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Identifying And Exploiting API Opportunities Across Emerging Markets. API SOURCING STRATEGIES 2008 BERLIN, GERMANY DAVID HARDING NOVEMBER 24, 2008. API INTELLIGENCE AT THOMSON REUTERS. Newport Strategies founded in 1990 and acquired by Thomson Scientific in 2004

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identifying and exploiting api opportunities across emerging markets

Identifying And Exploiting API Opportunities Across Emerging Markets

API SOURCING STRATEGIES 2008

BERLIN, GERMANY

DAVID HARDING

NOVEMBER 24, 2008

api intelligence at thomson reuters
API INTELLIGENCE AT THOMSON REUTERS
  • Newport Strategies founded in 1990 and acquired by Thomson Scientific in 2004
  • Industry pioneer in research and analysis of the impact of global API development on competition in generic products
    • Strategic competitive intelligence
    • Tools for API sourcing and business development
  • Newport Horizon and Newport Vision used by over 200 companies across the globe
backdrop
Backdrop
  • Pharma Market: Growth Expectations for 2009
    • “Will hold steady at 2008 levels”*
    • US: 1-2%, EU5: 3-4%
    • Japan: 4-5%
    • BRIC: 14-15%
  • Brand Pharma
    • Innovation slump
    • Blockbusters losing patent protection
  • Generics
    • Increasing competition, especially from India
    • Low cost API coming from India, China
    • Margin pressures in U.S., UK, Germany
    • Drop in small molecule opportunities post-2011

*2009 IMS Global Pharmaceutical and Therapy Forecast

agenda
Agenda
  • A quick look at some figures in regulated markets
  • Reviewing the changing dynamics of the API market
  • Benchmarking API opportunities from and into emerging generic markets
  • Pros and Cons of working in emerging markets
number of api manufacturing plants inspected by us fda 2001 2007
Number of API Manufacturing Plants Inspected by US FDA: 2001 – 2007

Source: Newport Horizon Premium™

number of api manufacturing plants inspected by us fda 2001 20071
Number of API Manufacturing Plants Inspected by US FDA: 2001 – 2007

Source: Newport Horizon Premium™

number of us dmfs filed by country 1998 2007
Number of US DMFs filed by country: 1998 – 2007

Source: Newport Horizon Premium™

us dmf filings by api manufacturers 1998 2007
US DMF Filings by API Manufacturers: 1998 – 2007

Source: Newport Horizon Premium™

cos filings by api manufacturers 1998 2007
COS Filings by API Manufacturers: 1998 – 2007

Source: Newport Horizon Premium™

indian landscape for api manufacture
Indian Landscape for API Manufacture
  • Abundant amount of API manufactured for local market
  • Abundant amount of API Exported; plenty imported
availability of api india
Availability of API: India

Source: Newport Horizon Premium™

markets for api india 1300 indian import registrations filed since feb 2003
Markets for API: India~1300 Indian Import Registrations filed since Feb 2003
  • Companies with most IIRs
    • Schering-Plough
    • Teva
    • DSM
    • BASF
    • Sanofi-Aventis
    • Novartis (Sandoz, Lek)
    • Pfizer
    • Bayer
    • North China Pharmaceutical Group
    • Kyowa Hakko Kogyo
  • Products with most IIRs
    • Clavulanate Potassium
    • Erythomycin Thiocyanate
    • Levonorgestrel
    • Vancomycin Hcl
    • Cyclosporine

Source: Newport Horizon

are there many opportunities to sell api into india
Pros

Not self-sufficient in all products

Fermentation

Steroids

Prostaglandins

Polypeptides

Demand for Intermediates

Costs rising in China and India

Opportunities in high-quality API for export dose

Cons

Abundance of locally manufactured API

Many local facilities FDA approved

Extensive importing from China

Local API manufacturers enjoy cost advantage

Restrictive duty on API imports

Are there many opportunities to sell API into India?
are there many opportunities to source api from india
Pros

Many companies with regulatory filings

Many companies that are FDA approved

Lower cost of API

Rich talent pool (125,000 chemical engineers each year alone)

No Language Barrier

Cons

Increased FDA inspections could lead to unfavorable results

Example: Ranbaxy

cGMP standards not always met

Are there many opportunities to source API from India?
chinese landscape for api manufacture
Chinese Landscape for API Manufacture
  • Abundant amount of API manufactured for local market
  • Abundant amount of API Exported; some imported
availability of api china
Availability of API: China

