CPhI announced its findings from a review of the US pharmaceutical manufacturing market at InformEx 2016 in New Orleans, last week.
According to the report, the industry is showing increased confidence in renewed growth, as some lower cost manufacturing that had previously been outsourced is returning to the US.
The report explained, “This turnaround in the US market’s revenue potential is being driven by concerns of quality in some Asian markets and a marked shift in the drug development pipeline towards difficult to formulate drugs and biosimilars.”
An increasing scrutiny from the FDA has increased regulatory confidence in manufacturing standards.
Additionally, new trade rules, including the TTIP (Transatlantic Trade and Investment Partnership), TPP (Trans-Pacific Partnership) and TPA (Trade Promotion Authority), while a source of debate in the market, are being welcomed by generics manufacturers in spite of potential biosimilar patent extensions.
“The belief is that these partnerships are making domestic generic manufacturers more competitive with their overseas rivals,” the report explained. Yet for smaller firms this may mean a halt in production, or acquisition by a larger company, as GDUFA (Generic Drug User Fee Amendment) fees, apply at a standard flat rate.
Contract manufacturing
According to the report, the US contract manufacturing market “is now as hot as it has been at any other time in the last 10-years.”
With this growth has come movement from international players to establish domestic manufacturing.
“These acquisitions are being driven by the need to acquire specialist technical capabilities and perhaps more significantly, sterile and biologic capabilities,” said the report.
“International companies with the dual benefits of development capabilities in the US and generic facilities in lower cost regions look extremely well placed for sizeable future growth.”
These conditions will lead to growth for domestic companies, but international companies, should “urgently enter the USA market with domestic assets or risk getting left behind.”
The report added that international companies supplying into the US are now at a “crucial tipping point.”
Growth is also being driven by new investments into diagnostics and biomarkers, as well as biologics and biosimilars which have higher profit margins.
Continued growth
With the wide-spread focus on biologics, the report added that small molecules “are not dead as profit generators,” explaining that ADCs and conjugation, mainly for oncology products, are providing new business opportunities.
Yet, with biologics, it is predicted that CDMOs will take on much of the development work because of the complicated regulatory approval process.
Overall, respondents agreed that the US CMO market, which is currently worth more than $10bn, is poised to expand significantly faster than the rest of the pharmaceutical industry.
This will be augmented by outsourcing non-core businesses, as well as the increasing amount of biotechnology companies without in-house capabilities.
However, one threat to this growth is the impending serialization deadline – while some companies have begun to install compliant capabilities, according to the report, the general consensus is that the industry is still way behind.