Argentina - What are the most recent developments affecting the biologic sector in Argentina?

The most recent developments include new production capabilities in the public sector, and a licence agreement between GTC and Bio Sidus in the private sector.

Pharmaceutical R&D activities in the public sector are focused on biotechnology. Historically, investments have been low, concentrated on basic science and developed by public institutions which do not co-operate with the private sector. Recent developments affecting the biologic sector, however, include the plan to create the Pilar Biotechnology Park; the installation of a plant for the production of vaccines against seasonal influenza and influenza A (H1N1), in co-operation with the private sector; and technology transference for the local production of the yellow fever vaccine in Argentina.

In the private sector, GTC Biotherapeutics and the Argentine Bio Sidus, part of the Sidus Group, entered into a registration licence agreement in May 2010 under which Bio Sidus will perform all necessary actions to obtain sales authorisations for GTC's lead product, the recombinant human antithrombin ATryn. A product licence agreement for the supply of material and marketing rights will be negotiated separately. It is anticipated that the review process in Argentina will be completed within a fast-tracked period of no less than six months from the filing of the dossier with the regulatory authorities.

Further reading - A detailed analysis of the Argentinian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Argentina (published May 2010)

Australia - What actions are the Australian government taking to improve the healthcare system and how will this impact the pharmaceutical market?

Prime Minister Kevin Rudd has already implemented an overhaul of the healthcare system and is expected to announce further reforms in the May Budget.

In March 2010, Prime Minister Kevin Rudd announced an A$50 billion (US$46.4 billion) overhaul of the healthcare system, which will free up funds for economic infrastructure over the next decade. The overhaul includes investment to add a record number of medical specialists over the next 10 years, and spending on aged care will also increase.

The government is expected to announce in its May Budget plan to slash US$2 billion in health spending over four years, by paying pharmaceutical companies less for their medicines. The plan will include increasing the use of generic medicines and ensuring that patients pay less for a range of commonly used blood-pressure and cholesterol-lowering drugs. Also under the proposed plan, people could save on the cost of prescription drugs.

Further reading - An in-depth analysis of the Australian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Australia (published May 2010)

Bangladesh - What is the state of the pharmaceutical balance of trade in Bangladesh?

The balance of trade will remain negative and the deficit is likely to grow.

Bangladesh does not export pharmaceutical products to any significant degree, although there are tentative signs of growth since 2006. Finished medicaments accounted for almost the whole export market in 2008. Imports are low but continue to increase. Raw materials accounted for just less than 50% of all imports in 2008. Imports of finished medicaments and antisera & vaccines represented the remainder of the total.

It is difficult to project how the balance of pharmaceutical trade will change throughout the forecast period. On the one hand, reports indicate that exports are rising. On the other hand, Bangladesh’s pharmaceutical reputation may have been tarnished by the recent scandal involving Rid Pharmaceuticals, which could result in fewer exports of domestically-produced drugs. Espicom expects that the balance of trade will remain negative and the deficit is likely to grow.

Further reading - Detailed information on the pharmaceutical market in Bangladesh is available from Espicom: The Pharmaceutical Market: Bangladesh (published May 2010)

Brazil - Is there room for more acquisitions in the Brazilian generic market?

Brazil is the most attractive bioequivalent generic market in the Latin American region and will continue to attract the interest of multinationals.

Pharmacy sales of generic medicines increased by 24.0% in value terms and 19.0% in volume terms in 2009. Generic medicines have increased their pharmacy market share in recent years, passing from representing 4.0% of the pharmacy sector by value in 2001 to 15.1% in 2009. In volume terms, generic medicines represented 19.4% of the pharmacy sector by volume in 2009, compared to 4.8% in 2001. Market growth opportunities will continue in 2010 and generics are expected to represent about 22.0% of the pharmacy sector by volume in 2010 and 33.0% by 2014.

Due to its growth potential, foreign producers continue to penetrate the Brazilian generic sector. The American pharmaceutical producer Valeant, for instance, announced the acquisition of a Brazilian generic producer in May 2010. This was its second acquisition in Brazil in less than one month. A number of international and local producers seem interested in the acquisition of the local generic producer Teuto. In 2009, two leading generic producers, Neo Química and Medley, were snapped up by Hypermarcas and sanofi-aventis, respectively.

Further reading - A detailed review of the Brazilian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Brazil (published May 2010)

Canada - What effect will recent pricing changes in Ontario have on the generic pharmaceutical industry?

There is concern that generic price cuts will make it harder for manufacturers to produce low-cost generic medicines currently on the market, not to mention develop and manufacture new ones.

