However, in contrast to this situation, 30% of international companies are principally looking for acquisitions within the USA. 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% 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 USA- particularly for off-patent prescription drugs and branded OTC products.
Domestic companies continue to thrive with the majority of their trade (over 60%) and net sales coming from within the USA. 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%, from the USA, 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 USA.
The relative split of sales from the USA market received by international companies is likely a direct result of nearly 75% of those companies not yet having facilities in the USA. Among these firms the consensus is that exporting drugs directly to the USA 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% 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% 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% of domestic companies do not perceive drugs manufactured in the USA as any safer than those produced in the EU, whilst over 50% of international firms view USA production far more positively.
As one domestic manufacturer puts it, "the USA market is still a huge international draw because drugs can be sold at much higher prices compared to overseas countries, allowing us to increase revenues and decrease marginal pressures."
The report concludes that structurally the key aspects to continuous growth and success in the USA 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 USA pharma economy will continue to show growth with a predicted annualized rate of up to 4%. In fact, both domestic and international players are actively increasing exposure here and are optimistic about their growth strategies.
"This comprehensive report of the USA pharma economy shows that both the near and long-term outlook points to an increasingly prosperous and innovative market. We are seeing huge potentials for growth especially in the generics market. Some domestic consumers would prefer to buy drugs manufactured in the USA, and this has seen a key trend of returning production. Even so, overall the USA is still a mass importer of generics. There has also been a surprising optimism towards the increasing FDA regulations and price controls. Domestic companies are using regulatory changes as an advantage, giving them a competitive edge over international companies. With further regulatory changes to come, domestic firms feel better able to adapt and confident in the regional pharma market. However, international companies are looking to combat this by planning more domestic acquisitions, allowing them to improve their penetration in the USA market." Chris Kilbee, Group Director Pharma
In total, we interviewed 110 people from across the entire pharmaceutical supply chain, out of which 36 were domestic companies from the USA and 74 international companies working in the USA.
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, Southeast Asia, Istanbul, Russia and South America 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 Live annual schedule of Pharmaceutical events also includes; CPhI South America (5-7 August 2014 at Expo Centre Norte, Sao Paulo- Brazil); CPhI, ICSE Korea (2-3 September, 2014 at the COEX- Seoul, South Korea); CPhI, ICSE, P-MEC and InnoPack Worldwide (7-9 October 2014, Paris Nord Villepinte- France); CPhI and P-MEC India (2-4 December, 2014 at the Bombay Exhibition Centre- Mumbai); CPhI, ICSE, P-MEC, BioPh and Pharmatec Japan (22-24 April, 2015 at the Big Sight Exhibition Centre- Tokyo). CPhI Russia and IPhEB (27-29 April, 2015 at the VVC, Pavilion Nr 75, Moscow Russia); CPhI, P-MEC and Innopack South East Asia (26-28 May, 2015 at the Jakarta International Expo- Jakarta, Indonesia); CPhI Istanbul (3-5 June, 2015, at the Lutfi Kirdar Convention and Exhibition Centre- Turkey); CPhI, Hi and Fi, ICSE, P-MEC, BioPh and LabWorld China (23-25 June, 2014 at SNIEC- Shanghai, China)
Produced by UBM, InformEx fosters the continuous advancement of the fine, specialty, and custom chemicals industry by providing networking tools, educational opportunities and community collaboration forums — all designed to accelerate growth in the changing chemical enterprise landscape. The annual InformEx event is the premier must-attend exposition for the chemical industry for the past 30 years, providing a platform for in-person networking and business development. Each year the event brings together an international mix of more than 3,500 fine and specialty chemicals professionals and hundreds of exhibitors. To learn more, visit www.informex.com
About UBM Live
UBM Live 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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