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Drug shortages, supply-chain security, generic-drug incursion, and flexible manufacturing models are some of the issues shaping the bio/pharma industry.
Simply put, 2011 was a year of transition for bio/pharmaceutical companies, contract manufacturers, and suppliers. Financial pressures caused by generic-drug incursion, the pressing need to augment R&D productivity and control costs, and an increasingly global and complex supply chain are some of the key issues cited by executives participating in Pharmaceutical Technology's industry roundtable. We asked executives to share their views of the leading issues shaping the bio/pharmaceutical industry overall and manufacturing and supply specifically. Participating in the roundtable were: Jeffrey Lee Craig, global director of marketing and business development at ATMI, a provider of single-use bioprocessing systems; Karen Zak, vice-president of marketing, pharmaceuticals, at the excipient and performance materials company Avantor Performance Materials; Guy Villax, CEO of the CMO Hovione ; Michael Kleinrock, research director at the IMS Institute for Healthcare Informatics; and John Kelly, vice-president of strategy and transitioning sites for Pfizer Global Supply (see Figure 1).
Figure 1: From left, Jeffrey Lee Craig, global director of marketing and business development at ATMI; Karen Zak, vice-president of marketing, pharmaceuticals, at Avantor Performance Materials; Guy Villax, CEO of Hovione; Michael Kleinrock, research director at the IMS Institute for Healthcare Informatics; and John Kelly, vice-president of strategy and transitioning sites for Pfizer Global Supply.
Overall industry trends
PharmTech: Reviewing 2011, what would you identify as the most significant issues shaping the bio/pharmaceutical industry?
Kelly (Pfizer): Key products continued to lose patent exclusivity. Research pipelines have become more robust as new medicines to treat unmet medical needs are developed and approved. Emerging-market demand continued to redefine geographic boundaries and increased the complexity of global supply chains. These significant factors will continue to inform the industry's transition away from the blockbuster model and toward developing smaller volume, specialty products.
IMAGE: DON FARRALL / GETTY IMAGES
Kleinrock (IMS): One of the most significant issues, by far, is the policy-driven actions that imposed additional costs to manufacturers or cut prices on medicines. These were largely motivated by fiscal and debt issues and impacted markets across the world.
Second is the unprecedented number of patent expirations that took place in 2011, which are driving the growth of generic drugs. We [IMS Institute for Healthcare Informatics] expect to see future spending on generic drugs coming from increased competition and incentives as patents on innovative products expire. The US will see the largest expansion of generic-drug spending compared with other global developed markets. US generic-drug spending is anticipated to be 7–8% through 2015.
Villax (Hovione): The increased speed and severity of regulatory activity reached a crescendo in 2011—Warning Letters, import alerts, recalls, and consent decrees. Some of it was clear evidence of global medicine agencies acting to recover control over the generic-drug industry whose lightning-speed development and globalization has caught regulators off guard. Take for example, an EU inspectorate report leading to a FDA Warning Letter.
The intensity of outsourcing by innovator-drug companies also is a significant trend, and here the most notable stories are in line with regulatory actions: a string of Warning Letters hitting Big Pharma because of their Indian-based supply chains. As one industry executive noted at a recent conference, 'A firm can have all the SOPs [standard operating procedures], systems, and controls required, but without [a] quality culture, product quality and business continuity are not assured.' Expect customers to be looking for evidence of a true quality culture across the organization and at every level.
Zak (Avantor): During 2011, the pharmaceutical industry has shown a renewed emphasis on all aspects of security and overall quality throughout an increasingly more complex supply chain. Global supply-chain security initiatives are critical tools to prevent what has become an abundance of counterfeit pharmaceutical raw materials and therapeutics found in both developed and emerging markets. They also play an important part in addressing concerns about potential adulteration for economic gain, contamination, theft, and lack of appropriate regulatory compliance. With patient safety as the public's fundamental expectation of the industry, pharmaceutical companies have made supply-chain security a primary responsibility that applies across the organizational boundaries of procurement, manufacturing, packaging, and regulatory compliance. Collaboration within the industry across suppliers and manufacturers allows for the determination, sharing, and implementation of best practices that will continue to enhance supply-chain security and build patient confidence.
Craig (ATMI): In 2011, we noticed a continued push toward gains in manufacturing efficiency. In recent years, manufacturers have qualified and validated single-use technologies to accelerate milestones and address productivity demands. Currently, we are focused on scaling manufacturing processes and optimizing supply-chain infrastructure. Right now, single-use technologies are in the early stages of industrialization. The cycle of innovation is ongoing even as single-use products and systems are being integrated for more efficient manufacturing platforms. Many positive steps were made in 2011 to help solve efficiency challenges. Ultimately, a new approach to manufacturing will be realized through these new technologies.
