pharamaceutical outsourcing analyst briefing
TRANSCRIPT
1
Somya Datta, Research Analyst
Healthcare Industry
Economic Research Analytics
12 February, 2008
•Somya Datta
•Research Analyst, Healthcare Industry
•Economic Research and Analytics Division
•7th August 2008
Global Pharmaceutical Outsourcing –
Trends and Growth Opportunities
• © 2008 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan.
No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
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Focus Points
� Global Pharmaceutical Market
� Overview of Pharmaceutical Market
� Pharmaceutical Outsourcing
� Overview of Pharmaceutical Outsourcing
� Structure and Functions
� Issues and Challenges
� Emerging Trends
� Outsourcing as a Growth Strategy
� Profile of Selected Outsourcing Destinations
� Pharmaceutical Outsourcing Evaluating Factors
� Key Location Attractiveness Indicators
� Factors Expected to Spur Future Growth
� Country Profiles
� China
� India
� Russia
� Brazil
� Mexico
� Poland
� Growth Opportunity Areas
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Overview of Global Pharmaceutical Market
Global Pharmaceutical Market - Trends
• Global pharmaceutical market to double by 2018
• Shift from infectious to western diseases
• Consolidation- a strategy for success
• Large pharmaceuticals companies now partnering more with local companies
• Emerging markets - China, India, Brazil, Russia, Mexico, South Korea and Turkey
• Market witnessing opportunities in• Bio pharmaceuticals• Pharmacogenomics • Biologics market
Pharmaceutical Sales (Global), 2001-2007
390
427
497
559
601
643
663
0 100 200 300 400 500 600 700
2001
2002
2003
2004
2005
2006
2007
$ Billion
Pharmaceutical Market Regional Share (Global), 2007
Others
23.2%
Germany
5.7%
France
5.5%
Japan
10.9%
Italy
3.5% U.K.
3.7%
China
2.8%
U.S.A
44.7%
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Type of Outsourcing
2000
19
90s
Ti m
e L
ine
Contract Manufacturing
Contract Sales
Clinical Trial Management
19
95s
Drug Discovery
Research ManufacturingDevelopmentDiscovery Marketing
Lead Generation
and Optimization
Target/Lead
Identification
Pre-clinical and Clinical Trails
Phase I to III
Product Launch Product Launch
Pharmaceutical Outsourcing – An Overview
EVOLUTION OF PHARMACEUTICAL OUTSOURCING
• Pharmaceutical outsourcing has been in existence since 1970s
• Initially non core functions were outsourced
• 90’s even core functions began to be outsourced
• Contract Research Organization (CRO) have expanded their services from only clinical trial management to comprehensive
management of all complex drug trial processes
• Drug discovery getting increasingly complex and impractical to
undertake in-house
Drug registration
Permission to
MarketDrug Discovery
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Pharmaceutical Outsourcing – Structure and Functions
LESS REGULATORY HURDLE
REDUCE TIME TO MARKET
ACCESS TO THERAPEUTIC
EXPERTISE
RUN MULTIPLE PROCEDURES
AT A TIME
FASTER + CHEAPER COST
FOCUS ON CORE
COMPETENCIES
MANUFACURING
DEVELOPMENT CRO
CMO
CSO
WHY PHARMACEUTICAL
OUTSOURCING?WHAT TO
OUTSOURCE?
