Accordingly, contract manufacturing of injectables has led this sector in growth for the last two years. The market for outsourcing of injectables manufacturing is expected to grow by approximately 14% annually over the next three years, with more than 150 new sterile product approvals anticipated by 2015. At the same time, pharmaceutical and biotechnology companies are increasingly moving into bio-therapeutics, which require a liquid or semi-liquid form to be administered intravenously.
Other key factors that influence the steriles market are trends in global healthcare and disease control. Just this month, there has been news of fresh concerns emanating from the United Nations over the potential resurgence of new mutant strain of bird flu – or Avian Influenza A type H5N1 – which is currently spreading in Asia. The World Health Organization reports that bird flu has killed 331 people since 2003, and the rise in cases makes it likely that governments will look into stockpiling anti-viral drugs such as Tamiflu. New cases of swine flu – or swine-origin influenza A (H1N1) – have also been on the rise in the United States of late, and as densely populated countries in the northern hemisphere head into flu season again, the issue of preparedness with enough doses of suitable vaccine will continue to generate business for sterile manufacturing.
In the area of systemic diseases and conditions, World Health Organization states that 346 million people worldwide have been diagnosed with some form of diabetes. In Type 1 Diabetes and increasingly in Type 2, the disease is treated with the injection of insulin and other hormone-based drugs, which are another mainstay of sterile manufacturing. The Center for Disease Prevention and Control (CDC) reports that diabetes is currently one of the most common chronic diseases among children and adolescents in the United States. Approximately 151,000 people below the age of 20 are affected, and more than 13,000 new cases of Type 1 diabetes are diagnosed in young people each year. With this trend continually rising, it is inevitable that demand for injectables will also increase and be sustained long-term – unless alternative methods of administration are met with success.
In addition to these growing demands for sterile production, the approaching pharmaceutical patent cliff will almost certainly create opportunities for generic competition that could drive growth. However, the sterile contract manufacturing market is less competitive than most contract manufacturing sectors because there are fewer respected players with the competency and equipment to manufacture injectables. Compared to oral and inhaled modes of delivery, intravenous and subcutaneous paths that drive sterile manufacturing can be complicated, expensive, uncomfortable, and inconvenient. It is estimated that 50% of all long-term prescribed medications are discontinued by patients in the first year. For injectables, the noncompliance rate is particularly high. Most patients find self-injection challenging – particularly those who have to inject medications that come in vials and require dosing with hypodermic needles.
In a direct correlation, demand for prefilled syringes and related dosing technologies remains high and is growing in emerging markets. Established contract research and manufacturing organizations that have expanded their production capacity and global presence to meet rising demand are well positioned to source new contracts. However, more and more contract manufacturers are gaining the trust of the pharmaceutical and biotech companies by demonstrating competency in this technology-driven segment.
While it is clear that sterile manufacturing is a growing industry with many opportunities for contract manufacturers, there are important factors to consider before deciding if and when to enter the market or whether to expand. The first consideration should be your company’s reasons for entering the market and how they fit into your overall strategy. You should also examine the size of the market, growth rates, the competitive environment, and customer segmentation. Nice Insight forecasts that revenue for sterile dosage contract manufacturing is expected to increase to $4.9 billion by 2012, which represents a growth rate of approximately 6.7%.
It is also important to identify the risks of entry into the market. For example, the successful emergence of alternate drug delivery systems has the potential to cannibalize future sales of injectable drugs. As referenced earlier, insertion of needles into the skin and muscle presents trauma and psychological factors that makes patient compliance a real issue. Continuous research is being undertaken into alternative methods including inhalers and nasal sprays, with the potential for equal efficacy from a far less invasive regimen. Historically, these drug delivery systems have been unable to deliver high molecular weight drugs, proteins and peptides. However, recent studies have shown that proteins and peptides can be administered through pulmonary and nasal routes. The growth in popularity of prefilled syringes is predicted to decrease long term as a result of new rival drug delivery technologies.
We looked at data gleaned from the Nice Insight Q3 Pharmaceutical and Biotechnology Outsourcing Survey to investigate any correlation between timing of entry into the sterile contract manufacturing market versus customer awareness / customer perception scores and market share. We sought to determine whether contract manufacturing organizations (CMOs) that entered the market earlier were at an advantage.
We found that Baxter BioPharma Solutions and Halo Pharmaceutical, Inc., who entered the sterile contract manufacturing market in 1979 and 1981, did not have higher overall market share than companies such as AAI Pharma Services Corp. and Althea Technologies Inc., who entered the market in 2001 and 2003 and have a leading market share of 8.39%.
However, Baxter BioPharma Solutions, with the earliest point of entry of those studied, did have the second highest overall combined customer awareness (CA) and customer perception (CP) score at 129%. Baxter also had the highest scores for perceived cost/affordability (83%), productivity (80%) and regulatory compliance (82%). And the highest overall score for perceived quality (81%) was earned by the other veteran, Halo Pharmaceutical, Inc.
Pfizer Centresource entered the market in 2003 and had the highest overall combined CA and CP scores at 132%, and the highest score for perceived accessibility (82%). But with market share of 6.45%, it was actually well below the average (8.32%) among the top 15 companies offering contract manufacturing of steriles.
After considering all relevant factors, if you believe it is a good strategic decision to enter or expand in the steriles market, you need to determine the most effective way to win a sustainable share of the growing market. With the intensive technology and capital-focused nature of steriles and the scrutiny involved, financial success is far from a small undertaking. It is also evident from data that even high customer awareness and customer perception are not necessarily inextricably linked to market share.
With the established positions of long-term players in terms of perceived quality, cost, productivity and regulatory compliance, all efforts need to go into establishing a reputation among the pharma and biotech outsourcing community. A continual eye on awareness and perception is key, but in terms of picking up market share, this might be combined with other strategies. It’s possible that acquisitions, joint ventures or strategic alliances could be a wise consideration for newer names in the marketplace.
.svg)