In April 2010, Ontario announced plans to reform its prescription drug system, including cutting the price of generic drugs to 25% of the cost of the brand-name originator, and ending the practice of professional allowances paid to pharmacists by generic drug companies, often used for rebates instead of patient care. Other provinces are expected to follow Ontario’s lead with these new measures.

Ontario officials have dismissed claims that the new regulations will lead to job cuts, shorter opening hours and store closures. However, the Canadian Generic Pharmaceutical Association (CGPA) has expressed concern that the generic price cuts could undermine the ability of manufacturers to produce and supply low-cost generic medicines currently on the market, as well as developing and bringing to market new ones. The CGPA is also concerned that the moves could jeopardise jobs within the industry. In addition, Shoppers Drug Mart, the largest pharmacy chain in Canada, has claimed that the withdrawal of professional allowances would force it to close stores and shorten opening hours. Shares in the company have fallen by 12% since the government’s announcement.

Further reading - An in-depth analysis of the Canadian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Canada (published May 2010)

China - How significant is the Chinese biologic/biosimilar market?

The Chinese government has recognised the importance of the biologic/biosimilar market and China claims to be the largest vaccine producer in the world.

The biotechnology industry was identified as a key strategic sector in the government’s 11^th Five Year Plan for 2006-2010. The biologic/biosimilar market is an integral part of the biotechnology industry.

China has 29 domestic companies which produce 49 different types of vaccines for the prevention of 26 infectious diseases. The total annual vaccine output has exceeded 1 billion doses.

In September 2009, China approved the clinical use of an A H1N1 influenza vaccine produced by the domestic company Sinovac, making it the first company in the world to be granted with a production licence for the disease.

Further reading - A detailed analysis of the Chinese pharmaceutical market is available from Espicom: The Pharmaceutical Market: China (published May 2010)

Germany - How will the German government deal with large deficits seen within the health insurance sector?

The government has proposed a package of reforms aimed at easing the financial problems of statutory health insurers.

In March 2010, the coalition parties agreed on a package of reforms which the government hopes to bring into force by 2011. The proposals includes an increase of the mandatory discount for patented drugs sold to the statutory health system from the current 6% to 16%, which could potentially save 1.1 billion euros (US$1.4 billion). In addition, prices will be frozen at August 2009 levels until the end of 2013, and the current fixed price system for some patented drugs, as well as the discount price contract system for generic, or copied drugs, will be retained.

The government is focusing primarily on a new system to set prices for new, innovative drugs, which the Health Minister claims entirely accounted for the increase in drug spending in 2009. Manufacturers will have the freedom to set prices themselves for the first year of a drug being on the market, but it will need to compile a dossier on its costs and benefits, which will be assessed by the authorities. If the drug does not offer additional benefit to medications already available, it will immediately be put under the fixed price system. The prices of drugs which do offer additional benefit will be subject to central negotiation on prices for the statutory system.

The proposals have angered industry associations which had been promised deregulation for the drug sector when the coalition government was formed, and noted that the system would jeopardise investment prospects. The plans were welcomed by the GKV, however.

Further reading - An in-depth review of the German pharmaceutical market is available from Espicom: The Pharmaceutical Market: Germany (published May 2010)

India - As Hospira finalises Orchid acquisition, AstraZeneca collaborates with Torrent

Hospira completes Orchid acquisition; AstraZeneca signs a deal with Torrent

On 30th March, Orchid and Hospira announced the completion of the transfer of Orchid’s generic injectable pharmaceuticals business to Hospira for approximately US$400 million.

The transfer includes Orchid’s beta-lactam antibiotic formulations manufacturing complex (comprising cephalosporin, penicillin and carbapenem facilities), and pharmaceutical research and development facility at Irungattukottai, Chennai, India, as well as its generic injectable dosage-form product portfolio and pipeline. Orchid is one of the top five generic beta-lactam antibiotics manufacturers globally.

In addition, the companies signed a long-term agreement for Orchid to supply APIs for the acquired business. To help facilitate the transition process, the companies entered into transitional services agreements for approximately 15 months.

Also in March, it was announced that a licence and supply agreement had been signed, pursuant to which Torrent will supply to AstraZeneca a portfolio of generic medicines for which Torrent already has licences in a range of countries. Working in partnership with Torrent, AstraZeneca intends to brand and market these products in many of its emerging markets, where it already has a strong commercial footprint.

Under the agreement, AstraZeneca will initially purchase from Torrent the licences and market authorisations for 18 products in nine countries. The agreement allows the flexibility to add further products and new countries where AstraZeneca sees opportunities for growth. Financial terms were not disclosed. Torrent will manufacture the medicines working to AstraZeneca's quality and process standards.

