Pharmaceutical contract manufacturing and API sourcing: why not Central Europe?
On the other hand, the potential of the region seems to be considerable, with Poland and the Czech Republic still the most attractive locations, according to the latest report from PMR, a research and consulting company, entitled "Pharmaceutical contract manufacturing and API sourcing in Central Europe and the Balkan states 2011".
Higher production costs matched by higher quality
Although companies in CE and the Balkans are usually unable to compete with Indian and Chinese manufacturers, because of the production costs, there are several regional advantages over the Far East; these include:
Legislation based on EU standards or, in Serbia and Croatia, laws which are being harmonised with those of the EU, with the aim of joining.
Relatively wide application of ISO and GMP standards.
Most CE companies can cooperate within the tariff-free trade framework of the EU.
A rapidly developing biomanufacturing industry.
"It must be admitted, however, that there is a much more limited choice of companies which offer contract manufacturing services and/or API in CE and the Balkans in comparison with India and China" says Agnieszka Skonieczna, PMR Senior Pharmaceutical Market Analyst and the report co-author.
According to the European Directorate for the Quality of Medicines & Healthcare (EDQM), India and China are also progressing as non-European users of EDQM Reference Standards. In May and September 2010, two conferences were organised in cooperation with the EDQM in India and China on the quality of APIs. These highlighted important matters relevant to the quality of APIs, dossier assessment, inspections and pharmacopoeial requirements.
Poland and the Czech Republic are the most attractive locations
PMR analysis suggests that the Central European and Balkan countries offer the opportunity to manufacture not only APIs, other specialist chemicals and plant raw materials, but also various finished dosage forms of pharmaceuticals, dietary supplements, semi-finished products and biotechnology products. In the area in question, the most attractive countries for pharmaceutical contract manufacturing and API sourcing are Poland and the Czech Republic. There are several dozen companies in both countries which offer such services.
There are numerous companies which specialise in API production in the Czech Republic in comparison with the other countries in the region and, in fact, the country might be thought of as a centre of API production in terms of Central Europe as a whole. Contract manufacturing services pertaining to finished dosage forms in the country focus primarily on the production of dietary supplements. This is associated with a long tradition of dietary supplement production in the Czech Republic.
In Poland there are not many API producers at present, and most companies do not produce APIs for their own needs. With regard to contract manufacturing, there are several Polish companies with a long tradition of pharmaceutical manufacturing which also engage in production under contract. There are also many companies which specialise in the production of dietary supplements and/or essentially natural raw materials used in the production of pharmaceuticals, dietary supplements and cosmetics.
EU to combat inferior APIs
Because of the questionable quality of some APIs exported into the European Union, in April 2010 the European Commission proposed that the drug regulator in any country which exports its APIs to the European Union should carry out regular inspections at the API supplier’s manufacturing facility to ensure that the company is not violating GMP standards and present a written declaration confirming product quality. If such regulations come into force, they may weaken the position of API manufacturers outside the EU. For example, Indian API manufacturers fear that the procedure could lead to unnecessary delays in export consignments because they would have a long wait before being cleared by the Indian authorities. At present, API suppliers to the EU need only obtain a Certificate of Suitability of European Pharmacopoeia monographs (CEPs) issued by the European Directorate for the Quality of Medicines & Healthcare.
In its 2015 Roadmap, the draft of which was published in January 2011, the European Medicines Agency highlighted the quality of APIs manufactured outside the EU as an area of concern, because the international sourcing of active pharmaceutical ingredients makes it possible for substandard material to enter the supply chain.
Will contract manufacturing become the norm?
The substantial changes seen in manufacturing infrastructure began only a few years ago, and the global contract manufacturing market, including the Central Europe area, will still be growing rapidly in subsequent years, according to PMR.
Market growth will be accelerated by the expiry of the patents on several blockbusters in the next few years. This will compel large multinational companies, whose revenues are expected to decline significantly, to look for savings. One of the solutions could be the outsourcing of pharmaceutical production.
Companies may also be compelled to reduce their costs because of uncongenial legislation introduced by governments. This includes, for example, the Reimbursement Act in Poland, which will require pharmaceutical companies to take part in a payback mechanism (and to participate in NFZ reimbursement costs). It also introduces fixed margins and prices for reimbursed products. In Hungary the government has decided to increase the tax payable by pharmaceutical manufacturers on revenues from reimbursed drugs from 12% to 20% from 1 July 2011 onwards.
This press release is based on information contained in the latest PMR report entitled "Pharmaceutical contract manufacturing and API sourcing in Central Europe and the Balkan states 2011" (http://www.pmrpublications.com/online_shop/Pharmaceutical-contract-manufacturing-API-sourcing-Central-Europe-2011.shtml
For more information on the report please contact:
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PMR (www.pmrcorporate.com) is a British-American company providing market information, advice and services to international businesses interested in Central and Eastern European countries as well as other emerging markets. PMR's key areas of operation include business publications (through PMR Publications), consultancy (through PMR Consulting) and market research (through PMR Research). Being present on the market since 1995, employing highly skilled staff, offering high international standards in projects and publications, providing one of most frequently visited and top-ranked websites, PMR is one of the largest companies of its type in the region.
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