APIs global business developments Dr Gian Mario Baccalini EFCG Board Member, Chairman of EFCG Pharma Business Committee President & CEO, Euticals S.p.A., Italy EFCG Press Conference, 13th October 2015, CPhI Madrid
Market outlook
Features of the European API manufacturers High level of competence in fine chemistry Employ a range of skilled, qualified & experienced staff for: Early assessment of market opportunities All technical (incl. ESHQ) management requirements Handling Intellectual Property Rights (e.g., patent issues) Production compliance with Good Manufacturing Practices on the basis of inspections performed by Regulatory Authorities
Where do the European manufacturers stand? APIs market is increasingly a global business, integrated in the supply chain; Manufacturers of APIs give more value to their production towards the dosage form; Companies are increasing their size; Manufacturers in new countries - Turkey, E-Europe, Middle-East - put more pressure on the market; Opportunities and challenges of selling APIs to BRICs countries. A global market needs a global strategy
Current status of the APIs market APIs Global APIs merchant market = 43.0 billion USD of which European APIs production=12.0 billion USD Italian market share APIs worldwide: 11% Activities of European Manufacturing: 50% custom manufacturing 50% generic medicines
APIs demand worldwide* Worlwide demand for APIs 84 billion USD - of which 41 captive and 43 merchant Merchant demand 43 billion USD - of which 32 catalogue and 11 custom made Merchant demand broken down by geographical area 43 billion USD, of which: 12.5 North America 6.8 Latin America 11,5 European Union 2.7 Japan 9.1 Rest of the world * Source: Arthur D Little
Current APIs market outlook is positive Big-Pharma companies are returning to Europe for their APIs supplies Chinese and Indian Authorities require more engagement on the environment and safety from APIs manufacturers; Regulatory aspects will be important not only for the «regulated» countries (Europe, USA, Japan) but also for emerging countries, i.e.: Brazil, Mexico Asian manufacturers often buy European APIs to export their dosage forms to the USA; Indian and Chinese domestic markets are becoming interesting for European manufacturers.
Regulatory issues and their impact on the market
Legislations affecting APIs Global Business Developments In Europe: Falsified Medicines Directive (FMD), 2011/62/EU Came in to force on 2 nd July, 2013 In the USA: FDASIA and Generic Drug User Fee Act (GDUFA) Came into force on 1 st October, 2012
The Falsified Medicines Directive (FMD) 2011/62/EU Current Directive covering human medicines does NOT ensure that the APIs used in EU comply with European GMP wherever they are made; About 70% of all APIs sold in EU now come from non-eu sites; The use of many non-eu API sites is dependent on industry selfevaluation and open to corrupt practices; DG Sante/EMA have been vigilant in their monitoring of Written Confirmations and have taken action to stop importation, for example from India; Mandatory inspections of EU API sites are performed by EU Regulatory Authorities but there are no mandatory inspections of non-eu API sites; All EU countries have transposed the FMD into national law; EFCG members have picked up new business as a consequence of FMD and flight to quality by MAHs.
EFCG Proposals: What still needs to happen? Stricter enforcement by EU authorities and tough sanctions to punish offenders; Better training of inspectors to detect falsification and fraud; Include mandatory inspections in the law - paid for by industry if needed (cf. GDUFA/USA) - or arrange Mutual Recognition Agreements with those countries with EU GMP standards.
GDUFA - Generic Drug User Fee Amendments GDUFA I will expire in September 2017; Talks around GDUFA II started with the US FDA who have called for input from a user perspective; The EU fine chemicals industry (EFCG and APIC) has been invited to take part in the discussions with the FDA, along with its US counterparts; We are gathering feedback from members in the EU and the US on their experience to share with the FDA; A crucial part of these talks are the DMF fees which have doubled since 2013 due to the decreasing number of DMFs; FDA reactions are still too slow; No EFCG members are on the FDA list of companies who have not paid their fees.
EFCG Proposals: Goals of GDUFA II Industry wishes: to enter into GDUFA II in order to accelerate approval of generic drugs, and ensure a more level playing field. their ANDAs and DMFs to be of higher quality filings thanks to a better dialogue with the FDA
EU-US Transatlantic Trade & Investment Partnership (TTIP) Progress so far TTIP aims not only on cutting tariffs, but also addressing barriers behind the customs border, i.e. differences in technical regulations, standards and approval procedures; Progress is very slow and civil society / NGOs severely critical; Bilateral trade pact could be completed by next year; Strong possibility however that not all regulatory sectors under negotiation could achieve a final agreement; The missing chapters include talks in the field of regulatory cooperation on chemicals, cosmetics, pesticides amongst others: Other sensitive topics like common rules for energy and raw materials or intellectual property are still not at the negotiation stage discussions could continue in those areas after a deal is signed http://www.ec.europa.eu/trade/policy/in-focus/ttip/
EU-US Transatlantic Trade & Investment Partnership (TTIP) the Industry s position At the onset of the negotiations, EFCG, APIC & SOCMA filed a proposal with both the EU and US government negotiators on MRAs for GMP Inspections; A letter was sent to DG Sante, EMA, DG Trade in 2013, calling for the Pursuit of a Mutual Recognition Agreement on Good Manufacturing Practices (GMP) Inspections; A MRA on GMP Inspections between the EU and US will have an immediate positive impact on the resources of the regulatory agencies, the European Medicines Agency (EMA), National Competent Authorities (NCAs) of the EU, the Food and Drug Administration (FDA), and on the industry; The resource savings for regulators should allow for the agencies to work together to identify high-risk sites in need of inspection, including in third countries, and to ensure resources are committed to addressing this need.
Impact of these legislations on the market FMD: allowed companies to gain new customers who look for reliable, long-term suppliers; GDUFA: has clearly affected EBIT but has also created barriers to low-quality imports.
EFCG: achievements and future outlook
EFCG achievements Regularly in contact with the FDA for GDUFA II; cooperation with EGA on common issues; A role, through CEFIC, in TTIP; Presidency of Rx-360; A role in the FMD (Falsified Medicines Directive); Regular meetings with the European Commission and EMA; Market Survey; A successful Annual Dinner; Memorandum of Understanding between EFCG and IPEC for excipients.
Investments in more quality compliance is paying off and attracting customers Business is picking up and outlook for the pharma supply chain is positive for the next few years Major driving forces: Customers concerns shifted from price to compliance and continuity of supply Higher demand for higher added value products EU companies offer better quality and higher reliability EU industry is launching more innovative products Return of clients, especially innovators, who previously left Europe to go shopping for their active ingredients and excipients elsewhere
In Conclusion Sustainability and compliance have to remain the key drivers for our business with NO compromise on quality; The trend towards outsourcing can be expected to continue to grow. This aspect could become increasingly important, allowing a positive projected evolution of drug substances demand.
Thank you for your attention For more information on EFCG activities please contact: Maggie Saykali EFCG Director 4 av. E. van Nieuwenhuyse B-1160 Brussels msa@cefic.be