World leaders met in late September 2013 in New York at the United Nations (UN) to examine the progress and future direction of the UN Millennium Development Goals (MDGs), a set of eight goals to improve social and economic conditions of people living in developing countries. Three of the eight MDGs specifically address health-related outcomes in improving children's health, reducing maternal mortality, and addressing diseases endemic to the developing world, such as malaria, tuberculosis (TB), and HIV/AIDs, and a fourth goal encourages partnerships to resolve these challenges as well as help realize the other MDGs. The pharmaceutical industry has been a key stakeholder, particularly through the use of public–private partnerships, to address global health issues and help realize the health-related MDGs. 

At the UN meeting, world leaders agreed to scale up action against extreme poverty, hunger, and disease and called for a 2015 summit to adopt the next set of goals to continue efforts after the target date for the MDGs in 2015 and also noted progress thus far. A joint statement by the World Health Organization (WHO), the United Nations Population Fund (UNFPA), UNAIDS (a joint UN program on HIV/AIDS), UNICEF, and the UN Secretary General’s Special Envoy for Financing the Health MDG, summed up progress thus far. "Over the past 12 and a half years, the world has made remarkable progress against the goals, especially the health-related MDGs. Child and maternal deaths have been almost halved from 1990 levels. Malaria deaths have dropped 50%, driven largely by the distribution of over 400 million mosquito nets in the past several years. Over 6 million people, of the 9 million who need TB treatment, are now on treatment. HIV, once a death sentence with virtually no one on treatment, has undergone a dramatic shift with almost 10 million people on treatment today; and if we can finish the job and put everyone on treatment, we will irreversibly halt the AIDS epidemic. These results are unmistakable proof that success is possible. Now we must come together in one final big push to achieve the health MDGs and lay the strongest of foundations for a post-2015 world." 

 A recent UN report examined the progress of achieving the health-related MDGs. MDG 4 seeks to reduce children mortality, and a recent UN report outlines gains made thus far. Worldwide, the mortality rate for children under five dropped by 47% from 90 deaths per 1000 live births in 1990 to 48 in 2012. Despite this accomplishment, more progress is needed to meet the 2015 target of a two-thirds reduction in under-five mortality, according to the UN report. In 2012, an estimated 6.6 million children—18,000 a day— died from mostly preventable diseases. Increasingly, child deaths are concentrated in the poorest regions—sub-Saharan Africa and Southern Asia accounted for 5.3 million (81%) of the 6.6 million deaths in children under five worldwide. The main killers are pneumonia, preterm birth complications, diarrhea, intrapartum-related complications, and malaria. Newborns account for almost half (44%) of under-five deaths. Also, undernutrition contributes to 45% of all under-five deaths. On the positive side certain countries are making progress. Bangladesh, Ethiopia, Liberia, Malawi, Nepal, Timor-Leste, and the United Republic of Tanzania have lowered under-five mortality rates by two-thirds or more since 1990, according to the UN report. 

MDG 5 is directed to reduce by three-quarters, between 1990 and 2015, the maternal mortality ratio and by 2015, to achieve universal access to reproductive health. Maternal mortality declined by 47% on a global basis over the last two decades and declined by two-thirds in Eastern Asia, Northern Africa, and Southern Asia. The UN report points out that only half of pregnant women in developing regions receive the recommended minimum of four prenatal care visits, and complications during pregnancy or childbirth are one of the leading causes of death for adolescent girls. Most maternal deaths in developing countries are preventable through adequate nutrition, proper health care, including access to family planning, the presence of a skilled birth attendant during delivery and emergency obstetric care. 

In terms of progress, maternal mortality has declined by nearly half since 1990. While progress falls short of achieving MDG 5 by the 2015 deadline, all regions have made important gains, according to the UN report. Globally, the ratio declined from 400 maternal deaths per 100,000 live births in 1990 to 210 in 2010. "Still, meeting the MDG target of reducing maternal mortality by three-quarters will require accelerated efforts and stronger political backing for women and children," according to the UN. Improving maternal health is also key to achieving MDG 4 of reducing child mortality. 

