Injectables: A Strong Outlook and a Shifting Landscape Defines the MarketBy
Growth in the injectables market is being driven by generic injectables, which are outpacing growth of innovator injectables and that constitute the impetus behind several recent deals.
Parenteral drugs, particularly generic specialty injectables, are expected to see strong growth in the long-term as the market is shaped by key company activity led by the pending $17 billion acquisition of Hospira by Pfizer and Hikma’s acquisition of the assets of Bedford Laboratories, including its US generic injectables business. So what lies ahead on a product and manufacturing basis? DCAT Value Chain Insights (VCI) examines the overall market, its strengths and weakness, and recent deals.
Looking at the market opportunities
The global generic sterile injectables market is projected to grow from $37 billion in 2013 to $70 billion in 2020, representing a growth rate of 10% versus 6% projected growth for the combined branded and sterile injectables segments, according to information offered by Pfizer in an investor call when announcing its proposed $17 billion acquisition of Hospira earlier this year. Future market growth is anticipated to be largely driven by China with 13% growth, the US with 6% growth, and other emerging markets with 12% growth. Pfizer’s projections show that growth will be driven by both generic sterile injectables volume and emerging markets as well as differentiated presentations in hard-to-make products in developed markets. Of the approximate $38 billion for generic sterile injectables in 2013, the US accounted for $7 billion, the EU5 (France, Germany, Italy, Spain, and the United Kingdom) $6 billion, and the rest of the world (ROW) $25 billion. By 2020, these three segments in the projected $70-billion generic sterile injectables market are forecasted to be $51 billion for the ROW, $10 billion for the US, and $9 billion for the EU5.
Looking at Pfizer’s acquisition of Hospira
Pfizer’s pending $17-billion acquisition of Hospira provides a growing revenue stream and a platform for growth for Pfizer’s Global Established Pharmaceutical (GEP) business by combining Hospira’s generic sterile injectables products, including acute care and oncology injectables, with a number of differentiated presentations, with Pfizer’s GEP’s branded sterile injectables, including anti-infectives, anti-inflammatories, and cytotoxics. Hospira is a provider of generic sterile injectables with more than 200 products in different presentations (i.e., vials, prefilled syringes, bags, and lyophilized products). Pfizer’s sterile injectable business consists of 73 products, primarily gained from acquisitions, and is focused on anesthetics, anti-infectives, and oncology.
The acquisition of Hospira further complements Pfizer’s 2014 acquisition of InnoPharma, a specialty pharmaceutical company based in Piscataway, New Jersey. Pfizer acquired InnoPharma for an upfront cash payment of $225 million with up to $135 million of contingent milestone payments. At the time of the announced acquisition in July 2014, InnoPharma’s portfolio included 10 generic products approved by the US Food and Drug Administration (FDA), a pipeline of 19 products filed with the FDA, and more than 30 injectable and ophthalmic products under development. InnoPharma is focused on developing novel formulations of existing drugs, including hard-to-make products, such as those that require complex manufacturing capabilities or delivery forms, such as pens and depot injectables.
Pfizer’s proposed acquisition of Hospira is expected to close in September 2015 following regulatory approvals for the deal, including in the United States and the European Union. Earlier this week, the US Federal Trade Commission (FTC) approved Pfizer’s $17 billion acquisition of Hospira, subject to divestment of four US sterile injectable assets.The FTC’s clearance is contingent upon Pfizer’s commitment to divest four US sterile injectable assets, including acetylcysteine, clindamycin, voriconazole, and melphalan. In addition, Pfizer announced that Brazil’s Superintendency-General of CADE published its unconditional clearance decision.
The approval from US and Brazilian regulatory authorities marked the final needed approvals for Pfizer to proceed with its acquisition of Hospira. Earlier this month, Pfizer was granted approval from the Canadian Competition Bureau for the pending acquisition, subject to certain divestments, and also received approval from the Australian Competition and Consumer Commission with no requests for divestments. The Canadian Competition Bureau reached an agreement with Pfizer under which Pfizer will sell its Canadian assets related to its marketed injectable cytarabine products (used to treat various types of blood cancers), injectable epirubicin products (used to treat a variety of cancerous tumor types), and oral tablet methotrexate products (used to treat certain cancers as well as severe psoriasis and arthritis), as well as Hospira’s pipeline injectable voriconazole product (used to treat serious, invasive fungal infections).
