Market Opportunities in the Global Injectables Market
Parenteral drugs, particularly generic specialty injectables, are expected to see strong growth in the long-term. In the wake of Pfizer’s proposed $17 billion acquisition of Hospira, what will be the implications for the global injectables market? DCAT Value Chain Insights (VCI) examines the overall market, its strengths and weakness, and recent deals.
The global injectables market is ramping up with Pfizer’s proposed $17-billion acquisition of Hospira, which follows Pfizer’s acquisition of InnoPharma in 2014. Other deals in 2014, namely Sun Pharma’s acquisition of Pharmalucence, and Hikma’s acquisition of the assets of Bedford Laboratories, including its US generic injectables business, are other important recent moves. What do these deals mean for the market and what is driving these moves and the overall market?
Looking at the market opportunities
Growth in the injectables market is being driven by generic injectables, which are outpacing growth on the innovator side and is the impetus behind several recent deals.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 at a recent investor call. 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 recent deals
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.
If the proposed acquisition proceeds as planned, 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). With the proposed acquisition of Hospira, some have speculated that Pfizer might seek to split its GEP business from its GIP segment. At a recent analysts’ call, Pfizer emphasized that it is not seeking to separate the businesses at this point and that such a decision would not be made until the company had at least three years of auditable results based on the new commercial structure (i.e., 2014, 2015, and 2016), so no options would be made until 2017 and that the proposed acquisition of Hospira does not change that timeline.
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, its US generic injectables business. 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. The combination of these assets with Hikma’s existing global Injectables platform strengthened Hikma’s position in the generic injectables market in the US. In addition, Hikma later acquired the assets of the Ben Venue manufacturing facility in Bedford, Ohio from Boehringer Ingelheim..
Injectables accounted for $536 million, or 39% of Hikma’s 2013 revenues of $1.365 billion. It has 200 products in 379 dosage strengths and forms. The company has a range of manufacturing capabilities, including sterile liquid, powder, lyophilized and cytotoxic products with manufacturing facilities in the US, Portugal, and Germany. As of year-end 2013, the company said it was the third largest generic injectable company by volume in the US, a position it gained in part through the 2011 acquisition of Baxter’s multisource injectables business. In terms of its product focus, Hikma says it focuses on products in which it can have a competitive advantage either through a period of exclusivity or by developing a vertically integrated active pharmaceutical ingredient supply.
In 2013, Hikma invested in its injectables capacity by adding two new high-speed lines at its plants in the US and Portugal. In Portugal, it also began installing a dedicated R&D line to accelerate the lead times of new product submissions and increase the capacity available for commercial production. In the US, Hikma is investing in the capability to combine its generic injectable products with advanced, innovative delivery systems to address the shift in market demand from vials to pre-filled syringes. In November 2013, Hikma signed a long-term (15 years) commercial supply agreement with the Unilife Corporation for Unilife’s Unifill pre-filled syringes with a range of its injectable products. In 2013, Hikma began installing a pre-filled syringe line, which is scheduled to be completed during 2014. The company also said it also began assessing the potential to establish local manufacturing facilities for injectable products in the Middle East and North Africa (MENA) region.
The US is Hikma’s largest market for generic injectables, accounting for 68% of its total generic injectables business in 2013. In 2013, its US injectables revenue grew by $67 million, or 23%, to $363 million. In Europe, the company’s injectables revenue was $81 million, up 4% from $78 million in 2012; overall Europe accounted for 15% of the company’s injectable revenues. The markets in MENA accounted for the remaining 17% of the company’s 2013 revenues in its injectables business. Revenue in its MENA Injectables business decreased by 4% to $92 million in 2013, compared with $96 million in 2012, primarily due to lower tender sales in 2013.
During 2013, Hikma’s injectables business launched a total of 35 products across all markets, including 10 new compounds and 16 new dosage forms and strengths. The injectable business also received a total of 89 regulatory approvals across all regions and markets, namely 56 in MENA, 28 in Europe, and five in the US. Hikma also signed nine new licensing agreements during 2013, adding innovative injectable products.
In acquiring Bedford Laboratories, Hikma is gaining additional product potential. At the time of the announced acquisition in May 2014, Bedford had an R&D pipeline of 27 products, of which 16 were filed and pending approval from the FDA. From Bedford, Hikma further gained a portfolio of 84 products, which included 82 products of Bedford and two products marketed under third-party licenses. These products include niche, differentiated products, including lyophilized and cytogenic products. Oncology products account for 51% of the acquired portfolio. The acquired products will be tech-transferred to be manufactured in Hikma’s facilities in the US, Portugal, and Germany. Hikma expected to relaunch an initial tranche of approximately 20 products between 2015 and 2017.
Other recent deals
Also 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 2014 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 other recent deals, 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. 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.