The Pharma Industry: Now and Beyond

By Patricia Van Arnum - DCAT Editorial Director

March 14, 2018

How did the pharmaceutical industry perform in 2017, and what is the outlook for 2018 and beyond? Key for the industry is the performance of the US market, the largest national market in the global pharmaceutical industry, but what other factors are in play?

The DCAT Week education program, Pharma Industry Outlook, will examine the recent and projected performance of the US pharmaceutical industry, of other developed markets: the EU5 (France, Germany, Italy, Spain, and the UK) and Japan and prospects in emerging markets, including China, the second largest market behind the US. The program will also provide an outlook for both innovator and generic drugs and the fortunes of small molecules and biologics.

Pharmaceutical industry performance

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Graham Lewis
Vice President
Global Pharma Strategy
IQVIA (formerly QuintilesIMS)

So how did the pharmaceutical industry perform in 2017, and what can be expected in 2018 and beyond? Going into 2017, US spending on medicines grew at a slower rate in 2016 compared to 2015. Drug spending in the US grew 4.8% in 2016 to $323 billion, less than half the rate of the previous two years, after adjusting for off-invoice discounts and rebates, according to an analysis by the IQVIA Research Institute for Human Data Science (formerly the QuintilesIMS Institute). While the total use of medicines continued to climb in 2016—with total prescriptions dispensed reaching 6.1 billion, up 3.3% over 2015 levels—the spike in new patients being treated for hepatitis C ebbed, which contributed to the decline in spend. Net price increases—reflecting rebates and other price breaks from manufacturers—averaged 3.5% in 2016, up from 2.5% in 2015.

Emerging markets have played an increasingly important role in pharmaceutical industry growth, so how did those markets perform in 2017 and what can be expected in 2018 and beyond? Key to pharmaceutical industry growth will be overall macroeconomic growth in those markets, particularly China, the second largest pharmaceutical market behind the US. China’s National Bureau of Statistics reported in January 2018 that its economy expanded 6.9% in 2017, a minor increase from the 6.7% growth reported in 2016, but importantly reversing a recent trend of slowing macroeconomic growth that began in 2011.

At the DCAT Week education program, Pharma Industry Outlook, Graham Lewis, Vice President of Global Pharma Strategy, IQVIA, will provide an update of pharmaceutical industry performance in 2017 and a near-term outlook. Key items to watch for is whether the US pharmaceutical market rebounded in 2017 and what its growth prospects are and how other developed markets, the EU5 (France, Germany, Italy, Spain, and the UK) and Japan, will fare. He will also examine whether emerging markets will continue to climb in global pharmaceutical market share or whether slowing macroeconomic conditions will impact pharmaceutical growth.

How innovator drugs and generic drugs will fare in the near-term is an important determinant in the future of the global pharmaceutical industry. After dipping to a recent low in 2016, the number of new molecular entities (NMEs) approved by the US Food and Drug Administration (FDA) increased to 46 in 2017, a 21-year high. At the same time, in 2017, the FDA recorded the highest annual total of generic-drug approvals (1,027 generic drug approvals: 843 full approvals and 184 tentative approvals) in the agency’s history. So what is on the horizon? At the DCAT Week education program, Lewis will further examine the global market for innovator and generic drugs.

Macro issues impacting drug development and commercialization

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Robert Armstrong, PhD
Boston Pharmaceuticals

Improving productivity in research and development (R&D) is an ongoing challenge for the industry, so how can that be addressed? How can R&D business models evolve, and what broader external issues are at play? In an Executive Forum at the DCAT Week education program, Pharma Industry Outlook Robert Armstrong, PhD and chief executive officer (CEO) of Boston Pharmaceuticals, will address those issues. Dr. Armstrong co-founded Boston Pharmaceuticals, a clinical-stage biopharmaceutical company. with Christopher Viehbacher, the current Executive Chairman of Boston Pharmaceuticals, Managing Partner of Gurnet Point Capital, and former head of Sanofi. With over 20 years of experience working in R&D, which included leadership positions in Amgen and Eli Lilly and Company, Dr. Armstrong has been involved in the discovery and clinical development of programs across multiple disease areas.

He brings a unique perspective with experience in leading R&D with large pharmaceutical companies and now with an emerging pharmaceutical company in Boston Pharmaceuticals. Dr. Armstrong created and led the small-molecule R&D organization at Amgen and subsequently co-led research at Eli Lilly and Company as Vice President of Global Medicinal Chemistry, was head of the company’s translational medicine group, Chorus, and was Vice President of Global External R&D. Now as CEO at Boston Pharmaceuticals, he is employing a partnership and financing model to acquire or license drug candidates from other pharmaceutical companies. The company is seeking to build a diversified portfolio of more than 20 molecules across multiple therapeutic areas and modalities. Since 2016, the company has acquired and is advancing several candidates from investigational new drug (IND)-enabling through Phase II.