MDG 6 has a target to halt and begin to reverse, by 2015, the spread of HIV/AIDS and to achieve universal access to treatment for HIV/AIDS for all those who need it as well as to halt and begin to reverse by 2015, the incidence of malaria and other major diseases. Worldwide, the number of people newly infected with HIV dropped 33% from 2001 to 2012, but 2.3 million people are newly infected by HIV each year, with 1.6 million of them in sub-Saharan Africa, according to the UN report. The MDG target of halting and beginning to reverse the spread of HIV has been met. In addition a record 9.7 million people living with HIV were accessing treatment in 2012 compared to just over 8.1 million in 2011, an an increase of 1.6 million in one year alone. Global malaria deaths fell by an estimated 26% from 2000 to 2010. More than half of the 1.1 million lives saved were in the 10 countries with the highest malaria burden. The TB mortality rate decreased 41% between 1991 and 2011. Still, TB killed 1.4 million people in 2011, including 430,000 among people who were HIV-positive. Multidrug-resistant TB is a major global challenge. Progress is being made in increasing the percentage of cases being detected, but the rate of people accessing treatment needs to improved. 

With more than 220 global partnerships addressing a wide range of diseases and focusing on prevention, improvements in health system infrastructures, training, pharmaceutical R&D, and medicine and vaccine donations, the pharmaceutical industry has played  an important role in advancing progress toward the health-related MDGs. A  recent analysis by the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) shows that  partnerships and accountability frameworks between civil society, the private sector, and governments can promote more equitable, inclusive, and sustainable development. 

"To maximize the impact of private-sector action on global health goals, we need proactive, cross-sector engagement in framing the next set of development goals," said IFPMA Director General Eduardo Pisani, in an IFPMA press statement. "The original MDGs were conceived without a clear map as to how the private sector could contribute. Pharmaceutical companies came to the fore anyway, recognizing the criticality of their unique contributions. But we know that there is no sector—not government, not civil society, not industry—that can alone drive the system-wide change that is required to address the most intractable health."

In its report, IFPMA highlighted key information on the 220 health partnerships in which the research-based pharmaceutical industry is involved. One of two programs is focused on strengthening health-systems infrastructure. Seven-nine percent focus on training, 38% on awareness raising, prevention, and outreach, and 36% on improving availability of treatments. With respect to specific health targets, 20% of the partnerships focus on HIV/AIDS, 16% on neglected tropical diseases, 16% on women's and children's health, 14% on malaria, and 14% on noncommunicable diseases. On a geographic basis, Tanzania, Kenya, Uganda, India, and South Africa respectively represented the five largest recipient countries, but partnerships are active globally. Sub-Sahara Africa accounts for 146 partnerships, East Asia and Pacific 80 partnerships, and South Asia 76 partnerships. Latin America and the Caribbean account for 71 partnerships, the Middle East and North Africa 39, Europe and Central Asia 38, and North America nine pacts, according to the IFPMA report. 

Articles

CSR and Sustainability Forum

The United Nations discusses the progress in achieving the UN Millennium Development Goals and sets a path for post 2015, and the pharmaceutical industry offers its input.

Pharma Industry and WHO Chart Progress on UN Millennium Development Goals

The expectations between a sponsor company and contract service provider define not only the nature of the outsourced relationship but also dictate the quality of the material being supplied or service provided. Quality agreements between contract manufacturers and their pharmaceutical customers are a well-established practice. Recent draft guidance by FDA brings quality agreements into greater focus by applying the science- and risk-based approach inherent in quality risk-management principles and practices. Industry groups and pharmaceutical companies have offered their input of the draft guidance

Contract Manufacturing Arrangements for Drugs: Quality Agreements

, in May 2013 to describe the agency’s current thinking on defining, establishing, and documenting the responsibilities of parties involved in contract cGMP manufacturing of drugs (1). The draft guidance describes how parties involved in contract manufacturing of drugs can use quality agreements to delineate their responsibilities and ensure drug quality, safety, and efficacy. The guidance applies to the commercial manufacturing of APIs (drug substances or their intermediates), finished drug products, combination products, and biological drug products (1). Moreover, the quality agreements described under the draft guidance fit within the larger scheme of pharmaceutical quality systems and provisions of ICH guidelines, including ICH Q7 