In making this agreement with Torrent, AstraZeneca is following in the footsteps of other large multinational innovator companies. Most notable in recent months has been Pfizer, which has entered into a series of agreements with Indian generic firms, notably Aurobindo, Claris Lifesciences and Strides Arcolab.

Further reading - A detailed review of the Indian pharmaceutical market is available from Espicom: The Pharmaceutical Market: India (published May 2010)

Indonesia - How has the USTR rated Indonesia, in relation to the IPR of pharmaceuticals, in their latest Special 301 report?

In 2010, Indonesia will remain on the Priority Watch List, due the prevalence of counterfeit pharmaceutical products, a weak IPR enforcement system, and barriers that affect pharmaceutical products.

The current state of the IPR protection of pharmaceuticals in Indonesia has not changed since 2009. This is why the country remains on the Priority Watch List in 2010. Indonesia was placed on the Priority Watch List in 2009 due to the deterioration of the IPR protection and lack of enforcement. Further concerns include an unreliable judicial system for IPR cases, a low number of criminal prosecutions, and non-deterrent penalties.

The USTR is worried about the protection against unfair commercial use, as well as unauthorised disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products. In addition, market access barriers remain, including a law that restricts the importation of drugs by foreign pharmaceutical companies.

Further reading - An in-depth analysis of the Indonesian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Indonesia (published May 2010)

Ireland - How is the recession affecting the pharmaceutical market environment?

The economic downturn has led to reductions in healthcare spending, necessitating cost-saving measures such as reference pricing.

As a result of the economic downturn, the government faces an extremely tight financial operating environment in the next few years. Ireland needs to make savings of over 1.0 billion euros (US$1.4 billion) in 2010, out of a health budget of 16.0 billion euros (US$22.2 billion). In order to do this, cost-saving measures will be implemented wherever possible.

Firstly, reference pricing will be introduced in 2010. Under the new system, only the reference drug selected by the HSE from a group of treatments will be reimbursed. In addition, although reimbursement for the over 70s was more or less automatic between 2001 and 2009, a means test has now been introduced, in attempt to slow consumption.

In February 2010, the prices of nearly 300 branded medicines were cut by 40%. It is anticipated that the move will make savings for the government of up to 94 million euros (US$130 million) over 12 months. The 40% reductions mean that many patented drugs are now cheaper than their generic versions.

Another measure currently being considered by the government is to impose prescription charges on the country’s 1.4 million medical card holders, of around 50 cent per item prescribed. This would work in two ways; by raising money and discouraging the over-prescribing of medicines. The Prime Minister claimed in November 2009 that this would generate savings of around 30 million euros (US$41 million) a year.

In addition, the Irish Medical Organisation (IMO) is calling for savings to be made through increased generic prescribing and reducing prices of generics. There is vast potential for savings in this area, as use of generics is currently very low. However, this is to try and support manufacturers based in the area, and so this is not likely to be a priority area for cost savings.

Further reading - A detailed analysis of the Irish pharmaceutical market is available from Espicom: The Pharmaceutical Market: Ireland (published May 2010)

Italy - Will the Italian generics market catch up with its European neighbours?

A number of high profile drugs have lost patent protection; will the Italian generic market take off as a result?

The Italian pharmaceutical market is expected to remain one of Europe’s slower growing markets over the next five years. Growth will continue to be constrained by low economic growth, cost containment measures for reimbursable products, reference pricing and an expected expansion of the generics market due to patent expiry on several high volume products.

On the plus side, this may be good news for the generic industry. Even by southern European standards, the Italian generics market is small. Excessive price regulation, long national patent supplementary protection, a lack of incentive distribution margins, confusion between branded and unbranded generics, a perception of generics as second-class drugs and the empowerment of doctors to stop generic substitution are all factors that have traditionally constrained the unbranded generic sector.

The combination of high profile drugs losing patent protection and the need to reduce costs should provide a boost to the generic market. In addition to the blockbusters that have lost patent protection in Italy in the last couple of years, a large number of medicines will lose their national supplementary certificates during 2010. Consumer perception of generics and generic awareness continue to improve. The Italian generic market is also being consolidated by leading generic producers in the country.

However, the generic industry has been coming under increasing pressure from manufacturers of branded products, which have begun to implement price cuts to minimise loss of market share. Significant price reductions have been closing the gap between off-patent brands and unbranded generics. The generic industry still has some way to go, but anticipates continued growth in market share and a progressive alignment with the rest of Europe.

Further reading - An in-depth review of the Italian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Italy (published May 2010)

Japan - Which companies have recently announced plans to enter the Japanese generic drug market?

In the first quarter of 2010, both Pfizer and Fujifilm unveiled plans to produce generic drugs.