Source: Newport Horizon Premium™

markets for api china 400 chinese import registrations filed since september 2003
Markets for API: China~400 Chinese Import Registrations filed since September 2003
  • Companies with most CIRs
    • Kyowa Hakko Kogyo
    • Novartis (Sandoz, Lek)
    • Ajinomoto
    • DSM Fine Chemicals
    • Pfizer
    • Chong Kun Dang
    • Ranbaxy
    • Dr Reddys
    • BASF
  • Products with most CIRs
    • Clavulanate Potassium
    • Amoxicillin
    • Clarithromycin
    • Diltiazem Hcl
    • Cysteine
    • Pioglitazone

Source: Newport Horizon

changing dynamics of api market china
Changing Dynamics of API Market:China
  • The days of cheaper API prices could come to an end

Effects of the Olympic games

+ Implementation of more stringent EHS regulations

+ Waste water treatment standards

+ Increasing cost of labor, inflation and energy

= Higher API prices

impact of the olympics
IMPACT OF THE OLYMPICS
  • Will intermediate manufacturing start moving to India? Europe? U.S.?
  • Will API outsourcing into China slow down?
are there many opportunities to sell api into china
Pros

Rising costs in China

Demand for difficult to manufacture APIs

“nibs”

Demand for high-quality API from dedicated facilities

Newer cephalosporins

Cons

China has manpower, intellect and raw materials to manufacture most products locally

Heavy focus on cost

Importing from low-cost countries

High-value of Euro

Are there many opportunities to sell API into China?
are there many opportunities to source api from china
Pros

Lower cost base (than India)

Improving IP and anti-counterfeiting environment

Good at intermediate manufacturing

Cons

Still lacking at meeting strict GMP standards

Cost of materials increasing

Language barrier

“Buyer Beware”

Heparin scare

Are there many opportunities to source API from China?
russian landscape for api manufacture
Russian Landscape for API Manufacture
  • Some API manufactured locally, but for local market
  • Overwhelming majority of API imported INTO Russia
availability of api russia
Availability of API: Russia

Source: Newport Horizon Premium™

top api imported to russia 2007
Top API imported to Russia (2007)
  • Paracetamol
  • TolperizoneHcl
  • Vinpocetine
  • Doxorubicin Hcl
  • Cefotaxime Sodium
  • Mannitol
  • Cefotaxime
  • Chlorpromazine Hcl
  • Docetaxel Anhydrous
  • CholineAlfoscerate

Source: PharmExpert™

  • Cefazolin Sodium
  • Amoxicillin Trigitrate
  • Sorbitol
  • Metamizole Sodium
  • Aminosalicylic Acid
  • Ampicillin
  • Ascorbic Acid
  • Acetylcalicylic Acid
  • Paclitaxel
  • Ceftriaxone Sodium
are there many opportunities to sell api into russia
Pros

Almost all API is imported

Little local production

Little local expertise outside of supplements

Local products w/ inconsistent quality

Large number of local dose companies

Cons

A lot of the API is coming from India, China

Many local dose companies buy from offshore distributors

Suspect quality

Red tape

Are there many opportunities to sell API into Russia?
brazilian landscape for api manufacture
Brazilian Landscape for API Manufacture
  • Some API manufactured for local market
  • Very little exported
  • Overwhelming majority of API imported INTO Brazil
availability of api brazil
Availability of API: Brazil

Source: Newport Horizon Premium™

are there many opportunities to sell api into brazil
Pros

Most of API is imported

Low import taxes

Dose companies becoming more quality minded

Regulatory environment becoming tougher

Dose exports into neighboring countries

Opportunities in

High-quality hormones

Controlled substances

Cons

Currently most API imports from India and China

Still heavy focus on cost rather than quality

Euro to Real

Are there many opportunities to sell API into Brazil
are there many opportunities to source api from brazil
Pros

Universities and private enterprise work together

Recent push for new drug development

Cons

Lack technical documentation or expertise

Lack of scale

Lack of specialization

Lack of export policy

Can’t compete on cost

Are there many opportunities to source API from Brazil
conclusion
Conclusion
  • Opportunities exist for sourcing API from China and India
    • Opportunities exist for selling API into China, India and Brazil
  • Knowledge of API manufacturer is key
    • Are they really manufacturing this API?
    • Are they able to supply regulated markets with API?
thank you
Thank you!

David Harding

Newport API Intelligence Specialist

Thomson Reuters Scientific

215 Commercial Street

Portland, Maine 04101

USA

+ 1 (207) 871-9700 x27

[email protected]

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