Further information on the DCAT Week program, Pharma Industry Outlook, including how to register, may be found here.

Online program and event registration closes on Wednesday, March 14th at 5:00 PM (ET). Onsite registration is available thereafter.

Emerging pharma: an engine for growth

Start-up companies and small, innovator companies play an important role in product innovation in the pharmaceutical industry. To bring those products through development, however, emerging pharmaceutical companies rely heavily on contract service providers to provide development and manufacturing services. In a recent article in DCAT Value Chain Insights, Jim Miller, founder and president, PharmSource, a GlobalData Company, explains the symbiotic relationship between the contract development and manufacturing (CDMO)/contract manufacturing organization (CMO) industry and emerging pharmaceutical companies and the mutual benefits derived therein. He notes that CDMO revenues across most provider segments grew in excess of 10% in 2017 after posting similar performance in 2016 with many companies growing 20% or better, especially active pharmaceutical ingredient (API) manufacturers. The article notes that much of that performance is due to emerging biopharma companies, which rely on CDMOs for 80% or more of their manufacturing and CMC (chemistry, manufacturing and controls) development requirements, according to a PharmSource analysis.

The DCAT Education program, Emerging Pharma: Strategies for Optimizing Manufacturing and Supply, provides practical insight for emerging pharmaceutical companies in making the all-important decisions for developing and implementing a successful development and launch strategy and customer-centric insight for the CDMOs and CMOs supporting that development. The program addresses three important topics: (1) trends in drug pricing and the payer environment and the impact on drug-development decisions; (2) CDMO/CMO selection and management; and (3) manufacturing considerations in due-diligence.

Market access and manufacturing

Roshawn Blunt, Managing Director, 1798 Consultants, will explain how trends in drug pricing and the payer/reimbursement environment are impacting product development and commercialization, including how manufacturing and product-design choices can impact downstream pricing and coverage. She has more than 20 years of experience in the biopharmaceutical and medical-device industries, beginning with her position at The Boston Consulting Group, where she worked primarily on healthcare cases. She transitioned into positions directly with manufacturers in various reimbursement, market access, health policy and global health economics positions at Amgen and Johnson and Johnson.

CDMO/CMO selection and management

For emerging pharmaceutical companies, delivering on key milestones requires an effective supply strategy to avoid delays in development and cost overtures and for meeting investors’ expectations. Partnering with the right CDMO or CMO is crucial. James Kanter, Senior Director, API Engineering, Ardelyx, a late-stage clinical pharmaceutical company, will share lessons learned for selecting the right development and launch partner in terms of scale, capabilities, and phase of development and best practices in supplier relationship management when working with CDMOs and CMOs.

Kanter has more than 20 years of experience managing the CMC (chemistry, manufacturing and controls) aspects of small-molecule drug development from preclinical development through commercialization. This includes: the management of internal process chemistry groups as well as formulation and drug-product functions; the transfer of technology of both API and drug-product processes to external contract manufacturing organizations (CMOs); oversight of validation and commercialization activities at manufacturing sites in North America, Europe, and Asia; and supply-chain mapping and management to support clinical and commercial programs. Prior to Ardelyx, he held managerial positions in CMC at Portola Pharmaceuticals, Gilead Sciences, Exelixis, and Millennium Pharmaceuticals and has consulted for numerous virtual, small, and medium-sized biotech companies.

Manufacturing and due diligence

The clinical potential of a drug candidate drives partnerships and acquisitions with larger pharmaceutical companies, but how does manufacturing factor into the due-diligence process for such deals? At the DCAT Week education program, Michael Rosenfelder, Director of Business Development, Merck Manufacturing Division (MMD) and Head of MMD’s Global Supply Business Development (GSBD) Vaccine Therapeutic Area Group, Merck & Co., Inc., will provide practical insight on manufacturing assessments made in due diligence, including risk evaluation, and the issues considered in contract assumption in external development and manufacturing.

Rosenfelder has nearly 20 years of experience at Merck leading manufacturing due diligence and partnering negotiations for clinical and commercial-stage intellectual property licensing and acquisition transactions. In his current role, he is responsible for strengthening business-development processes and capability within the 55-person Merck GSBD organization, hiring, training, and managing new business-development professionals and continuing to lead deals personally. His 50 completed clinical and commercial-stage transactions at Merck generated 11 approved Merck products between 2016 and 2018.

Further information on the DCAT Week program, Emerging Pharma: Strategies for Optimizing Manufacturing and Supply, including how to register, may be found here.

Note; Online program and event registration closes on Wednesday, March 14th at 5:00 PM (ET). Onsite registration is available thereafter.

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Roshawn Blunt
Managing Director
1798 Consultants

James Kanter
Senior Director,
API Engineering

Michael Rosenfelder
Director, Business Development
Merck Manufacturing Division (MMD)
and Head of MMD's Global Supply
Business Development GSBD
Vaccine Therapeutic Area Group
Merck & Co., Inc.