The Challenges Of The Emerging Markets

The challenge with any of the emerging markets such as the BRIC (Brazil, Russia, India and China) nations and the newly named Next 11 (Mexico, Nigeria, Egypt, Turkey, Iran, Pakistan, Bangladesh, Indonesia, Vietnam, South Korea and the Philippines) is in adjusting to the western regulatory concepts of quality and compliance. Most country-specific regulatory guidance in the emerging markets is more focused on basic quality principles, such as sanitation and cleanliness, than the sophisticated framework of the FDA and EMA. Another point to consider is the varying role of the government in establishing these operations. Nigeria, for example, has a desperate shortage of IV bag manufacturing capacity; in fact, much of Africa falls into this situation. However, anyone contemplating establishing an aseptic operation to produce IV bags must contend with oversight from the Nigerian Senate and use local subcontractors and suppliers, which complicates compliance oversight if you are striving to meet FDA aseptic standards. Meanwhile, in China, new GMP 10 guidance uses a public safety risk framework, which fundamentally means anyone attempting to establish an aseptic operation can expect Chinese SFDA involvement in their plant.

Bikash Chatterjee

The challenge in building a facility for both emerging and global markets is navigating the country-specific compliance requirements for facility design and process while satisfying the international. This may seem trivial at first glance, but there are unique elements to each guidance and the impact on facility design and cost can be significant. For example, to manufacture a cytotoxic product on one line in an isolator, the EU will only require a Grade D environment around that isolator, while the US would expect a Grade C environment. Couple this with the SFDA's desire to have two gowning airlocks for each Grade change and the facility design becomes complex very quickly.

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The rise of China

China is an important country and it is undeniable that its role in the global pharmaceutical market is evolving. IMAP analysts project the Chinese healthcare market will soon become the third largest in the world, with an estimated market value of over $40 billion (1). Today, China produces nearly 70% of the world's generic APIs and, despite some very high profile missteps, it continues to increase its market presence.

What China will bring to the marketplace in the long run, however, remains an open question. The initial lure of low cost manufacturing and packaging is still attractive to many western business strategies. While investment in Chinese manufacturing remains strong, the most successful western organisations have found that establishing their own operations in China, complete with a skilled leadership and management team versed in western compliance understanding, may be a better recipe for success than tapping existing local manufacturing capability. In terms of understanding, China is rapidly climbing the compliance ladder, but the big question is can China maintain its cost competitive environment whilst building a western quality management system?

In the background of all this change is the fact that the Chinese government still has a majority interest in most large corporations in China, which means that political considerations are always present in every conversation and negotiation. How the government will continue to balance free market business and government oversight is a big unknown. As the country firms up its intellectual property protection laws and moves to a rule of law basis for legal protection, the separation of government and private sector interests will be tested if parity can ever truly be achieved in business. For now, there is never a level playing field when conducting negotiations in China.

Quality compatibility

Five years ago, I would have said that it would be unlikely that China could develop a quality mindset that is compatible with that of the western markets. However, in China things move quickly. I do believe there is still a fundamental gap with the basic quality mindset of the west, but the business drivers for closing this gap are emerging quickly. The most significant driver for change has been the issuance of the GMP 10 guidance, which has quickly seized the Chinese market's attention. The second driver is the rapid growth of the Chinese national market. Increasingly, Chinese developers and manufacturers are striving for FDA compliance, not because of their desire to enter the US market, but because they would like to command higher prices and market position in their home market. In the end, this motivation may turn out to be the biggest driver in catalysing change in China's approach to quality.

Bikash Chatterjee President and Chief Technology Officer at Pharmatech Associates, USA

References

1. Pharmaceutical and Biotech Industry Global Report — 2011 (IMAP Healthcare Report, 2011).