Approval from the regulatory authorities of Canada and Australia followed approval by the European Commission (EC) also earlier this month, pending certain divestments. The EC approval is conditional on Pfizer divesting certain sterile injectable drugs as well as its infliximab biosimilar drug, which is currently under development. Infliximab is the active ingredient in Johnson & Johnson’s Remicade, a drug used o treat autoimmune diseases such as rheumatoid arthritis and Crohn’s disease. In its ruling, the EC also noted competition concerns for sterile injectables for certain products in some European Union (EU) member states: namely carboplatin in Belgium; cytarabine in Belgium, Italy, Portugal, and Sweden; epirubicin in Austria, Belgium, Italy, the Netherlands, and Spain; irinotecan in Belgium, the Czech Republic, and Italy; vancomycin in Ireland and voriconazole in the EEA as a whole).
Following the close of the deal, Hospira would become part of Pfizer’s GEP, one of two distinct businesses within Pfizer. At the beginning of fiscal year 2014, Pfizer began managing its commercial operations through a new global commercial structure consisting of two distinct businesses: an Innovative Products business and an Established Products business. The Innovative Products business is composed of two operating segments: the Global Innovative Pharmaceutical segment (GIP) and the Global Vaccines, Oncology and Consumer Healthcare segment (VOC). The Established Products business consists of the Global Established Pharmaceutical segment (GEP).
The rise of Hikma
In another major deal in the injectables market, in 2014, Hikma Pharmaceuticals PLC, a pharmaceutical company with a generic injectables business, completed the acquisition of the assets of Bedford Laboratories,,providing Hikma with further assets in the US generic injectables market. The total consideration of up to $300 million was satisfied through an upfront cash payment of $225 million and includes contingent cash payments of up to $75 million, subject to the achievement of performance-related milestones over a period of five years. Hikma acquired Bedford’s product portfolio, intellectual property rights, contracts for products marketed under license, raw material inventories, R&D and business development pipeline, and a number of employees across key business functions.Hikma later acquired the assets of the Ben Venue manufacturing facility in Bedford, Ohio from Boehringer Ingelheim..
In 2014, Hikma’s global Injectables revenue increased by 33% to $713 million with US revenues up 51% or by $185 million to $548 million. The acquisition of Bedford Laboratories gave Hikma a portfolio of 82 products, Hikma has begun the process of transferring an initial tranche of around 20 of Bedford’s products to its global manufacturing facilities in the US, Germany, and Portugal (all manufacturing at the Ben Venue site ceased in December 2013), and Hikma will begin re-launching these products toward the end of 2015. In 2017, Hilkma expects to have all 20 of the products back on the market, generating revenue of around $150 million.
Hikma’s acquisition of the manufacturing facility of Ben Venue Laboratories in Bedford, Ohio was completed in September 2014. The Ben Venue site included four manufacturing plants and a quality and development center. The four manufacturing sites remain dormant, but Hilkma has begun the process of transferring equipment, including lyophilizers and filling lines, to Hikma’s other global manufacturing facilities in the US and Europe.
Other recent deals
In other deals, earlier this year, Altan Pharma Limited, an Irish specialty pharmaceutical company, acquired a privately held group of Spanish companies, The GES Group. The GES Group develops, manufactures, and markets specialty injectable drugs. GES, headquartered in Spain, is comprised of three operating companies: GES Genéricos Españoles Laboratorio, S.A.U., Genfarma Laboratorio, S.L. and Biomendi, S.A.U. GES has been providing the Spanish hospital market with injectable drugs since 1985. The company is a provider in the pain and anti-infective segments of the Spanish market and also has an international distribution network covering many European, Latin American, and Asian markets. Malin Plc provided an equity investment of EUR 34.5 million ($38.5 million), and Altan also raised debt financing and additional equity financing for the transaction.
