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Bright forecast for fine chemicals

Posted 22/10/2013 by sevans

It‘s seven years since my last CPhI meeting and a lot had changed in the intervening years. This year the event, aimed at pharma and fine chemicals manufacturers and contract research organisations, is being held in Frankfurt, Germany, with around 30,000 attendees expected to visit the city’s vast Messe convention centre between 22-24 October, according to organisers. But while CPhI has grown in size, many in the industry remain concerned about the same issues, particularly about growing competition from Asia, and ensuring the quality and safety of ingredients derived from increasingly complex supply chains. 

In 2013, India’s pharma exports currently stand at around $14.7bn (2012-2013), with an ambitious government target to reach $25bn by 2016. India became recognised by UNICEF as the world’s largest supplier of generics in 2012, and generous tax breaks such as a weighted tax reduction of 150% for R&D expenditures and 19 dedicated Social Economic Zones are all helping to stimulate pharma investment. ‘During the last three years India’s exports of pharmaceuticals have been growing at 17%. We are expecting CAGR of around 20% for the next five years,’ said Appaji P.V., director general, Pharmexil.

Changing regulations, meanwhile, also mean that the pharma industry globally increasingly has to tighten supply chain security, commented Frithjof Holtz, vice chairman of the European Fine Chemicals Group (EFCG). Regulators are no longer interested only in the risks from active pharmaceutical ingredients (APIs) but also from the fillers or excipients and other ingredients included in drug formulations, Holtz pointed out, and are placing more responsibility on companies to carry out physical audits of their suppliers. A new independent EXCiPACT certification scheme, he believes, should help alleviate some of the burden by providing a third party auditing service for firms struggling to carry out audits, often for hundreds of products.

However, the good news for Western European pharmaceutical manufacturers is that, while the trend for high volume, large capacity pharmaceuticals to move to Asia is likely to continue, many of the new drugs now appearing on the marketplace are more specialised and technically demanding to produce, noted SAFC’s Andreas Weiler. The cost of drug manufacture is just 1-10% of the final overall drug price, Weiler pointed out, while 80% of pharma innovation is carried out by small companies more interested in productivity than cost. And with high attrition rates of 10-20% in Asia, that often makes Europe more attractive for companies hoping to bring products to market more quickly.

Cath O’Driscoll - Deputy editor

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