Pharma manufacturing investment in emerging markets
pharmafile | May 23, 2011 | Feature | Manufacturing and Production | emerging marketing, pharma manufacturing
The pharmaceutical industry needs to undertake a radical overhaul in its approach to manufacturing which at present is ‘‘inefficient, underutilised and ill-equipped to cope with new medicines”, according to professional services firm PricewaterhouseCoopers (PwC).
The latest instalment in the consultants’ Pharma 2020 series notes that drugmakers have invested little effort in modernising their manufacturing and distribution processes to date, focusing instead on issues such as R&D productivity and marketing challenges.
‘‘By 2020, many of the medicines the industry makes will be specialist therapies that require totally different manufacturing and distribution techniques from those used to produce small molecules,” says the report.
For example, biologic drugs are generally more susceptible to impurities during production and damage during shipping than chemical drugs, and have shorter shelf lives, and this difference becomes even more stark with gene- and tissue-based therapies.
PwC suggests this will mean new medicines may have to be finished near the patient, for example at the pharmacy or point-of-care. A shift in the way medicines are licensed away from a binary approved/rejected model towards ‘live licenses’ – in other words initially limited registrations that can be broadened as experience with a medicine grows – will also have an impact.
Peak sales will be reached over a longer period, so companies will need to build a supply chain that adjusts according to demand and avoids a large upfront investment. Pharmaceutical manufacturers will therefore need to develop adaptable cost structures ‘‘that preserve gross margins at each stage of the product lifecycle”, according to PwC.
Health reforms – and a movement towards outcomes-based measures of a drug’s success – will demand that pharmaceutical manufacturers distribute products alongside diagnostics, data and support services. Meanwhile, greater use of electronic health records, e-prescribing and remote monitoring is driving a preference for self-administered medicines delivered in patients’ own homes and communities.
As a result, ‘‘pharmaceutical companies will need real-time information to manage wider distribution networks and demand-driven manufacturing and distribution processes”, says the report.
Added to the mix is the opening up of emerging markets which require understanding of patients’ needs and preferences, as well as greater public and regulatory scrutiny of medicine quality that is bringing issues such as traceability to the fore.
Overall, PwC is predicting three major changes to pharmaceutical manufacturing and distribution over the coming decade:
• The supply chain will become more fragmented, with different models used for different product types and patient segments;
• Distribution and manufacturing will be a differentiator in the marketplace and source of economic value;
• Information will flow both up and down the supply chain.
Continuous production techniques
PwC predicts that by 2020 most medicines will be produced using a continuous manufacturing system. Process tomography and other such technologies will enable companies to capture real-time data on critical processes, develop complex multivariate models and automatically compensate for unexpected process disturbances. Process data generated during the development phase will be used to ‘teach’ process control systems to respond to process disturbances even before commercial manufacturing begins.
Meanwhile, advances in colloidal and foam systems will facilitate the micro-processing of active pharmaceutical ingredients (APIs).
Micro-containers with embedded superparamagnetic nano-particles can be treated with an alternating magnetic field to release materials encapsulated in bubbles within the material, and thus converted into micro-reactors for the efficient production of thousands of individual doses of tailored biological products. Micro-processing will even make it possible to formulate some medicines and polypills at the point at which they are dispensed.
Several companies have already started providing pharmaceutical compounding services, one such instance being Fagron, a subsidiary of the Belgian Arseus. But, by 2020, PwC predicts that pharmacists will be able to ‘mix’ medicines individually on the premises, using validated formulation equipment – much as DIY stores mix paints to produce customised colours.
Shared manufacturing facilities?
Most pharma companies currently manufacture and distribute their own products, but PwC says this reduces asset utilisation rates and drives up distribution costs, as well as causing unnecessary environmental damage.
Conversely, sharing manufacturing and distribution resources would be much more economical. A few pharma companies have started experimenting with ‘shared services’, primarily to support joint product development initiatives.
However, the vast majority of companies still build, own and operate their own supply chain infrastructure.
Some companies may choose to establish joint ventures, while others turn to third parties. Abbott and Boehringer Ingelheim already manufacture for other organisations, for example. And the contract manufacturing sector is expanding very rapidly. In fact, market research firm BCC Research estimates that the bulk- and dosage-form drugs segment will be worth about $73 billion by 2014, more than double the $36 billion it was worth in 2007.
Conclusion
‘‘The most successful pharma companies will be those that recognise the underlying value locked in their supply chain and can leverage it as a value and brand differentiator rather than just a cost,” commented Steve Arlington, global advisory pharmaceutical and life sciences leader at PwC.
“Companies that recognise information is the currency of the future, will be those that go the final mile and stand out by 2020.”
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