Pharmaceuticals play a critical role in improving human and animal health and well-being. They bring tremendous benefits to public health and economic productivity by saving lives, increasing life spans, reducing suffering, preventing surgeries, and even reducing hospital stays. Today, the average human being’s life span has increased due to life-saving drugs, which help to fight and prevent fatal diseases such as HIV/AIDS as well as some cancers and control others like tuberculosis. The research-based pharmaceutical industry plays a very significant role in every nation’s economy and is considered to be a top-performing, high-technology sector.
The global pharmaceutical industry is projected to reach a phenomenal USD 1.6 trillion by 2020 (1). Globally, the demand for medicines continues to grow modestly in the developed countries while steady growth is seen in high-growth markets such as the BRIC countries, Asia-Pacific, and South Africa, among others. In most of these countries, disease profiles are changing and newer, rarer “orphan” diseases are emerging. The recent Ebola virus threats or the earlier swine flu epidemics fuelled the need for rapid research to counter and control these new infectious agents. Thus, although infectious diseases have always been a threat, new and emerging diseases along with the increase in the number if chronic lifestyle diseases such as cardiovascular disease, diabetes, and cancer have risen faster than before. In addition to this, demographic changes resulting in increased life spans are leading to an increase in aging population, opening up the need for geriatric medicines and healthcare. The result is that the demand for medicines has increased considerably from the emerging markets. The rapidly increasing middle-class population in these markets, which can afford medical treatments, is also considered to be a major cause for growth of the industry (1).
With the advent of new and innovative technologies in the pharmaceutical sector, personalized medicine is a trend that is here to stay. All these factors help drive the industry in the emerging markets. The compound annual growth rate (CAGR) for the global pharmaceutical market is projected to be 4%–7% from 2013 to 2018; however, for the U.S., it is projected to be 5%–8% during the same period. On the other hand, the “Pharmerging Nations” [a term coined by IMS Health with reference to emerging markets (2)]—21 countries whose 2013–2018 growth will be greater than USD 1 billion in absolute terms—are expected to witness an average CAGR of 8%–11%. These countries are expected to reach USD 358 to 388 billion by 2018, with China leading the market at a CAGR of 10%–13%, at USD 155 to 185 billion. China is already the second-largest pharmaceutical market in the world, surpassing Japan. The EU5 countries (Germany, France, Italy, U.K., and Spain) are all expected to experience a growth of 1%–4% in the next five years, reaching USD 157 to 185 billion by 2018 (3).
Most regulatory bodies are trying to streamline their approval processes, making them more transparent, well-structured, and competent so as to facilitate quick approvals of pharmaceutical products. In such a dynamic situation, pharmaceutical companies are attempting to capitalize on all these opportunities and are ready to shift focus to the emerging markets.
Over the years, the pharmaceutical industry, especially in the developed nations—the U.S., Europe (the Big Five), and Japan—has been facing several challenges of varying severity from changing regulatory norms and government policies to pricing restrictions, increased competition, and pressures of new product launches in an economically challenging situation. In recent years, several blockbuster drugs have gone off-patent, representing what is known as the patent cliff. A total of around USD 255 billion worth of products are expected to go off-patent by 2016. For example, Roche lost the patents for its top-selling breast cancer drug, Herceptin (trastuzumab), in Europe in July 2014. This drug generated USD 6.56 billion worth of global sales for Roche in 2013. It is also set to lose its patent in the U.S. by 2019. Similarly, Israel-based global pharmaceutical company, Teva Pharmaceutical Industries’ patents on Copaxone (glatiramer acetate), an immunomodulator drug used in the treatment of multiple sclerosis (MS), expired in the U.S. in May 2014. The drug, developed and produced by Teva, generated a global revenue of about USD 4.3 billion in 2013 (4). However, the flip side is that although this puts Big Pharma in a difficult situation, it is a golden opportunity for the generics and biosimilars drug makers.
Yet, in many other cases, the product pipeline has not kept pace with the need for new drugs. With the rising costs for regulatory approvals, there has been a decline in R&D activities. Therefore, there is a dwindling pipeline and slower industry growth, especially in developed countries.
To counter these challenges, the industry has been responding and evolving in different ways and undergoing rapid, significant transformations. This article traces some of the key changes taking place in the industry.