Good Manufacturing Practice Guidance for Active Pharmaceutical Ingredients 

(1–4). In the draft guidance, FDA specifies that the principles of quality management extend to contract manufacturing, and that the agency FDA expects parties engaged in contract manufacturing to implement quality-management practices. The draft guidance is intended to build upon the quality-management principles in ICH guidelines in developing and executing contracted-manufacturing arrangements (1-4). Public comment on the draft guidance ended at the end of July 2013, and the pharmaceutical industry weighed in on the guidance with several major pharmaceutical companies and industry groups offering comments.

  One concern raised by several companies and industry groups was that the draft guidance did not adequately address developmental activities. The Biotechnology Industry Organization (BIO) offered the following comment: “The Draft Guidance applies to commercial manufacturing of product. However, BIO notes that quality agreements are equally important during the development phase. They are a useful tool to provide both thoughtful consideration of reasonable quality expectations based on the item being procured and to provide standards during development and manufacturing. Limiting the guidance to commercial manufacturing may lead contract manufacturers to conclude that such agreements are unnecessary during drug development.” 

BIO suggested that the guidance be further applied to investigational products. “We ask FDA to consider expanding the scope of the guidance to include quality agreements for investigational product during the development phase. Contract manufacturing of drugs may also be subject to good laboratory practices (GLPs) as applicable. While the Draft Guidance is appropriately focused on good manufacturing practices (GMPs), it does not appear to allow for a contract laboratory to perform certain tests in accordance with GLPs. BIO asks that the Guidance recognize that manufacturing of drugs may also be subject to GLPs and therefore, are also included in the scope of the Guidance.” AstraZeneca also concurred that the guidance and related provisions on quality agreements should include GLPs.

 The Parenteral Drug Association (PDA) further suggested that the scope of the guidance include developmental activity. “Since it is common for virtual companies to use contracted parties in all phases of development, it would be valuable if the guidance could be extended to include manufacture of clinical trial materials.” To this end, PDA suggested a clarification to the language in the draft guidance. “For purposes of this guidance, while the term commercial manufacturing does not include research and development activities or the manufacture of material for clinical trials or treatment Investigational New Drugs (INDs), or for veterinary investigational files (INADs or JINADs), the principles and concepts outline herein could be applied and it would be a best practice to have a quality agreement in place for these drugs prior to start of manufacture of any drug intended for human or animal use.”

The Active Pharmaceutical Ingredient Committee (APIC) of the European Chemical Industry Council (CEFIC) also suggested the inclusion of clinical trial materials with respect to the guidance. “As such trials [clinical trials,], especially Phase III could eventually be used in commercial production plus the level of GMP needs to increase through the different stages of clinical trials, we feel the guidelines should give guidance on the requirements for a quality agreement for such activities.” 

Further refinements of quality agreements 

Other groups and pharmaceutical companies suggested further refinements to the draft guidance. PDA suggested further emphasis on the collaborative relationship between CMOs and owners. “PDA commends FDA on writing this guidance which highlights common gaps which have occurred in the past between CMOs and Owners and clearly points out many elements of current best industry practic. PDA suggests that FDA further emphasize in this guidance, the importance of establishing a collaborative relationship between the parties in addition to clearly assigning and defining the appropriate responsibilities.” 

PDA also made suggestions as to the quality agreement itself. “In some instances the guidance appears to be asking that the Quality Agreement include listings of parts of the CMO’s quality system. We recommend clarifying that the intent is for the Quality Agreement to assign responsibilities to parties by general categories rather than a restatement of individual GMP elements. PDA also recommends against requiring specific procedures to be included in the Quality Agreement since such an approach might inhibit the effective functioning of either party’s quality system with respect to continual improvement.” 

PDA also suggested the guidance include measures relating to audits in a quality agreement. “A initial quality system audit of the Contract Acceptor should precede the signing of a Quality Agreement. During this audit, the Contract Giver is responsible for verifying and accepting (or rejecting) the Contract Acceptor’s quality system and the ability of the Contract Acceptor to meet GMPs. With this approach, the purpose of the Quality Agreement should then be limited to defining the roles and responsibilities for the specific product(s) processes and activities covered by the agreement. The Quality Agreement should also address responsibilities of each party in subsequent audits such as how to schedule, notice, response and corrective actions.” 