TYPE OF PHARMACEUTICAL
OUTSOURCING
SALES FORCE
AUTOMATION
IDENTIFICATION OF
UNSUCESSFUL COMPOUND IN
EARLY STAGES
HIT TO CONVERSION RATE
RISES
SECONDARY
MANUFACTURING
PRIMARY
MANUFACTURING
BIOMANUFACTURING
SMO
EXPIRING PATENTS
GENERIC DRUG COMPETITION
Pre CLINICAL
CLINICAL TRIAL
RESEARCH
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Global Pharmaceutical Outsourcing Market
CAGR of 10% annually
Pharmaceutical Outsourcing Market (Global), 2007 and 2011
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
2007 2011
Billion ($)
Pharmaceutical Outsourcing – Trends
• Focus on outsourcing clinical research
• Global drug discovery outsourcing market to grow 16% annually until 2013
• Greater regulatory scrutiny, encouraging even Phase IV clinical trial outsourcing
• US outsource 40% of the clinical trials and figure is expected to rise to 65% by 2013
• CRO’s transforming into Site Management Organizations (SMOs)
Pharmaceutical Outsourcing Market Segment (Global),
2007
CMO
68.0%
CRO
29.0%
Others
3.0%
Pharmaceuticals R&D Expenditure (Global), 2007
Phase I
5.9%Phase II
11.2%
Phase III
18.8%
Others
23.8%
Phase IV
11.1%
Discovery
29.2%
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Global Pharmaceutical Outsourcing Market- Issues and Challenges
Pharmaceutical Outsourcing - Issues and Challenges
• Companies accused of taking advantage of weak drug safety standards in global nations. Recent Initiatives taken to combat this challenge include
• FDA to launch pilot project for joint inspections of overseas API manufacturing plants • FDA Globalization Act of 2008
• Closure of domestic plants (e.g. recent closure of 45 plants by U.S.-based Pfizer)
• Companies face critical challenges like the lack of standardization in services, and market / data heterogeneity
• Loss of control, Intellectual Property and Confidentiality are still a concern for companies
• Bureaucracy still holding back clinical trial market growth in some countries (e.g. Poland)
• Majority of clinical trial locations facing intense competition for qualified professionals (e.g. India)
Pharmaceutical Outsourcing – Trends (cont.)
• Next outsourcing wave expected in biomedical engineering areas such as
• Cardiovascular engineering• Fluid mechanics• Artificial self contained hearts• Artificial optic nerves and brain cells
• Additionally outsourcing trends expected in genomics, proteomics, integrated crystallographic data collection and computation techniques
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Inter/API Dosage
Form
Clinical
Biologics
Pharmacovigilance
Injectables
Pre Clinical
Clinical Data
ManagementDevelopment
Manufacturing
Range of Services
ChemistryBiologyResearch
Non core functions
PHARMACEUTICAL OUTSOURCING – MOVING UP THE VALUE CHAIN
Pharmaceutical Outsourcing – Emerging Trends
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Pharmaceutical Outsourcing- A Growth Strategy
Emerging Pharmaceutical Outsourcing Models
• Risk and Reward Sharing Arrangements – Companies are expanding their presence by entering into such
agreement with regional companies (e.g. Eli lily’s agreements in India)
• Functional Outsourcing – Contracting a single provider to deliver a particular service
• Model has been adopted by several major pharmaceutical companies, including Pfizer and Wyeth
• CROs have started to offer variety of pricing schemes
• Preferred outsourcing provider for multiple projects as opposed to bidding system for each project
•Strategic Outsourcing as opposed to earlier approach of Tactical Outsourcing
In the future, large pharmaceutical companies, will mix and match the models and make use of the hybrid approach
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Cost Efficiency
Labor cost and cost of facilities and cost of other resources
Regulatory Hurdles
Laws and regulations holding back outsourcing activities + compliance with international regulations
Patient Pool
Size and availability of patients with desired disease profile
Infrastructure Quality
Level of healthcare infrastructure and country infrastructure
Technical Skills/Track Record of Expertise
Expertise of labor force in needed skill sets
Indicators for Evaluating the Attractiveness of Pharmaceutical Outsourcing Location
Key Location Attractiveness Indicators
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Contract Research
Organization
Contract Manufacturing
Organization
Drug Discovery
• Lower production costs
• Strong Intellectual Property Rights (IPR)
• Availability of certified drug manufacturing facilities
• Manufacturing expertise
• Needed technology
• Compliance with Good Manufacturing Practices (GMP)
• R&D cost
• Strong IPR
• Good Clinical Trial Practices
•Speed and Timeliness
• Clinical Trials
•Prevalence of diseases
• Patient enrolment rate
• Heterogeneous mix of patient population
• Therapeutics expertise
• Patient confidentiality and security
• Communication
Expertise in
•Strategy designing / Operation and Planning
•Product launch
•Market competition management
• Territory alignment
•Support services such as biometrics
Contract Sales
Organization
•Previous Track Record
•Trained coordinators to monitor and coordinate the Phase II to IV trials
• Management and scientific personnel
•Site capacity
• Chemical testing
• Regulatory compliance
Indicators by Type of Pharmaceutical Outsourcing
INDICATORS FOR CHOOSING AN OUTSOURCING PARTNER
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Factors Expected to Spur Future Growth
PHARMACEUTICAL OUTSOURCING MARKET (2008-2013)
Rising Life Expectancy
Rising Health Awareness
Rising R&D cost
Increasing Lifestyle Diseases
Improving Regulatory Environment
Increasing Purchasing Power
Expiring Patents and Stiff CompetitionAging Population
Improving Infrastructure
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Pharmaceutical Outsourcing Market - China
Recent Regulatory Environment Improvement Initiatives
• Strengthening IP Rights with stiff penalties for patent, trademark or copyright infringement
• Efforts underway to streamline regulations and align with international standards
• Focus on reducing evaluation time to 90 working days from Oct 2007
•Since December 2002, China has adjusted to policy of multi-center clinical trial
• In 2004, SFDA made it mandatory for sites to be GCP-certified to conduct clinical trials
• In 2007, China shorten its IND approval time by more than one half
• US FDA will now accept all-China data as a basis for approval of drugs
China- Country Profile
• GLP and cGMP regulations
• ICH GCP standards
• SFDA certified clinical trial centers
• Commitment to comply with TRIPS and amend IP
related laws
China
Russia
Brazil
India
Rising level of attractiveness for clinical trials
Attractiveness of Clinical Trials Market
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Pharmaceutical Outsourcing Market - China (cont.)