In the last few years, ever since the western markets faced a slowdown, there has been a dramatic shift towards emerging markets such as India, China, Brazil, and Russia, among other countries. Global pharmaceutical companies are looking towards these markets as new revenue pockets. They are scanning these markets for new growth opportunities to boost drug discovery potential, reduce time to market, and decrease costs along the value chain. Governments in the abovementioned countries have made public healthcare one of their top priorities and are investing in it by introducing new policies, inviting foreign investments, providing infrastructure, encouraging innovation, and launching programs that are aimed at making healthcare more affordable and accessible to every individual. They are thereby fostering a favorable environment for growth.
Apart from outsourced manufacturing or setting up base in these countries, there has been a huge surge in the number of mergers & acquisitions, which enable big players to consolidate and cut costs, strengthen research pipelines, and expand their geographic reach (1, 2). To keep their revenues growing, pharma companies think that it is often cheaper for a company to acquire the next blockbuster drug than to develop it in-house.
In addition to these developments, some of the major areas in the pharmaceutical industry are currently witnessing swift expansions, a number of technological innovations, and rapid advancements in manufacturing processes and integrations. This is another way to adapt to the changing environment. Innovation has always proven to be a major factor for driving the growth of any industry. Along with innovations in the actual drug molecule, the pharmaceutical industry is also witnessing the development of novel modes of drug delivery and advancements in excipients.
Active Pharmaceutical Ingredients (APIs)
Active Pharmaceutical Ingredients (APIs) are the most vital part of any formulated end product or drug. After the economic recession, the pharmaceutical industry witnessed a paradigm shift from the manufacturing of innovative drugs to low-cost API drugs. API manufacturers are applying various novel technologies to reduce the processing time in order to increase productivity. At present, the generic APIs market is growing at an exponential rate due to the expiration of a number of patents of global blockbuster drugs. In addition to this, the development of High Potency Active Pharmaceutical Ingredients (HPAPIs) and biogeneric drugs is another trend boosting the growth of the API market. These compounds are extremely effective in the treatment of cancer, respiratory disorders, and hormonal imbalances. The HPAPIs market is mainly driven by growth in the oncology therapeutics segment.
Mergers, acquisitions, and collaborations are the major growth strategies adopted by players in the API industry. New market entrants are major threats to the existing small and medium manufacturers, leading to high competition. To overcome these challenges, companies are now forming joint ventures, which enable them to share technologies and complementary assets in order to manufacture API drugs. Another trend evident in the pharmaceutical industry (for both small and large molecule drugs) is the shift to smaller, more flexible manufacturing facilities that are strategically located to serve several regional markets and manufacture a wide range of smaller volume, niche, and targeted therapies. The overall API market is projected to grow at a CAGR of 7.9% from 2011 to 2016, while the global HPAPI market is expected to grow at a CAGR of 8.3% till 2016 [for further details, read the MarketsandMarkets report on the API market (5)].
Pharma Excipients:
Pharmaceutical excipients are the inactive ingredients used along with the active ingredient or API in a drug formulation. They generally exhibit different functions without altering the therapeutic action of the active ingredient used in a drug. In recent years, the pharmaceutical industry has witnessed a sudden surge in the demand for functional excipients, which in turn is expected to drive the market for new excipients globally. Over the years, there has been a significant increase in the adoption of nanotechnology, which helps target the disease site more accurately. This, in turn, helps reduce the number of drug toxicities. Nanotechnology-enabled drug delivery systems (NDDS) and liposomal drug delivery systems are some of the most advanced drug delivery systems that are currently in focus. A recent trend observed is that an increasing number of international players are currently outsourcing their excipient manufacturing activities to countries such as India and China due to low manufacturing and labor costs in these countries. The global pharmaceutical excipients market is estimated to grow at a CAGR of 6.7% from 2014 to 2019 [for further details, read the MarketsandMarkets report on the pharma excipients markets (6)].
Cleanroom Technologies
Cleanroom technologies are an inevitable, indispensable aspect of the manufacturing of aseptic medical goods. Over the years, the demand for cleanrooms for the healthcare industry has increased significantly owing to stringent healthcare regulations, the emergence of biologics, the growing pharmaceutical industry, and rising applications of cleanrooms in the medical device industry (10). Although the high costs associated with the installation and use of cleanrooms is a major factor restraining the growth of the healthcare cleanrooms technology market, the global cleanrooms technology market is expected to grow at a CAGR of 5.5% during the period of 2014 to 2019 [for further details, read the MarketsandMarkets report on the cleanroom technologies market (7)].
