Potential growth for the generics industry as API manufacturing diversifies
Research from Clarivate Analytics reveals that thousands of companies are looking to take advantage of opportunities in API manufacturing and could lead to intense competition
To meet the needs of generic finished dose and innovative biopharma markets, API producers are expanding their development and manufacturing capabilities. Companies are looking to secure specialized technologies, grow their market share and enter into new markets, further fragmenting the API production landscape.
Recent research by Clarivate Analytics showed that more than 3,200 companies are actively engaged in API production activities. Since only one-third of these companies is affiliated with a corporate group that also has finished dose manufacturing capabilities, there is an evident lack of integration despite these being complementary businesses.
The scope of product portfolios across API manufacturers also highlights the growing levels of intense competition across the market.
Although established players in the market are producing two-to-four-times more APIs than less experienced manufacturers, the relatively low barrier to in-house development is driving continued interest from newer companies. We are likely to see new players seeking to close the gaps between themselves and the market leaders, especially in both India and China.
Regionally, there has been a split in activity. In India, the most established firms have gained prominence by pursuing scale across a wide range of products. Whereas in more developed economies, such as the US, Japan and throughout Western Europe, the focus has been on a smaller variety of specific product types, often those that are more technically challenging.
The growing number of products losing their patent protection will also lead to greater levels of competition in the market. The Newport Constraints Dates (NCDs), an analytical tool for generic entry timing, predicts a robust pipeline of new generic product opportunities that could accelerate the growth trajectories for small firms in the market.
For example, in the five-year period between 2020 and 2024, three large regulated markets, Germany, Japan and the US, will have 300 unique products potentially face first-time generic competition. Many companies will be interested in these molecules set to lose their exclusivity. However, there are likely to be a significant number of products with limited or no confirmed API sources, apart from those produced by existing innovative marketers.
Analysis by Clarivate Analytics has found that one-third of the products set to lose exclusivity by 2024 will require specialized development and formulation expertise in areas such as high-potency APIs, peptides, recombinant proteins and monoclonal antibodies. If emerging firms are willing to invest in more complex technologies, then they stand a strong chance of being able to benefit from this market change.
It is clear that there are opportunities for smaller companies to follow in the footsteps of the larger market players by expanding into finished dose formulations for regulated markets, initiating small-scale R&D programs or investing in biologics. With a broad pipeline of lucrative products poised to go generic in the coming years, API and finished dose manufacturers looks set to enter a substantial growth phase.
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