chinas changing role in the global pharmaceutical supply chain
TRANSCRIPT
REUTERS/Michaela Rehle
CHINA’S CHANGING ROLE IN THE GLOBAL PHARMACEUTICAL SUPPLY CHAINBob KennedyManager of Industry ResearchThomson Reuters
3 May 2012
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THOMSON REUTERS GENERICS & API INTELLIGENCE • 20 years of experience in global generics
• Unique research that tracks global generic API development and manufacturing activities
• Intelligence appears in Newport Premium™ database used by professionals in:– Strategy, Planning and Product Targeting– Business Development & Licensing– Competitive & Business Intelligence– API Sourcing Specialists– Patents & Intellectual Property
• Supports Life Sciences consulting projects
• Serves 300 customers operating in 43 countries
• Team based in Portland, Maine, USA
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AGENDA• Global API manufacturing landscape
• Trends, drivers and challenges of the Chinese API manufacturing industry
• Comparison of China to other API sourcing markets
• Forward integration into finished dosage forms
• Future prospects for the Chinese pharmaceutical industry
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GLOBAL API MANUFACTURING LANDSCAPE
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API MANUFACTURING LANDSCAPE171
264
314
1528
Established
Less Established
Potential Future
Local
Experience insupplying regulated
markets
Established: companies with years of experience supplying highly regulated marketsLess Established: companies with less of a track record in supplying regulated markets in terms of the length of their history or number of products suppliedPotential Future: companies with little or no known experience but have aspirations to become involved in regulated marketsLocal: companies with no record, capability or interest in supplying to regulated markets
Source: Thomson Reuters Newport Premium™
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REGIONAL HUBS – API MANUFACTURINGOver 1/4 of the 400+ experienced manufacturers are in India and China 142
1002617
15
36
52
66 USA
Rest of World
Japan
Germany
Spain
Italy
China
India
Source: Thomson Reuters Newport Premium™
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TRENDS, DRIVERS AND CHALLENGES OF THE CHINESE API MANUFACTURING SECTOR
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CHINESE API MANUFACTURER RATINGS
Source: Thomson Reuters Newport Premium™
0
20
40
60
80
100
120
140
160
180
Established Less Established Potential Future
2005
2011
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PROGRESSION OF CHINESE API MANUFACTURER RATINGS: 2005 vs. 2011
Source: Thomson Reuters Newport Premium™
3
14
901
4
40
5
14
31
2
5
3
2
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Est (2011) LE (2011) PF (2011)
Est (2005)
LE (2005)
PF (2005)
Local (2005)
NR (2005)
Est: Established LE: Less Established PF: Potential Future NR: Groups not rated by Newport in 2005
n=13 n=37 n=164
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REGULATORY FILINGS BY CHINESE COMPANIES
Source: Thomson Reuters Newport Premium™
0
20
40
60
80
100
120
140
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
US DMF (Type II) Filings COS Filings
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US DMF FILINGS vs. US FDA INSPECTIONS IN CHINA
Source: Thomson Reuters Newport Premium™
0
10
20
30
40
50
60
70
80
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
No. Groups with US DMF (Type II) Filings No. Groups with FDA Inspections
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SOURCING DRIVERS IN CHINA • Talented pool of scientists and engineers
• Lower cost base and economies of scale
• Scale of infrastructure
• Improving IP and anti-counterfeiting environment
• Newly revised GMP regulations
• Leadership (cost and/or technical) in certain product classes– Intermediates– Base chemicals– Fermentation-based APIs– Steroids
• Government support for API exports to regulated markets
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REGULATED MARKET ACTIVITY DEALS: API & INTERMEDIATES
Company Partner Activity
Chongqing Huapont Janssen various
Hubei Shine Star Flamma amino acids & derivativesJiangsu Hansoh Hospira gemcitabine hydrochloride
Ningbo Smart Novartis diclofenac sodium
Shenzhen Hepalink APP heparin
Zhejiang Hisoar Boehringer various, intermediates
Zhejiang Hisun Eli Lilly capreomycin, vet drugs
Zhejiang Hisun Alpharma vancomycin
Zhejiang Huahai Merck, Novartis various, intermediates
Zhejiang Medicines Hospira vancomycin
Source: Thomson Reuters Newport Premium™
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SOURCING CHALLENGES IN CHINA• Risk of technology theft
• Environmental costs and increasing prices
• Compliance issues– Ongoing training needed to ensure adherence to SOPs & GMPs– High turnover rate for qualified and experienced QA/QC staff– Lack of an effective QA program among big groups
• Language barriers
• Limited long-term strategic planning– Focus on quick targets rather than sustainable profits
• Limited experience with supporting patent challenges
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CHINA VERSUS OTHER API SOURCING MARKETS
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API MANUFACTURER RATINGS
0
10
20
30
40
50
60
70
Italy India China
20052011
Data represents combined total of Established + Less Established companies
Source: Thomson Reuters Newport Premium™
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US DRUG MASTER FILINGS
0
50
100
150
200
250
300
350
400
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
ChinaIndiaItaly
Source: Thomson Reuters Newport Premium™
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CERTIFICATES OF SUITABILITY FILINGS
0
20
40
60
80
100
120
140
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
China IndiaItaly
Source: Thomson Reuters Newport Premium™
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US FDA INSPECTIONS
0
10
20
30
40
50
60
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
ChinaIndiaItaly
Source: Thomson Reuters Newport Premium™
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COST COMPARISON
Cost Type China India Europe U.S.