In August 2015, the specialty pharmaceutical company, Concordia Healthcare Corporation, acquired substantially all of the commercial assets of privately held Covis Pharma S.à.r.l and Covis Injectables, S.à.r.l for $1.2 billion. Covis is a provider of branded and authorized generic products. Covis Pharma S.à.r.l. and Covis Injectables S.à.r.l. are subsidiaries of Covis Pharma Holdings, which is headquartered in Zug, Switzerland. The Covis drug portfolio acquired consists of 18 branded and authorized generic products and injectables.
In 2014, Par Pharmaceutical Companies, Inc. acquired JHP Group Holdings, the parent company of JHP Pharmaceuticals, a specialty pharmaceutical company that develops, manufactures, and markets branded and generic sterile injectable products. JHP, which focuses on US sterile injectable drug market, manufactures and sells branded and generic aseptic injectable pharmaceuticals in hospital and clinical settings and provides contract manufacturing services. At the time of the announced acquisition in January 2014, JHP had a portfolio of 14 specialty injectable products, including Aplisol and Adrenalin, and a pipeline of 34 products, 17 of which had been submitted for approval to the FDA. JHP’s sterile manufacturing facility in Rochester, Michigan has the capability to manufacture small-scale clinical through large-scale commercial products. After closing the deal earlier this year, JHP Pharmaceuticals now operates as an indirect wholly owned subsidiary of Par Pharmaceutical, Inc.
In another deal in the injectables market, in February 2014, Lupin acquired Naomi B.V., based in Goldenseal, the Netherlands, to position Lupin in the injectables market. Nanomi’s core technology is its proprietary microsieve emulsification process. The microsieves are made by semiconductor technology, which enables the production of highly monodispersed droplets and particles.
Also, in 2014, Sun Pharmaceutical Industries Ltd. acquired Pharmalucence Inc. , a privately held company based in Billerica, Massachusetts, has sterile injectable capacity supported by R&D capabilities. Pharmalucence has a new 70,000-square foot manufacturing facility in Billerica, Massachusetts for automated, isolated aseptic filling.
In December 2013, Mylan Inc. completed the acquisition of the Agila injectables businesses from Strides Arcolab Limited for up to $1.75 billion, which included $250 million in contingent consideration. The Agila acquisition provided Mylan with an additional four dedicated R&D facilities staffed by more than 400 scientists and 13 dedicated manufacturing sites across six countries.Through the acquisition, Mylan expanded its injectable product portfolio, pipeline, and capabilities, and as of December 2013, had more than 1,200 approved injectable products globally and more than 900 injectable products pending global approvals. In making the deal, Mylan said it expects to launch more than 800 injectable products through 2018, with approximately 150 of those in the US across a broad range of therapeutic categories and delivery systems.
The manufacturing facilities acquired by Mylan from the Agila deal have encountered recent quality control issues. Earlier this month in August 2015, the US Food and Drug Administration (FDA) posted a Warning Letter to Mylan regarding current good manufacturing practices (cGMP) violations of three Mylan facilities in India based on FDA inspections made in 2014 and 2015. The GMP violations were for sterile manufacturing facilities for finished pharmaceuticals in Bangalore, India in which Mylan gained as part of its $1.75 billlion acquisition of Agila Specialties in 2013. The inspections were conducted as follows: February 6-13, 2015 at Mylan Laboratories Limited OTL, in Bangalore; September 23, 2014 through October 3, 2014 at Agila Specialties Private Ltd., Specialty Formulation Facility in Bangalore; and August 1-8, 2014, Agila Specialties Private Ltd., Sterile Product Division in Bangalore.
Mylan CEO Heather Bresch commented in a company statement: “Since Mylan acquired the Agila injectables businesses in December 2013 to create a leading global injectables platform, we have been taking extensive action to integrate the Agila business into Mylan’s One Quality Standard, and to ensure our leading position as a high quality, reliable source of injectables for the long term. As part of this ongoing process, we have a deep and unwavering commitment to quality everywhere we operate. We have been and will continue to work diligently to address all of the FDA’s observations and have made important progress.”
Also in December 2013, the investment firm KKR acquired a minority stake in Gland Pharma Limited, a generic injectable pharmaceutical products company based in India, for $200 million. Established in 1978 and based in Hyderabad, Gland Pharma develops and manufactures generic injectables primarily for the US market and also for India and other semi-regulated markets.