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SPOTLIGHTS
Look to Asia for generic manufacturing
Pharmaceutical experts talk about four aspects generic drug producers need to consider when sourcing for active pharmaceutical ingredients.
By Tanja Schaffer and Shigeru Ishihara

The global generic drug market, according to Zion Market Research, is growing at more than 10 per cent annually and is expected to reach approximately USD 380 billion by 2021. This growth translates into reduced prices of generic drugs, more access to consumers and improved public health.

As a quick recap, generic drugs are bioequivalent to branded drugs in active pharmaceutical ingredients (API), dosage form, strength, intended use and route of administration. After the original drug’s patent expires, usually 20 years in most cases, it can be copied, manufactured and sold by generic producers at a much lower price.

With the rising number of patent expirations, increasing number of chronic diseases and more patients preferring cheaper alternatives, more producers are on the lookout for available drugs and APIs. There are four aspects for generic producers to consider.

1. Drug/API patent status

The first aspect you must look at is the current patent situation of the drug/API you are interested in and what the status of its patent expiry is. As you will be competing with the originator, it is important to have a detailed knowledge of the patent’s processes and manufacturing technology applied.

As the review and approval of a generic drug takes time, it is best to have a good understanding of how and what the authorities will be reviewing and the complexity of the drug/API product.

You must also define your production and retail strategy in accordance to the industry’s intellectual property (IP) landscape. With IP requirements and standards constantly evolving, ensure you do not fall into the IP trap.

2. Market competitiveness

One of the main drivers for you to go into generic manufacturing is to make it better for existing and future commercial conditions. While you can choose to do this alone, many generic producers prefer to work with an established partner who understands the industry and the regulations involved.

A partner like DKSH, for example, can help you with the market studies, selecting the right source of the APIs, fine-tuning production processes and developing the correct pricing strategies for the target markets.

As a producer, a sufficient return on investment is your foremost consideration and as such you must fully understand the cost drivers of the product. To keep it competitive, you must ensure a streamlined production process and that you are able to source for cheaper material, and at the same time, be fully knowledgeable of the chemical and formulation processes.

3. Regulatory compliance

Managing the regulatory process to facilitate drug approvals is perhaps one of the most demanding step in becoming a generic drug producer. An important area that a producer must give attention to is to ensure its processes and product is in full compliant with either the U.S. Food and Drug Administration (FDA) or other regulatory requirements.

In 2017, the U.S. FDA approved 763 new generic versions of drugs, 112 more than it had in 2016 and almost twice as many as in 2014. Along with the increasing demand for generic drugs, the FDA have also stepped up their focus on the regulations and requirements for these products.

A producer must be aware of all these requirements to ensure its application to the regulatory agencies is correct and the relevant source documents are provided to facilitate the approval process.

4. Markets for your product

Asia continues to lead in generic drugs consumption with approximately 40 per cent of global generics spending coming from this region. This domestic consumption in Asia is expected to continue rising - as a result of aging populations, rising healthcare costs and the introduction of government initiatives, for example:

  • Japan is an aging population with high medical costs.The government is looking at increasing the volume of generic prescriptions from the 25 per cent in 2012 to 60 per cent by 2018 to bring down healthcare costs.
  • India: The new government's universal health plan rolled out in 2015 will cover the entire population by 2019. The state governments are promoting the use of generic medicines in state-run public hospitals to cut down healthcare costs.
  • Indonesia: The universal health coverage scheme implemented in January 2014 is driving the demand for medicines.
  • Thailand: New legislations such as the Government Procurement and Supplies Management Act 2017 were introduced to curb rising healthcare costs. Under this new Act, the state-run Government Pharmaceutical Organization, which also manufactures generic versions of originator drugs produced by multinational pharmaceutical companies, has gained additional responsibilities for the procurement of pharmaceutical products. Overall, we expect the Procurement Act and subsequently issued sub-acts to accelerate the transition towards generics medicines.

Governments in several Asian markets are also proactively enhancing their drug production standards to benchmark against international standards. Countries like Thailand, Indonesia, Japan, Malaysia and Singapore have joined the Pharmaceutical Inspection Co-operation Scheme (PIC/S) consortium, which aims to harmonise inspection procedures worldwide by developing common standards in the field of Good Manufacturing Practice of medicinal products for human or veterinary use.

It is recommended to study your intended market environment before jumping into it as different markets are at different levels of maturity. For example, Japan’s healthcare market, second only to the US, offers an exciting prospect for generic producers. However, it is also very strict in terms of its application and approval process.

Similarly, South Korea has been aggressive in developing the generics industry but like Japan has adopted stringent regulations on par with the European Medicines Agency guidelines. Other Asian markets worth taking a closer look at include India, Vietnam and China, who all are boosted by increasing support from their respective governments.

It is not just manufacturers entering into Asia; competition has increased significantly in the global generics market with many Asian producers entering developed markets such as the US and Europe. India, the world’s largest exporter of generic drugs, in 2017 accounted for 300 generic drugs granted approval in the US, while Chinese generic producers received FDA approval for 38 generic drugs.

Asia has become the hub for API manufacturing and offers abundant lucrative opportunities for producers. The key to finding and sustaining business there is to fully understand the markets and ensure a solid strategy.

References:

  1. https://globenewswire.com/news-release/2018/03/21/1443577/0/en/Global-Generic-Drug-Market-Size-Share-to-Reach-380-60-Billion-by-2021-Zion-Market-Research.html
  2. https://qz.com/1101897/more-generic-drugs-were-approved-by-the-us-fda-in-fy-2017-than-ever-before/
  3. https://journalhealthcare.com/47408/generic-drugs-market-global-competitive-analysis/
  4. https://www.ft.com/content/6645b174-2371-11e8-ae48-60d3531b7d11
  5. https://www.biosimilardevelopment.com/doc/will-asia-go-big-in-biosimilars-adoption-and-manufacturing-0001
  6. https://www.prnewswire.com/news-releases/generic-drug-companies-in-asia-focus-more-on-market-expansion-and-quality-less-on-patent-cliff-finds-frost--sullivan-300069135.html

Tanja Schaffer is vice president of global pharmaceutical industry, performance materials at DKSH.


Shigeru Ishihara is director of performance materials at DKSH.

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APBN Editorial Calendar 2018
January:
Obesity / Outlook for 2018
February:
Searching for the fountain of youth
March:
Women in Science - Making a difference
April:
Digestive health in the 21st century - Trust your guts
May:
Dental health - The root to good health
June:
Cancer - Therapies and strategies for better patient outcomes
July:
Water management - Technologies for biotech and pharmaceutical industries
August:
Regenerative technology - Meat of the future
September:
Digital healthcare / 3D printing
October:
Bones / Breast cancer
November:
Liver health / Top science research nations & institutions
December:
AIDS / Breakthrough of the year/Emerging trends
Editorial calendar is subjected to changes.
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