Labor $ $ $$$ $$$
Environmental $$$ $ $ $
Energy $$ $$ $ $
IP Protection $$ $$ $$ $$
cGMP
Monitoring$$$ $$ $ $
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FORWARD INTEGRATION INTO FINISHED DOSE
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50 CHINESE GROUPS HAVE LAUNCHES IN 11 LESS REGULATED MARKETS
Region No. of Groups No. of Products*
Bangladesh 1 64Egypt 5 6
French West Africa 3 7Hong Kong 7 247
Pakistan 10 30Philippines 10 33
Russia 10 28Saudi Arabia 1 1
Taiwan 4 137Thailand 8 57Ukraine 4 7
Source: Thomson Reuters Newport Premium™
*Count represents the number of unique molecules and/or combination of molecules
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BREAKDOWN OF CHINESE LAUNCHES IN LESS REGULATED MARKETS BY ROA
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Bangladesh Egypt French West Africa
Hong Kong Pakistan Phillipines Russia Saudi Arabia
Taiwan Thailand Ukraine
Ophthalmic Oral Parenteral Topical Other
Source: Thomson Reuters Newport Premium™
”n” represents the number of unique combinations of marketer, active ingredient, dose form and strength
n=94 n=9 n=13 n=474 n=43 n=46 n=47 n=1 n=233 n=94 n=14
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REGULATED MARKET ACTIVITY DEALS: FDF & DEVELOPMENT AGREEMENTS
Company Partner Region Activity
CSPC Alapis EU Co-development and registration of FDF in Greece and SE Europe
Fosun Omni Amerigen US Fosun to develop FDF for Amerigen
Shandong Xinhua Perrigo EU Ibuprofen tablets for UK market
Yabao Pharma Frontage Labs EU/US Collaboration agreement to develop sustained-release drugs
Zhejiang Hisun Cinfa EU Joint development of tacrolimus capsules
Zhejiang Hisun PharmTak US Collaboration agreement for development of new drugs
Zhejiang Hisun Farmaprojects EU JV to produce and market solid FDF
Zhejiang Hisun Tiefenbacher EU Fluvastatin sodium capsules
Zhejiang Huahai Merck EU/US Contract manufacture of unnamed finisheddose product
Zhejiang Huahai Ranbaxy US Benazepril hydrochloride tablets
Source: Thomson Reuters Newport Premium™
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7 CHINESE GROUPS HOLD A COMBINED 20 ANDAS WITH FINAL FDA APPROVAL
Group Applicant Product Activity
China Resources HoldingsBeijing Double Crane fluoxetine hcl, meloxicam ANDAs acquired from Ranbaxy
Secan amlodipine besylate ANDA developed in-house
Dalian Merro Merro Pharmaceuticals Ibuprofen OTC ANDA acquired from Par
HEC Pharm HEC Pharm zidovudine ANDA developed in-house
Jiangsu Hengrui Medicine Jiangsu Hengrui Medicine irinotecan hcl ANDA developed in-house
Novast Laboratories Novast LaboratoriesLevonest, Dasetta 1/35, Dasetta 7/7/7, Philith
Oral contraceptive - branded generics; ANDAs developed in-
house
Yabao Pharma Beijing Yabaogalantamine hbr,
meloxicamANDA acquired from Par; now
discontinued
Zhejiang Huahai
Huahai US donepezil hcl ANDA developed in-house
Prinston
benazepril hcl ANDA acquired from KV
captopril ANDA acquired from Kali
lisinopril, lisinopril+hctz ANDAs acquired from Actavis
losartan potassium, risperidone
ANDAs developed in-house
ropinirole hcl ANDA acquired from Par
Source: Thomson Reuters Newport Premium™
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US ANDAS – INDIAN COMPANIES
Year of approvalSource: Thomson Reuters Newport Premium™
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FUTURE PROSPECTS FOR THE CHINESE PHARMA INDUSTRY
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SMALL MOLECULES LOSING PATENT PROTECTION IN THE US
$0
$5
$10
$15
$20
$25
$30
$35
0
5
10
15
20
25
30
35
40
45
50
2011 2012 2013 2014 2015 2016 2017 2018
Combined Brand sales ($bn) Number of products
Num
ber o
f Pro
duct
sbillions (U
S $)
Source: Thomson Reuters Newport Premium™
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SPECIALIZED MANUFACTURING• High Potency
– Requires specialized equipment for containment, operator training and safety practices
– Lucrative targets for API manufacturers
• Continuous Flow Processes
– More Asian companies investing in micro-reactor technology– Reduction of waste streams
• Micronization
– Improves formulation and dissolution properties– Better bioavailability, less API needed
• Quality by Design
– Increasing importance to regulatory bodies– Lower production costs
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FOLLOW-ON BIOLOGIC DEVELOPMENT IN CHINA
Company Proteins Antibodies Vaccines Launches
Anhui Anke FP HGH, IFN
Amoytop FP GCSF, IFN, HGH
Beijing Tiantan FP Hep B
China Bioway Biotech FP EPO, GCSF
China National Biotec FP Various
Dalian Hissen FP Hep B, Rabies
Fosun UD
Jiangsu Hengrui UD
Shanghai Biomabs UD
Shanghai Celgen FP Etanercept
Shanghai Citic Pacific Guojian FP UD Etanercept
Shenyang Sunshine FP EPO, IFN, IL2
Sinovac Biotech FP Various
Zhejiang Hisun UD
Key: FP = Full Production; UD = Under DevelopmentSource: Thomson Reuters Newport Premium™
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CONCLUSIONS• Continued emphasis on large batch production
• Additional companies will expand into finished dose for regulated markets
• Impact of new GMP regulations
• Greater EHS, waste water treatment enforcement
• Increased costs of labor and raw materials
• Improvements in quality, technical packages, IP
• Many companies will stay focused on local market
• Increased partnerships with Western companies seeking access to the growing Chinese market
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THANK YOU
Bob Kennedy
Manager of Industry ResearchThomson Reuters
+1 207 871 9700 [email protected]