API market growth driven by biologics

pharmafile | May 13, 2009 | News story | Manufacturing and Production biologics 

The global market for active pharmaceutical ingredients is being transformed as big pharma companies devote more and more resources to the development of biologic medicines, according to an industry analyst.

Sumanth Kambhammettu of consultancy firm Frost & Sullivan says biologic ingredients are providing the fastest growth in the active pharmaceutical ingredients (APIs) sector, outstripping their chemical counterparts two- to three-fold.

The market for biologic APIs was worth $7 billion in 2007, accounting for around 9% of the $78 billion global market for APIs in that year. Biologics are expected to grow at a rate of 12% to 15% a year to reach $12 billion in 2011. During the same period small-molecule APIs will grow at 5% to 6%.

Within biologicals, monoclonal antibodies and therapeutic proteins are the fast-growing segments, with cumulative annual growth rates of 14.6% and 15.9%, respectively, through 2011.

The increasing importance of biologics also has a knock-on effect on contract manufacturing organisations (CMOs), as these products are largely manufactured in-house by drugmakers at the moment because of the complexity of manufacturing processes and intellectual property concerns.

At the moment big pharma companies such as GlaxoSmithKline and Pfizer are restructuring manufacturing, scaling down small-molecule capacity and increasing investments in biologics production, said Kambhammettu.

While that effort is providing some opportunities for CMOs, there is considerable overcapacity in the marketplace which will drive "considerable consolidation in contract manufacturers over the next five to seven years", he added.

For chemical APIs the big growth driver will be the continuing growth of the generic drug industry, which accounted for 45% of the revenues made by contract API manufacturers in 2007. That share is expected to increase to 52% by 2011 as generic sales expand in emerging pharmaceutical markets such as Asia-Pacific, Latin America and Eastern Europe.

More opportunities for CMOs are expected to crop up in the biologics space too as a result of big pharma's restructuring drive, both for innovative biologics and biosimilars, said Kambhammettu.

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