 The International Society for Pharmaceutical Engineering (ISPE) recommended that additional key quality elements be included in the scope of the guidance, including a subsection for exception-related events and outcomes and the involvement of the “Owner” in the decision to rework, reprocess, re-inspect product, and product acceptance as these issues are critical aspects as part of the “Owner’s” management oversight of the Contract Facility. ISPE also suggested additional items to be considered for scope inclusion: a subsection for Complaints and Safety Events that includes direction around timeliness, responsibilities and communication; a subsection for field action/recall roles and responsibilities; and a definition section to clearly define specific terms. 

Bristol Myers Squibb (BMS) noted that the quality agreement should also indicate how the parties will communicate information about presenting cross-contamination and maintaining traceability when a contracted facility processes or tests drugs for multiple product owners.  “The product Owner and Contracted Facility might opt to refer to existing documentation or procedures or the presence of such documents verified during the qualification of the facility,” noted BMS. 

Industry comments also focused on definitions used in the draft guidance. For purposes of the draft guidance, the “owner” is defined as the party that introduces the drug into interstate commerce, whether the drug is covered by a marketing application/license or not. The “contracted facilities” are the outside entities performing manufacturing operations for the product owner. Some of the manufacturing operations performed by contracted facilities include: formulation, fill–finish, chemical synthesis, cell-culture manufacturing and fermentation for biological products, analytical testing, other laboratory services, and packaging and labeling. The draft guidance specifies that the owner is responsible for ensuring that drugs introduced for interstate commerce are neither adulterated nor misbranded as a result of the actions of their selected contracted facilities. In turn, all contracted facilities must ensure compliance with applicable cGMP for all manufacturing, testing, or other support operations performed to make a drug(s) for the owner (1). 

Merck & Co.  noted that draft guidance covers only pure CMO arrangements, but that pharmaceutical companies are involved in many hybrid forms of contracts, such as in-licensing, comarketing, reciprocal CMO, joint ventures, public-private partnerships, and clinical supply partnerships It noted that the current definition of “owner” in the draft guidance “is ambiguous in contracts that are not pure CMO arrangements. A less ambiguous approach would be to define “Owner” as equal to the Marketing Authorization Holder. In reality, this references the party that is “the lead,” has the principle pharmaceutical liability, and is responsible for all interactions with the Health Authorities. 

 The Consumer Healthcare Product Association, which represents manufacturers of over-the-counter products, also noted issues with the definition of “owner.” “The term owner and its definition do not address the complex license agreements that can arise is today’s pharmaceutical supply chain. Due to the complexities of licensing agreements, there are situations where the ‘ownership” of the application or of the intellectual property rights for the product is different from the contract given, “said CPHA. “For example, a company may license from the application holder the distribution rights and may also take responsibility for the supply of the product. In such as case, the distributor would contract with the contract manufacturer and would enter into a quality agreement. However, such a distributor would own neither the application nor the intellectual property. It is not clear who would be the ‘owner in such an arrangement. If the holder of the application in such an arrangement is a small business that discovered the product, it might not have the expertise or resources to oversee a manufacturer.” 

The Bulk Pharmaceuticals Task Force of the Society of Chemical Manufacturers and Affiliates suggested clarification that the term “contract manufacturing” apply to those activities for a specific customer.  “API manufacturing and its associated activities is composed of custom businesses that are exclusive for specific customers and non-custom businesses that are nonexclusive for a range of customers. A high level of oversight of change control and deviations is appropriate for the former. In the latter case, such a level of oversight and approval is unmanageable....This guidance is appropriate for a custom business but not for a noncustom business.” 

 Pfizer noted the work of ICH in addressing measures in the guidance and to ensure that there is alignment between the draft guidance and specific ICH measures. “The ICH Q7 IWG (Implementation Working Group) is preparing a Q&A that will address much of the same concerns as outlined in this guidance (the first round of questions are loaded with expectations of contract manufacturing quality units, etc.). Suggest holding this guidance as draft to assure alignment and minimize confusion/implementation.” 