Pharma Packaging
Moving away from traditional packaging systems, the pharma packaging industry has evolved into a modern, automated, integrated, and flexible packaging sector that helps meet the challenges of patient compliance requirements and anti-counterfeit measures. Safety and quality of packaging has gained prime importance in pharmaceutical packaging over the years. Owing to this, pharmaceutical packaging has become increasingly innovative, effective, and meaningful. Currently, blister packs and aseptic pharmaceutical products like parenteral vials and prefilled syringes are gaining popularity among pharmaceutical end users, especially since biotechnological advancements continue to lead to the introduction of new therapies. A majority of the leading players have launched various automatic and integrated blister packaging and cartoning lines. Just like the API and excipients markets, a majority of the manufacturers have diverted their investments to high-growth markets such as India, China, and Brazil. Furthermore, many of the major companies are also establishing their subsidiaries in these regions to establish a stronger foothold in these countries. Due to this transition, the APAC and Latin American regions are expected to spearhead the overall packaging equipment market for pharmaceutical growth [for further details, read the MarketsandMarkets report on pharma packaging (8)].
Drug Delivery Systems:
Drug delivery systems form an integral part of the pharmaceutical industry owing to their ability to enhance the availability of drugs inside a patient’s system. A tremendous amount of innovations are taking place in this field since the mechanism of drug delivery plays a critical role in determining the safety and efficacy of therapeutics. Drug delivery technologies are increasingly being used to help drug manufacturers define the USP by differentiating new therapeutics from existing products. They can also provide a means for extending patent protections. Although a majority of drug delivery devices are related to oral delivery, given the growth of the biopharmaceutical market, the fastest-growing segments of the drug delivery market will be for the delivery of biologic drugs. The peculiarity of biologics is their large size, due to which they are instable molecules in the body and show limited membrane permeability. Therefore, as the biologics market grows, the drug delivery market is also expected to grow simultaneously. The global drug delivery systems market was worth USD 142.5 billion in 2012 [for more details, read the MarketsandMarkets report on the drug delivery systems market (9)].
With all these developments taking place currently, the pharmaceutical industry is on a progressive and upward wave. Innovations are happening on every front, which will dramatically influence healthcare. As the PwC Pharma 2020 reports says, “In some respects, pharma’s never had it so good. The tools to develop remarkable new medicines are materializing, demand for its products is escalating and trade is getting easier.” At the core, it is the patients who must stand to gain. With this in mind, let us hope the future is bright for the sunshine industry, taking us towards a healthier, disease-free world.
Related Reports and References:
- Market Opportunities and outlook- Pharma 2020 reports by PwC: http://www.pwc.com/gx/en/pharma-life-sciences/pharma2020/market-opportunities-and-outlook.jhtml)
- IMS Health. “Pharmemerging Shake Up”. (2010).
- http://pharmaceuticalcommerce.com/latest_news?articleid=27416
- http://www.drugdevelopment-technology.com/features/featureten-blockbuster-drugs-that-lost-patent-in-2014-4445799/
- Markets and Markets Report: API Market: http://www.marketsandmarkets.com/Market-Reports/API-Market-263.html
- Markets and Markets Report: http://www.marketsandmarkets.com/Market-Reports/pharma-excipients-market-956.html
- Markets and Markets Report: http://www.marketsandmarkets.com/Market-Reports/cleanroom-technology-market-263122482.html
- Markets and Markets Report: http://www.marketsandmarkets.com/Market-Reports/pharmaceutical-packaging-market-890.html
- Markets and Markets Report: http://www.marketsandmarkets.com/Market-Reports/drug-delivery-technologies-market-1085.html
- Trends in Cleanroom Technologies, Guy Tiene, Director Strategic Content, That’s Nice LLC / Nice Insight reviews: July 24, 2015: http://www.financialexpress.com/article/pharma/cleanroom/trends-in-cleanroom-tech/106727/
The writer, Dr. Anita Joshi is a Biotechnology Advisor for MarketsandMarkets, India.