Trends Expected Until 2013
• Emergence of organizations specializing in different therapeutic areas
• Domestic clinical research organizations (CROs) to grow up to the level of international CROs
Growth Opportunity Areas
• Innovative drugs from TCM
• Gene therapy
• Stem cell research
• Animal cloning
• Biochips
• Advanced and complex chemistry research
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Pharmaceutical Outsourcing Market - India
India – Country Profile
• Has highest FDA certified manufacturing facilitiesoutside US
•Are leaders in API DMF filings in the US
• Has more than 4 times the drug manufacturing staff in the US and more than 12 times in the UK
•Has strong chemistry and reverse engineering capabilities
•Emphasis on complying with international FDA standards and EU clinical practices has gone up
Clinical Trial Market (India), 2007
Astra Zeneac
7.1%
Novartis
6.4%
Merck
5.7%Roche
3.5%GSK
15.6%
Johnson and
Johnson
15.6%
Eli Lily
12.1%BMS
12.1%
Pfizer
11.3%
Sanofi Aventis
10.6%
Clinical Trial Outsourced (China and India), 2007
139
89
20
40
60
80
100
120
140
China India
No. of Trials
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Pharmaceutical Outsourcing Market – India (cont.)
Recent Regulatory Environment Improvement Initiatives
• In 2005 government amended policies to conform with WTO/TRIPS treaties
• In 2001, GCP guidelines were established
• Clinical Trail Registry, documents all trials in India
• Recent changes in Schedule Y of the Drugs & Cosmetics Act permits on the merit of each case the conduct of
trials in a concurrent phase with centers abroad
Trends Expected Until 2013
• Currently, companies outsource APIs and intermediates. However, India will soon become a major hub for
outsourcing formulations
• Manufacturers are upgrading their manufacturing plants and getting certified by the FDA, EDQM and various
other regulatory agencies
• Growth of the contract manufacturing market is expected to provide a major boost to the pharmaceutical market in
India
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Trends Expected until 2013
• Pharmaceutical outsourcing market, CMO market and CRO market to grow annually at CAGR of 37.6%, 41.7%
22.7% respectively
• Vendors will expand their geographical presence and service-offering through acquisitions
• Partnering strategies like licensing arrangements, collaborative research will be increasingly undertaken
• Companies will focus on enhancing pre-clinical trial facilities and develop expertise in research-biology and
chemistry
• Product patent system of January 1, 2005 is encouraging pharmaceutical MNCs to return back to India
Growth Opportunity Areas
• Research biology is likely to gather momentum in the long term
• Generic drugs R&D, manufacturing of APIs and formulations
• Additionally, opportunities lie in health data and medical records (EMR), data analytics, pharmacovigilance and labeling
Pharmaceutical Outsourcing Market – India (cont.)