Draft Guidance for Industry–Contract Manufacturing–Arrangements for Drugs Quality Agreements 

Good Manufacturing Practice Guide for Active Pharmaceutical Ingredients 

Contract Manufacturing

Pharmaceutical companies and industry organization provide comments to FDA's draft guidance on contract manufacturing and quality agreements.

Pharma Industry Comments on FDA's Draft Guidance for Contract Manufacturing

In an effort to increase the number of minority investigators in clinical research, 

Center for Drug Development and Clinical Trials at Roswell Park Cancer Institute 

 have formed a new collaborative training program specifically tailored to this growing group of investigators. The partnership will include a three-day clinical research workshop, "Reducing Cancer Disparities Through the Training of a Diverse Workforce," for minority physicians across the country. Workshops will begin in spring 2014 and will run through 2016. 

According to an Eli Lilly press release, there are approximately 10,400 oncologists in the United States, but approximately 1 to 2% are African American and approximately 2 to 3% are Hispanic. The goal of the new initiative is to train 75 to 150 oncologists in the conduct of clinical trials. The  goals of the workshop include: enhancing clinical research in minority and underserved populations through development of a cadre of well-trained minority investigators; educating participants about the principles of good clinical trial design and providing the necessary tools required to conduct trials that are relevant to minorities and under-represented populations; guiding participants to identify various challenges of clinical research, particularly in minority and underserved populations, and providing advice and education on how to overcome these challenges; providing ongoing mentorship to young minority investigators through career-long relationships with workshop faculty; and reducing cancer health disparities through increased clinical research targeting minority and underserved populations. Organizers are targeting minority physicians and senior fellows who have cancer-related subspecialties in medical, hematologic, radiation, pediatric, surgical, and gynecologic oncology. Faculty in the first five years of their academic appointments and those working full-time at an academic institution or practice with a track record of enrolling patients in cancer clinical trials may apply to participate in the workshop. 

 (GSK) it has increased its commitment to the 

 to provide vaccines to developing countries. The company will provide an additional 240 million doses of Synflorix to developing countries over the next 10 years to help protect up to 80 million more children from pneumococcal diseases such as meningitis and pneumonia. GSK has committed to provide the additional 240 million doses of Synflorix to GAVI at $3.40 per dose. To date, more than 50 million doses of the vaccine have been delivered to GAVI countries, including Uganda, Mozambique, Madagascar, Kenya, Ethiopia, and Pakistan. Zambia is the most recent country to include the vaccine in its national immunization programme under the AMC in July 2013.

The additional commitment builds on the 480 million doses of the vaccine that GSK has already committed to GAVI through the Advance Market Commitment (AMC) framework, which is designed to bring heavily discounted vaccines to children living in the developing world. GSK provides GAVI with a several vaccines, including Synflorix which protects against pneumococcal disease; Rotarix, which is a vaccine for rotavirus, a common cause of diarrhea; Cervarix, which helps protect against cervical cancer caused by human papilloma virus; and a combined vaccination for diphtheria, tetanus, pertussis, hepatitis B and Haemophilus influenzae Type b, With this new vaccine supply agreement extension, GSK is committed to provide more than 850 million vaccine doses that will help protect up to 300 million children and adolescent girls in the developing world from these diseases by 2024. 

 has invited 60 students from international universities in 21 countries to its headquarters in Switzerland for the International Biotechnology Leadership Camp (BioCamp). Over the course of three days, students will gain first-hand experience of starting a biotechnology company as well as developing and launching an innovative healthcare product. This year's BioCamp focuses on the company's innovation efforts in new business approaches to the healthcare industry. Some of the company's g outcome-based business models include collaborations with payors on pricing arrangements, patient-compliance programs as well as online support and education. 