Manufacturing and supply trends
PharmTech: Looking back at 2011, what would you identify as the most significant issues shaping the direction of bio/pharmaceutical manufacturing from a supply perspective, technical perspective, and/or regulatory perspective?
Kelly (Pfizer): Issues shaping the direction of pharmaceutical manufacturing include: continuing to align capacity with future anticipated demand, ensuring the security of the supply chain, and meeting shifting global market requirements.
Kleinrock (IMS): The current drug-shortages issue in the United States is of increasing concern to patients, clinicians, and policymakers. The issue is reflective of the challenges associated with complex sterile injectables and the supply chain; they were the genesis of a recent report by the IMS Institute where we identified several new trends and found significant volatility in the suppliers of drugs, but not always in the total volume of medicines. These issues will not get any easier as we approach 2012.
Zak (Avantor): The most significant fact is that pharmaceutical manufacturers are operating in a time of continuous change. They are facing an extraordinary range of challenges, from handling risk-management initiatives while maximizing their manufacturing, outsourcing, and quality capabilities, to balancing the need for speed in technical problem resolution, all with the emphasis placed on supply-chain security. They are facing these challenges while dealing with the intricacies associated with the development of new products and their components, along with the responsibility to provide an uninterrupted supply of safe and secure pharmaceuticals to the global patient population. In response to these challenges, cost management and operational excellence projects abound, including the development of enhanced collaborations internally between R&D and manufacturing as well as the use of external partnerships to meet strategic goals.
Craig (ATMI): The direction of the industry is being shaped by the drive to meet tomorrow's manufacturing demands efficiently. Even as single-use vessels, mixers, bioreactors, and manifolds have become reliable, GMP manufacturing standards, innovation, adoption, and continuous improvement of disposable platforms are ongoing. Today, the focus is shifting from evaluation and integration to other considerations, including assurance of supply-chain security, the evolution of single-use standards and continuous technology, and efficiency improvement.
A look to 2012
PharmTech: Looking ahead to 2012, what factors, conditions, or other developments do you think will play an important role in determining the performance and direction of the pharmaceutical industry overall and manufacturing specifically?
Kelly (Pfizer): Pharmaceutical manufacturers will need to ensure that their internal and external manufacturing capabilities are aligned for the expected needs of the emerging new-product pipeline. They must have the strategic flexibility and agility to respond to a more dynamic market environment and increasingly volatile product demand. In the emerging markets, manufacturers will need to look to partnership relations as opportunities for capturing competitive advantage.
Kleinrock (IMS): The performance of the drug pipeline, both in the approval of new entities and in the commercial success of those medicines, will be critical for the long-term health of the sector and for the patients these medicines treat. For generic-drug makers, an unprecedented bubble in new molecular opportunities comes also with an unprecedented race to the bottom and the margin pressures that await.
Villax (Hovione): Looking ahead to 2012 and onward, I see regulators adding new legislative powers to enable them to effectively control the new global industry landscape and establish effective oversight process. As the Generic Drug User Fee Act (GDUFA) passes into law in the US, and the Falsified Medicines Directive into national laws in 27 EU member states, we should expect shock waves to the supply chains of APIs in the generic-drug industry. We will witness a push toward higher standards and increased compliance. If there is increased demand from the few reliably compliant sources, this may trigger shortages, which may lead to API price increases although this is unlikely to translate into pharmacy-level price increases. The key dates are July 2013 for Europe and 2017 in the US, by which time, we shall have parity between foreign and domestic inspections in two of the major global regions. Japan may be less in the news, but Japan's Pharmaceuticals and Medical Devices Agency (PDMA) does expect the Japanese Drug Master File (J-DMF ) to mirror in detail the reality of what goes on in the plant and for the inspectors to verify compliance in the field against the Japanese version of the document; in fact, this is the only document they consider valid. Expect surprises.
Zak (Avantor): The following challenges faced in 2011 within the pharmaceutical industry will continue as we move into 2012:
Craig (ATMI): Our view of the biopharmaceutical industry is shaped by early development and ongoing growth in the single-use manufacturing technology space. We are beyond trial and validation of these technologies. Once the question was: 'Will these tools work?' Now, the expectation is to deliver on the efficiency and performance promises of lower operating costs, faster build of manufacturing capacity, and product life-cycle flexibility. These expectations have hit stride in the recombinant protein and vaccine arenas and are expanding into the fast-emerging stem-cell and cell-therapy markets. In 2012, the speed at which pharmaceutical and biopharmaceutical organizations achieve strategic clinical milestones and maintain economically viable business models will be differentiators. Suppliers of single-use technologies will be measured by their ability to excel in commercialization and industrialization and their cycle of technology innovation, supply-chain security, and continued improvement of process efficiency.