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Pharmaceutical Outsourcing Market – Brazil
Brazil- Country Profile
• Brazilian Clinical trials market started to evolve since 1996
• Established regulations in adherence with International Conference on Harmonization (ICH) guidelines
• Established national bioethical committee to investigate institutional review boards (IRBs)
• In 2006, 923 clinical trial applications (CTAs) and 56 new drug applications (NDAs) trials were approved
• In 2007, around 645 trials were being conducted (Phase I-IV)
Latin American Clinical Trial Market, 2006
Mexico
37.4%
Argentina
15.3%
Colombia
5.8%
Chile
2.9%
Brazil
28.4%
Venezeula
8.4%Peru
1.8%
Recent Regulatory Environment Improvement Initiatives
• Since 2004, government revising clinical trial regulations. Recent amendments include
• All clinical sites need to be audited to ensure that they meet the set standards
• Patent protection environment is after World Intellectual Property Organization membership in 1997
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Trends Expected Until 2013
• Government will continue to be the leading purchaser for bulk anti-AIDS drugs for free distribution among the Brazilian patients
• Brazil’s focus will be on 13 parasitic and bacterial diseases
• CRO partnering with non profit organizations likely to be followed in the future
Growth Opportunity Areas
• In therapeutic drugs- cardiovascular, CNS, analgesics, anti diabetes, hypertension and anti cancer drug lead the market
• Growth opportunity are in genome sequencing, vaccine for infectious tropical diseases and Anti AIDS drugs
• Opportunities lie in human genetics; reproductive health; vaccine drugs; neglected diseases, research involving different ethnic groups
Pharmaceutical Outsourcing Market – Brazil (cont.)
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Pharmaceutical Outsourcing Market – Mexico
Mexico- Country Profile
• Mexico, is third in LA in terms of international clinical research
• In 2007, pharmaceutical related trials rose to 1,360 protocols from 285 protocols in 2000
• Mexico has a fairly strong public healthcare system and hosts some of the most advanced health research
Recent Regulatory Environment Improvement Initiatives
• COFEPRIS, the regulatory body, has strengthened and increased transparency in regulations
• Recent initiatives to improve regulatory framework in Mexico include creation of a permanent
pharmacovigilance program and enactment of a Mexican Norm
• In Mexico, conformation and operation of IRB’s, particularly within large organizations, follows paradigms set
by the FDA
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Trends Expected Until 2013
• Half of the domestic CRO conduct clinical trials following the product marketing to gain an
understanding of the population using the medicine. This trend will continue
•Pharmaceutical companies and CROs will address pharmacogenomic issues in their clinical trials inMexico in the future
Growth Opportunity Areas
• There has been considerable interest in Mexico in genetic profiles of the numerous ethnic groups
• Mexico has a potential market for pediatric products
Pharmaceutical Outsourcing Market – Mexico (cont.)
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Pharmaceutical Outsourcing Market - Russia
• Both federal and local ethics committees are governed by Industry Standard OST 42-511-99 (Regulations on good clinical practice in the Russian Federation), which comply with international standards of GCP
• Russian clinical trials market is led by the US (18 per cent) followed by Switzerland (12 per cent) and Germany ranking third with its 8 per cent
Clinical Trial Outsourcing Market (Russia), 2007
Phase I
14 trials; 3.0%Phase II
122 trials;
24.0%
Phase III
240 trials;
47.0%
Phase IV
45 trials; 9.0%
Others
86 trials;
17.0%
Russia – Country Profile
• In 2007, Russian had 750 health care institutions entitled to conduct trials
• Centralized healthcare system with very large hospitals, each specializing in one therapeutic area
• Between 1995-2006, FDA has audited Russian clinical centers 39 times
• In 15 cases, no deviation discovered
• In 22 cases, unwanted facts revealed but were considered insignificant
23
Pharmaceutical Outsourcing Market – Russia (cont.)
Note
• Bioequivalence studies of Russian and foreign drugs,
*clinical trials of drugs manufactured both in Russia and abroad
Type Of Clinical Trials (Russia), 2007
International
Mutlicenter
Clinical Trials
324; 64.0%
Clinical Trials for
New Drug
Discovery
107; 21.0%
Bioequivalance or
Pharmacokinetics
76; 15.0%
Recent Regulatory Environment Improvement Initiatives
• Roszdravnadzor plans new, stricter legislations to regulate country's clinical trials. In proposed changes:
• Clinical trial site will be required to obtain permission for each individual trial
• Permission will only be given if the tested drug being is also going to be registered in Russia
• New drugs must be registered under the name of a Russian legal entity
• Roszdravnadzor will soon announce legislations allowing children to be involved in regular clinical trials in Russia
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Trends Expected Until 2013
•In 2007, Phase II trials increased (by 57.0 percent) and phase III trials decreased (by 18.0 percent) . This trend is expected to continue
• In 2007, there was a minor increase in the share of Russian sponsors in the clinical trials, accounting for 31.0 percent of the total studies initiated during Q3 2007. This trend is expected to continue
• Foreign sponsor countries- United States (30.0 percent of clinical trials), Germany (10.0 percent) and Great
Britain (7.0 percent)
Growth Opportunity Areas
• Opportunities lie in oncology, respiratory, central nervous system (CNS), endocrinology, cardiovascular and gastrointestinal related clinical trials
•The maximum clinical trials are initiated in oncology (29 studies), followed by cardiovascular trials (18 trials) and nervous system diseases (15 trials)
Pharmaceutical Outsourcing Market – Russia (cont.)