 formed a development and licensing agreement with Biological E Limited (BioE), a biopharmaceutical company based in India, for two vaccines to protect against typhoid and paratyphoid fevers. The agreement advances the Novartis goal to deliver accessible and affordable vaccines that address unmet medical need in endemic regions. Under the license, the Novartis Vaccines Institute for Global Health (NVGH), part of the Novartis Institutes for BioMedical Research, will transfer technology to BioE, which will have financial and operational responsibility for manufacturing, further clinical development, approval, and distribution in the developing world. The typhoid vaccine (Vi-CRM197) has achieved proof of concept, had successful Phase II results, and will be transferred to BioE. A combined typhoid-paratyphoid vaccine will be transferred once proof of concept is completed through early, small-scale studies in humans to determine safety and immunogenicity. 

 has signed a new supply agreement with the GAVI Alliance regarding the signing of a new supply agreement for Pfizer to provide additional doses of Prevenar 13 (pneumococcal polysaccharide conjugate vaccine [13-valent, adsorbed]), the company’s 13-valent pneumococcal conjugate vaccine, for use in infants and young children to help protect against pneumococcal disease in developing countries under the terms of the Advanced Market Commitment (AMC). Under the terms of the new supply agreement, Pfizer has committed to supply the United Nations Children's Fund (UNICEF) with up to 260 million doses of Prevenar 13, at a reduced tail price, over the course of the agreement period (through 2025). This amount is in addition to 480 million doses of the vaccine already committed through the first two supply agreements. The tail price is the reduced price per dose set by the manufacturer and paid by GAVI; the remaining amount is paid by the AMC. Pfizer will offer Prevenar 13 through the AMC at the reduced price of $3.40 per dose for the remainder of this year, at which time the price will further decrease to $3.30 per dose for the remainder of the agreement. This pricing will apply to doses purchased under all AMC supply agreements. 

Pfizer entered into the first supply agreement to participate in the AMC in March 2010, and then expanded its commitment through a second supply agreement in 2011, pledging to supply Prevenar 13 through 2023. Since Pfizer’s original agreement with the AMC in 2010, more than 20 countries have introduced Prevenar 13 into their immunization programs, and pneumococcal vaccines are expected to reach more than 50 GAVI-supported countries by 2015. 

 have formed an agreement to increase access to Roche’s Valcyte (valganciclovir), a key medicine to treat cytomegalovirus (CMV). CMV is a viral infection that can result in loss of vision and greater risk of death in people living with HIV. This infection affects around 1 in 10 people living with HIV in low-and middle-income countries. The supply agreement between the Medicines Patent Pool and Roche will improve access to Valcyte– by making it up to 90% cheaper in 138 developing and emerging countries than it is currently available. The Medicines Patent Pool and Roche will consider adding more countries to the initial scope if there is a need and will also explore licensing and technology transfer as a second step to help local production of Valcyte and increase access to Valcyte in developing countries. 

, reports that one of its quadrivalent vaccines to prevent invasive meningococcal disease has been prequalified by the World Health Organization (WHO). The prequalification procedure accepts Menomune vaccine for purchase by United Nations Agencies. The UNICEF supply division has been notified of Menomune vaccine’s acceptance by the WHO. The purpose of the United Nations prequalification assessment is to provide assurance that candidate vaccines meet WHO recommendations on quality, safety and efficacy, including compliance with WHO’s recommended standards for GMP and good clinical practice. This Menomune vaccine prequalification was performed through a streamlined procedure in which the WHO worked closely with FDA. 

Menomune vaccine is designed for active immunization against invasive meningococcal disease caused by Neisseria meningitidis serogroups A, C, Y, and W 135 for use in persons two years of age and older. It is the first quadrivalent meningococcal vaccine prequalified by the WHO. The WHO notification to UNICEF states that following the evaluation of consistency of final product characteristics, GMP, and quality system audits of the manufacturing facilities, and followup of implementation of recommendations made by WHO reviewers during the evaluation, the Menomune vaccine is acceptable. It is manufactured at Sanofi’s facility in Pennsylvania. 

A roundup of developments in global health and sustainability from the bio/pharmaceutical industry, its suppliers, and other public and private organizations.

Pharma News in Global Health and Sustainability

The wage gap between advanced economies and emerging economies, such as China, India and the Philippines is expected to decline significantly by 2030, according to a recent analysis by PricewaterhouseCoopers (PwC). 

