CPhI Worldwide has come and gone and beautiful Barcelona is but a memory. However, pharmaceutical industry insiders have come away with interesting perspectives on the road ahead. A recent piece by William Looney of Pharmaceutical Executive caught our eye. William wrote on three topics near and dear to the heart of PaizaBio. Here they are with brief editorial comments:
Contract Manufacturing Organizations (CMOs) spell opportunity. Transformation of service providers will continue apace as the major integrated drug manufacturers seek support in rationalizing their supply chain networks on a global scale. Consolidation within the CMO/CDMO business is overdue—but it’s happening. More CMOs will go public and service providers based in emerging countries will seek to replicate their low-cost service model in the U.S. market. The higher profile of the CMO/CDMO is evidenced in the way national regulators now see them as strategic partners, not just service delivery organizations.
As a CMO, PaizaBio views greater opportunities as good news. As a CMO in China specializing in aseptic fill-and-finish of sterile injectables to Western standards of quality, this is even better news. China’s FDA recently approved the use of CMOs in China as part of a national effort to accelerate drug innovation and commercialization in China. Our focus is assisting multinational pharmaceutical companies (MNCs) in successfully sourcing the Chinese market with locally manufactured sterile injectables.
We do differ with Mr. Looney on one point; there are hardly any CMO/CRO/CDMO based in emerging markets realistically viewing the United States as a potential market. What is happening, emerging markets are fostering development of domestic service providers to service MNCs in their home country as MNC’s seek local registration of products, as well as the sourcing and manufacture of oral pharmaceuticals, but NOT injectables.
China rising. China is on course toward its goal to be a global biopharma innovator, from local manufacturer of drug formulations to discoverer of new products, first for Chinese patients, and ultimately as the source of world-class innovations with market reach beyond China. China’s innovation aspirations are anchored by a strong base in API production, rivaled only by India. Increased M&A activity among API producers will strengthen the competitive positions of companies with a track record on data integrity and quality. But there remain some clouds on the horizon, led by the affordability of novel drugs for Chinese patients and lack of investor confidence in a predictable regulatory pathway, from drug discovery to commercialization and launch.
As the second largest drug market in the world, with the potential to be the largest within a decade, China is highly attractive to MNCs willing to make the commitment. The CFDA’s recent policy changes have completely changed the way drugs are developed, reviewed and approved, making it abundantly clear the country is open for business – if MNCs or willing to play by the new rules. In addition to providing contract manufacturing services in China, PaizaBio also offers consulting services to MNCs focusing on these policy changes and the nuances and how to operate successfully in the new China.
Bump up for biosimilars. The innovative sprint to biologics makes growth of biosimilars all but inevitable, particularly in emerging countries but equally in the United States. India now has 25 companies marketing nearly 50 such products, domestically and worldwide. Not only are biosimilars viewed as a therapeutic novelty—they are also necessary, due to the projected saving for cash-strapped health systems in the United States and Europe of more than €50 billion over the next five years. Convergence of regulatory standards is still too slow, but a bright spot is national regulators’ increasing acceptance of data extrapolation, which allows a biosimilar to be approved for multiple indications without undergoing additional clinical testing. What is industry NOT doing? Stakeholder education—greater outreach is needed.
PaizaBio has been addressing the “biosimilar revolution” and its impact on MNCs. Rapid adoption of biosimilars in place of innovator blockbuster drugs, combined with implementation of formalized cost effective metrics and parameters employed to evaluate the cost/benefit of expensive new therapies, will have horrific revenue implications, particularly, in the United States where a disproportionate level of global corporate profitability is attributed. This will force MNCs to look for new opportunities, both geographic expansion as well as larger patient populations who might benefit from an emerging new portfolio of orphan and specialty products – read China – to make up for lost revenue. China is poised to participate in the biosimilar revolution, prompted by the lower costs such drugs offer and the need to expand healthcare and the latest pharmaceutical products to its 1.4 billion citizens. PaizaBio is poised to participate and assist MNCs in doing the same.
Mr. Looney’s observations are largely on target. If you would like to discuss in greater detail or explore a China strategy for your company, PaizaBio invites you to connect with our Chief Commercial Officer David Deere, about this new China and its rapidly changing pharmaceutical landscape.