October 28, 2019 PAP-Q3-19-NI-003
The Networking Issue Feature: Part 2
While the United States remains the world’s largest pharmaceutical market, “pharmerging” markets will make up nine of the top 20 markets by 2021,1 with China already the second-largest pharmaceutical market. Since 2011, the global expansion of the pharma market has largely been driven by pharmerging markets. This is due to increasing global wealth, greater government support, expanding infrastructure and enhanced insurance coverage.1
Innovation in pharmerging markets is also increasing dramatically. According to a study conducted by Charles River Associates for the International Federation of Pharmaceutical Manufacturers and Associations, between 2005 and 2010, industry R&D spending increased by 455% in Asia-Pacific (excluding Japan), 112% in Latin America and 303% in India.2
Pharmaceutical manufacturing is also increasing in many developing countries, with governments creating pharma production hubs and placing in-country pharma manufacturing as a priority.3 Examples include Sri Lanka, Kenya, the United Arab Emirates and South Korea. Africa is of particular interest, because it is seen as the last large pharmaceutical market with significant future growth potential.4
Local pharmaceutical production (LPP) has been a focus of the United Nations Industrial Development Organization (UNIDO) for more than a decade. According to UNIDO, LPP can help vulnerable populations — particularly those in rural areas — gain access to quality medicines, reduce dependency on international donations and facilitate control of fraudulent drug products entering emerging markets.5 In addition, local manufacturers tend to be more responsive to the needs of the local population. Regulators have more access and control of quality at the source, and inventory can be better managed to prevent supply interruptions.6 Furthermore, local production can contribute to the local economy through job creation and income generation.7
Increasing the LPP in Africa is of particular interest.7 Currently, 95% of the medicines consumed in Africa are imported from countries such as South Africa and Morocco, which produce 70–80% of their medicines locally. As early as 2005, a World Bank Study identified South Africa, Kenya, Nigeria and Zimbabwe as having the industrial capacity needed for successful LPP. In 2012, the African Union Commission’s (AUC) Pharmaceutical Manufacturing Plan for Africa (PMPA) was adopted. China and India have, in recent years, shown interest in the development of the pharma sector in the African region.7
The desire to expand LPP in emerging markets is strong, but it remains unclear whether it is practical in many developing economies. Barriers7 range from a lack of skilled workers and limited access to key raw materials to inadequate infrastructure. The high capital investment needed to meet GMP requirements and operating costs makes it difficult to offer affordable products.6 In many cases, a strong regulatory framework is also lacking, and thus ensuring quality can be problematic.7
According to the WHO,8 to be successful, local pharma manufacturers require the existence of a sufficiently large national market, or need to provide medicines that meet specific local demand. However, even highly developed countries do not produce all of their drug substances and drug products locally. In addition, fierce competition and government and payer pressures have driven down the price of many generic medicines, making it difficult for LPPs to compete. In summary, “high-quality, low-cost” medicines are not likely to be produced from the raw materials stage in countries that do not have the required market size and resources, in terms of skilled people, technology and quality control.8
While production decisions should generally be driven by economic factors and left to private manufacturers, pharmaceuticals directly impact the health of the population. Some government oversight is necessary to ensure that medicines are available, safe and of high quality. There is also an argument that government policies should encourage local drug production.
Brazil is one country that has elected to develop large-scale health-inspired industrial policies. The Brazilian government successfully encourages LPP by providing appropriate incentives for collaboration between competitive pharma companies.9 Russia introduced its “Pharma 2020” strategy in 2009, which has the goal of raising the market share of drugs produced within the country to 50% by 2020. Its three phases have focused on the construction of new production facilities, domestic production of generics and increasing exports.10 A 2005 WHO study found that policies were effective only in countries such as China, Brazil, Korea, India, Egypt and Poland with the industrial capacity sufficient to have local production approach or exceed $1 billion (similar to many European countries).11
In contrast, a study conducted in 2011 by the United Nations Conference on Trade and Development (UNCTAD), as part of a project funded by the European Union to identify the main challenges and obstacles to local production in developing countries, revealed that, in Argentina, Bangladesh, Indonesia and Jordan, LPP was indeed feasible, with companies in these countries achieving the economies of scale required to produce drugs competitively.12 However, the researchers found that the most successful companies often started in collaboration with large multinational pharma companies, with technology transfer eventually leading to independent success. Perhaps as importantly, they also determined that LPP may increase access to medicines.
Increased outsourcing to contract development and manufacturing organizations (CDMOs) and contract research organizations (CROs), the advent of modular manufacturing solutions and the rising adoption of flow chemistry/continuous processing have all facilitated glocalization of pharmaceutical manufacturing.
Outsourcing provides access to specialized technologies and can increase efficiency and productivity while reducing cost. For small/emerging firms that often operate under a virtual manufacturing model, outsourcing is a fundamental business strategy.
Outsourcing to CDMOs in specific geographic locations also provides a foothold into countries that have implemented policies requiring local pharmaceutical production. Furthermore, CDMOs with multiple facilities located around the world can ensure greater security of supply with dual/multiple sourcing solutions. WuXi Biologics with its “Global Dual Sourcing Strategy”13 and Alcami with its “Protect Your Brand™” offering14 are just two examples of CDMOs focusing on this issue. CDMOs with the right skill sets can also help pharma manufacturers effectively manage the global sourcing role,15 which can facilitate the use of in-country manufacturers.
Modular and flexible manufacturing systems are an attractive solution for replicating small production facilities in multiple countries to meet government requirements for LPP.16 GlaxoSmithKline, Pfizer, GEA and G-CON formed a partnership in 2013 to develop self-contained, POD-based mini-factories for the continuous manufacture of oral solid dosage (OSD) forms. In November 2015, JHL Biotech’s prefabricated KUBio plant manufactured by GE Healthcare Life Sciences was assembled from 62 containers in Wuhan, China in 11 days.
Today, Univercells is developing an automated bioproduction system (NevoLine™) that facilitates safer, faster and closed bioprocessing in a much smaller footprint, delivering a low cost of goods and reduced time to market and thus facilitating access to vaccines and biologic drugs.17 The plant-based expression system offered by iBio is ideally suited for the production of biologics/biosimilars in developing countries that lack the funding and infrastructure to support traditional biologic manufacturing methods.18
Many of the key barriers to local pharmaceutical production can be overcome by applying new manufacturing models, most notably flow chemistry and continuous processing. Combined with state-of-the-art cloud computing and automation systems, continuous manufacturing is creating opportunities for cost-competitive in-country drug production using advanced manufacturing technologies.19
David is Scientific Editor in Chief of the Pharma’s Almanac content enterprise, responsible for directing and generating industry, scientific and research-based content, including client-owned strategic content, in addition to serving as Scientific Research Director for That's Nice. Before joining That’s Nice, David served as a scientific editor for the multidisciplinary scientific journal Annals of the New York Academy of Sciences. He received a B.A. in Biology from New York University in 1999 and a Ph.D. in Genetics and Development from Columbia University in 2008.
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