India and the Philippines remain at the lower end of wage projection in relative terms, but average wages in India could more than quadruple over the period in real dollar terms and more than triple in the Philippines, according to a Sept. 26th PwC press release. Real wages in the United Kingdom and the United States are projected to rise by only one-third over the same period, remaining at similar levels to each other. 

PwC projects that the wage gap could close significantly by 2030. For example, India’s current average monthly wage is approximately 25 times smaller than that of the UK. By 2030, that wage gap will still exist, but will be only 7.5 times smaller. Average wages in US are currently 7.5 times greater than in Mexico, but the gap could close to a factor of less than four times by 2030. Over the same time period, the average monthly Chinese wage could rise to around half that of Spain, according to PwC. 

In looking further at projected average monthly wage levels relative to the US, PwC further outlines the narrowing gap. For example, monthly wage rates in China in 2011 represented 15% of monthly wage levels in the US, but by 2020, China's average montly wage levels rises to 29%o of that of US wages and to 45% by 2030. Monthly wage rates in India in 2011 represented 4% of monthly wage levels in the US, but by 2020, India's average monthly wage levels rises to 8%o of that of US wages and to 13% by 2030. 

“While any such projections are subject to significant uncertainties, the direction of change is clear. The large wage advantages enjoyed today by many emerging economies will shrink as their productivity levels catch up with those in advanced economies and their real exchange rates rise as a consequence," said John Hawksworth, chief economist at PwC. "Places like Turkey, Poland, China and Mexico will therefore become more valuable as consumer markets while low-cost production could shift to other locations such as the Philippines. India could also gain from this shift, but only if it improves its infrastructure and female education levels and cuts red tape.” 

PwC suggests that this narrowing wage gap have several important strategic implications. First, companies may re-shore their manufacturing or service operations, as some US companies have already started to do, or move them to cheaper locations. Moreover, as current large cost advantages decline, companies may move to locations that are initially more expensive but that closer to home, thereby gaining more control over supply chains to respond to customers’ changing needs. In addition, middle-income economies, such as Turkey, Poland, and China may begin offshoring to relatively cheaper economies, such as Vietnam, India and the Philippines, according to the PwC report. Lastly, current Western offshorers (to India and China, for instance) will reorient their operations to sell their goods and services to increasingly affluent local populations. 

"It's inevitable that the manufacturing and services industries in countries will transform as the cost base evolves, and also that there will be winners and losers," said Michael Rendell, PwC partner and Global Human Resource Services leader, in the release. "Governments, regulators and business communities need to be ready for that shift." 

Global Feature

A recent analysis by PricewaterhouseCoopers projects that the wage gap between advanced economics and emerging economies, such as China and India, will shrink significantly by 2030.

Emerging-Market Wage Gap Projected to Narrow

The first generation of strategic sourcing relationships in clinical research is coming up for renewal, and the CRO industry is watching carefully to see how they renew. Strategic sourcing relationships, which involve global bio/pharmaceutical companies contracting large portions of their clinical research programs to the largest CROs, have transformed the clinical research industry. CROs that have won strategic relationships, including Icon, Parexel, Quintiles, and Covance, now control substantial shares of the clinical research market while smaller CROs have been forced to fight over the “leftovers” from mid-size and emerging bio/pharma companies.

All indications are that clients are happy with most aspects of their strategic sourcing relationships. For the most part, these arrangements are delivering on their promise to the global bio/pharmaceutical companies, especially lower costs, better trial execution, and reduced staffing. Given their performance and the high costs that would be involved in switching vendors, it is likely that most (probably all) of these deals will renew.

That’s good news for the CROs that have been able to secure these strategic relationships. Not only have they received the project volumes negotiated in the original deals, they have received work well beyond the original scope, including projects in adjoining activities that were not part of the initial arrangement. As a result, their revenues have been growing at the annual rate of 15–20%.  Profits have not grown as quickly due to the costs of expanding capacity to handle the burgeoning volume, but margins are expected to improve over time.


