Seqens, Inc. (www.pcisynthesis.com), a pharmaceutical manufacturer of new chemical entities (NCEs), generic active pharmaceutical ingredients (APIs), and other specialty chemical products, issued its annual list of trends that will impact the generic drug industry in 2016.
“The Generic Drug User Fee Amendment known as GDUFA will continue to affect the sector, with higher fees that will hurt smaller generics companies, a speedier approval process, and more but-not-enough inspections of foreign facilities,” said Ed Price, president of Seqens. “We expect to see costs rise because of higher GDUFA fees but also because of the continually more complex discovery and development process. At the same time, the private investment and public markets will continue to drive for capital efficiency. That pressure will result in more outsourcing, especially as investors and board members tell smaller firms to not build labs and plants, and to find alternatives to more cost-effectively complete projects.”
Here are the list of trends likely to hit in 2016:
FDA will make progress on its backlog but approval for generics still takes too long. With GDUFA, the FDA committed to clearing its backlog by Oct. 2017. The agency has made significant progress, thanks to new hires (funded by GDUFA fees) and new processes that have streamlined the submission-to-approval timeline to approximately two years, down from five years in 2010. But the backlog won’t be cleaned up in time — and some feel there will always be a backlog which will continue to impact smaller one-product generic drug companies that can’t generate revenues until they get approval.
Drugs costs will continue to climb. Rising drug costs became a frequently covered news story in 2015, blamed on over-regulation by some and not enough regulation by others. One thing for sure: costs will continue to rise in 2016. This includes generics, which will hurt patients. The reasons include, the time and investment necessary to bring ever-more complex drugs to market; as well as, rising GDUFA fees and increased oversight, two factors that have pushed out smaller companies, thereby reducing competition, which can lead to great scarcity and higher prices.
More international Inspections still won’t cover the world. While 100 percent of U.S. facilities are inspected by the FDA, that’s not the case for international facilities manufacturing drugs for the U.S. Thanks to new hires, however, the FDA now conducts more inspections of facilities in India and China than ever before — which is good news for patients because it maintains the safety and quality of generics imported into the U.S. There are still a scarcity of new inspections among, many international facilities, especially in China, where the government continues to block inspection requests.
CROs/CMOs will continue to see robust activity in 2016. With pharma companies looking at ways to be more capital efficient, many have turned to CROs to reduce overall costs. The industry saw a lot of new drug development programs initiated in 2015, and that momentum will carry over into 2016. This is good news for CMOs and also for CROs and allied industries.
There will be a continued shortage of employees with highly technical skills. Even as big pharma continues the trend of downsizing its lab facilities and the people who staff them, CROs and CMOs need to find innovative ways to recruit. It can be difficult to find people with the right set of skills. Developing training programs for junior staffers will become more important because, otherwise, it can be difficult finding senior-level, experienced managers and technical people. The lack of experienced senior people has a limiting effect on growth because it takes time to bring junior staff up to speed.
U.S. CMOs become more competitive as Chinese wages increase. Chinese wages have been rising an average of 12 percent per year since 2001, according to The Economist. This may drive renewed interest in the U.S. for drug manufacturing because as the gap between wages in China and the U.S. decreases, the other advantages — in language, time zone, culture, logistics, etc. — become more significant.
Seqens is a custom chemical manufacturer of new chemical entities (NCEs), generic active pharmaceutical ingredients (APIs), and other specialty chemical products. A contract manufacturing organization (CMO), Seqens provides emerging and mid-sized pharmaceutical companies access to the expertise needed to develop and manufacture complex small molecules and APIs used in generic pharmaceuticals. To learn more about Seqens, its proprietary NCE development activities and process R&D capabilities please visit www.pcisynthesis.com.