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Pharmaceutical Outsourcing Market - Poland
Recent Regulatory Environment Improvement Initiatives
• In 2006, the Central Register of Clinical Trials (CEBK), published requirements to streamline registration process
• It waives the need for notarial authentication of certain documents every time permission is sought to
conduct a trial
• Applicants no longer require to submit copies of their entries in the National Courts Register for
agreements on clinical trials concluded between parties within Poland
306
476
0
100
200
300
400
500
$ M
illion
2008 2013
Clinical Trial Market (Poland), 2008 and 2013Poland – Country Profile
• In 2008, Polish clinical trials market, witnessed an increase of 10.0 percent from the previous year
• Phase III trials are the most popular in Poland
• Polish cumbersome legislations has restricted the
exploitation of pharmaceutical outsourcing market
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Trends Expected Until 2013
• Lengthy and cumbersome regulations will hamper the growth of the Clinical Trial market
• Poland may lose its number two position in clinical trials in the region, to Hungary and Romania. (currently it is next to Russia and boasts 20% of the regional trials)
• Poland is one of the best performing in terms of patients adherence to assigned treatment regime. This trend is expected to continue in the future
• Greater collaboration between academia, government and the Pharmaceutical Industry
Growth Opportunity Areas
• Molecular diagnostics, pharmaceutical analytics and technology of drug forms
Pharmaceutical Outsourcing Market – Poland (cont.)
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Key Location Attractiveness Indicators – Comparative Analysis
Patient Pool
Cost Efficiency
Regulatory Hurdles
InfrastructureQuality
China Brazil
India
Russia
HighestLowest
MexicoPoland
China
China
Russia
Russia
India
India
Brazil
Brazil
Poland
Poland
Poland
Mexico
Mexico
Mexico
China Russia IndiaBrazil
Quality ofResources PolandChina RussiaIndia BrazilMexico
Technical Skills/Track Record of
ExpertisePolandChina RussiaIndia BrazilMexico
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China
Innovative drugs from TCM Gene therapy Stem cell research
Animal cloning Biochips Advanced and complex chemistry research
India
Research biology is likely to gather momentum in the long term Generic drugs R&D
Manufacturing of APIs and formulations Health data and medical records (EMR)
Data analytics Pharmacovigilance and labeling
Brazil
Therapeutic drugs, cardiovascular, CNS, analgesics, anti diabetes, hypertension and anti cancer drugs
Genome Sequencing Vaccine for infectious tropical diseases Anti AIDS drugs
Human genetics Reproductive health Vaccine drugs; neglected diseases
Research involving different ethnic groups
Mexico
Genetic profiles of the numerous ethnic groups Potential market for pediatric products
Russia
Oncology, respiratory, central nervous system (CNS), endocrinology, cardiovascular and gastrointestinal related clinical trials
Maximum clinical trials were initiated in oncology, followed by cardiovascular and nervous system diseases trials
Poland
Molecular diagnostics Pharmaceutical analytics and technology of drug forms
Growth Opportunity Areas in Pharmaceutical Outsourcing
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ERA- Research Studies & Consulting Capabilities
HC Industry
Political and Policy Analysis
Economic Analysis
Social and Infrastructure Analysis
Related HC Studies
• Japan
• S. Africa
• Australia
• Russia
• Germany
Economic Research and Analytics Consulting Capabilities
Statistical Data Analysis
Multi Country Analysis
Trade and Investment Analysis
Outsourcing
Econometric Modeling
Country Risk Analysis
PESTLE Analysis
• Poland
• U.K.
• South Korea
• India
• China
• Brazil
Published Studies Upcoming Studies
Country Industry Forecast
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