  Given the success of the strategic relationships in clinical research, CDMOs should be thinking hard about when and if that model will be adapted to chemistry, manufacturing, and control (CMC) services. If it can be ported into the CMC environment, the model could drive a radical restructuring of the industry by creating big opportunities for some CDMOs but also shutting out others, which would result in a flurry of acquisition activity. Whether the model can be fully adapted to the CMC world, however, is open to question.
  
Perhaps the biggest difference between clinical research and CMC development is that CMC development is all about creating knowledge, innovation, and intellectual property that ultimately differentiates a product in the market. CMC creates a lot of knowledge about the molecule, some of which is captured in laboratory data but much of which is generated and understood less formally, just by working on the process or product. Further, CMC development generates innovations such as more efficient processes for manufacturing APIs or improved formulations to aid drug delivery.

Bio/pharmaceutical companies recognize that knowledge and innovation creation is part of CMC development, and companies are understandably reluctant to give it up entirely. They want to retain the knowledge that is generated and want to own or protect the intellectual property (IP) that is created.

By contrast, clinical research is only about collecting and analyzing data on the effectiveness and safety of the product in the patient. It seldom leads to product innovation directly (the famous case of Viagra [sildenafil citrate], first discovered as a cardiovascular drug and later developed as a treatment for erectile dsyfuntion, is the rare exception), and the information technologies that clinical research leverages are not core competencies for bio/pharmaceutical companies. 

Another major characteristic of CMC development that may mitigate against strategic partnerships is the diversity of technologies and know-how that are used to develop a drug. It would be uneconomical and infeasible for a CMC-services provider to acquire and maintain all of the technologies used to manufacture or deliver a drug. Think of all the possible types of reactions used to synthesize small-molecule compounds, and the way certain companies have carved out special niches for themselves for technologies such as high-energy reactions that are only appropriate in particular circumstances. Similarly, expertise and equipment for solubility-enhancing technologies such as spray drying or micronizing is concentrated in a few specialty CDMOs that can efficiently service the limited number of candidates that need that expertise. The diverse range of technologies would seem to guarantee that bio/pharmaceutical companies will always need a wide array of CMC service providers to meet their development requirements.


The nature of CMC development would suggest that it may not be as suited to the strategic partnership model as clinical research. While there are some CMC activities that have gone a long way to adopting that model, namely clinical packaging and analytical testing, those activities have more in common with clinical research. Neither of those activities generates IP and both require more operational expertise than scientific expertise.

As the bio/pharmaceutical industry continues to adapt to a changing market and scientific environment, however, some of the forces that have driven strategic clinical research relationships may come to bear on CMC development as well. Consider global reach. CMC expertise is more widely available, especially for small-molecule API development and for basic formulations. As cost pressure increases, companies seem to be more open to exploring CMC development in lower-cost locations.  Further, global bio/pharmaceutical companies recognize the need to develop products specifically for those emerging markets. 

At the same time, information technology has made collaboration and knowledge-sharing possible over great distances, so the opportunity to disperse those activities may be increasing. CMC providers with truly global operations that can access and network lower-cost resources in emerging markets might be able to build favorable positions as strategic providers. 

The other big opportunity for strategic partnerships may lie in integrated service offerings. Time and cost are of the essence in drug development today, and companies offering a combined service developing an API and drug product may be able to offer significant reductions in both. One-stop offerings have the potential to reduce the leakage of knowledge as projects are handled off from one provider to another, and they can eliminate or reduce the periods of inactivity between development activities. Delivering the promise of one-stop models, however, will require a level of operational excellence that few in the CMC industry have yet been able to achieve.


  Jim Miller is president of PharmSource Information Services, Inc., and publisher of Bio/Pharmaceutical Outsourcing Report, tel. 703.383.4903, Twitter@JimPharmSource, info@pharmsource.com,www.pharmsource.com.

Outsourcing

Are strategic partnerships in clinical research a model for CMC services?

PTSM: Pharmaceutical Technology Sourcing and Management-10-02-2013

Pharma Industry and WHO Chart Progress on UN Millennium Development Goals

Pharma Industry Comments on FDA's Draft Guidance for Contract Manufacturing

Pharma News in Global Health and Sustainability

Emerging-Market Wage Gap Projected to Narrow

Outsourcing Partnerships for CMC Development