In February 2010, Pfizer announced that it aims to be the leading manufacturer of generic drugs in Japan, which it plans to enter in 2010. Pfizer unveiled its Japanese generic drug business plan in December 2009 as part of its global move to offset risks on patent drugs. Fujifilm also plans to enter the Japanese generic drug market in 2010 and expects to sell products by spring. The government is currently providing incentives to manufacturers and pharmacists to promote generic drugs in an attempt to reduce the amount spent on branded drugs, and it wants the generic drugs to represent nearly one-third of the pharmaceutical market by 2013.

Further reading - A detailed review of the Japanese pharmaceutical market is available from Espicom: The Pharmaceutical Market: Japan (published May 2010)

Mexico - Which factors are increasing market opportunities in Mexico?

Pharmaceutical regulatory developments and market growth, particularly in the public sector, are attracting multinationals.

There are a number of regulatory developments that are currently transforming the market, particularly a draft to regulate biologic and biosimilar medicines, new guidelines to regulate antibiotics, regulatory developments for manufacturing, a new registration renewal process and regulatory developments for medical samples. The Federal National Commission for Protection against Health Risks (COFEPRIS) also aims to increase its participation in international forums and is working closer with the EMA and FDA.

Pharmaceutical regulatory advances are making the market more attractive, in spite of containment factors such as tighter out-of-pocket pharmaceutical expenditure as unemployment has risen and economic conditions have toughened up; a number of key pharmaceutical and biologic products losing their patents in the next years; and an infant bioequivalent generic sector which is expected to shoot up from 2010 onwards. The market, however, will be encouraged by increasing sales in the public sector, particularly derived from further coverage by the Popular Insurance Programme (SP).

Further reading - An in-depth analysis of the Mexican pharmaceutical market is available from Espicom: The Pharmaceutical Market: Mexico (published May 2010)

Poland - Has the economic crisis affected the Polish pharmaceutical market?

Changes have been made to the reimbursement list due to the economic crisis but the pharmaceutical market will continue to grow.

Whilst many countries have entered recession as a result of the economic crises, Poland’s economy did not shrink in 2009. In fact, it was the only economy in the EU that avoided contraction. Consequently, the impact on the Polish pharmaceutical market will be far less than in other countries of similar development in Central & Eastern Europe, such as Hungary. There will be less of a need to reduce spending on healthcare and the disposable income available for purchasing pharmaceuticals should remain steady, although unemployment is predicted to rise marginally in 2010, which may be detrimental to retail sales.

However, recent changes to the drug reimbursement list do reflect the government’s cost-containment policy that was prompted by the economic downturn. Only two new innovative drugs have been placed on the list, although innovative drugs that had previously been approved for reimbursement were not removed. Over 100 generic drugs were added to the lists, but around 50 were removed. Along with the many medicine price decreases that the MoH has negotiated with several pharmaceutical companies, overall savings are expected to reach 45 million zlotys (US$15.2 million).

Further reading - A detailed analysis of the Polish pharmaceutical market is available from Espicom: The Pharmaceutical Market: Poland (published May 2010)

Russia - How will the Russian pharmaceutical market be affected by recent price freezes?

Recent price freezes are expected to result in lower availability of cheaper drugs.

The government has forbidden drug companies from raising the prices of drugs which are included on the MoH’s list of vitally essential medicines in 2010. As new prices must take into account the average prices for the previous six months, this could result in falling prices. Wholesalers may revise prices once a year but the increases must not exceed inflation and price hikes related to the rising costs of production, substances and rent will not be permitted.

Russian pharmaceutical companies have warned of the possible consequences of new legislation. They claim that the pricing policy will make the production of some medicines loss-making and ultimately lead to certain medicines disappearing from the shelves. Producers will consequently focus on expensive drugs which bring the biggest profit and abandon cheaper drugs which are unprofitable to produce and distribute. The prices of other items may be increased in order to cover any losses resulting from the price freezes. Critical drugs will not vanish from the market, but fewer cheaper drugs are expected to be available in the drugstores.

Smaller companies are expected to suffer, as they tend not to make profitable drugs and distributors may lose interest in products with smaller margins. It is therefore possible that smaller producers and distributors may be swept out of the market. Some manufacturers have considered scaling down production or moving part of it to other CIS countries. However, the market is expected to become more civilised and benefit from consolidation. The largest distributor, Protek, is to improve its distribution and logistics models in order to help it through the changing environment.

Further reading - An in-depth review of the Russian pharmaceutical market is available from Espicom: The Pharmaceutical Market: Russia (published May 2010)

South Korea - Why is drug patent protection being threatened in South Korea?

The South Korean legal courts have favoured domestic companies over multinational companies in recent patent cases, under the guidance of a government that is keen to promote branded generic production.

This year, several high profile court cases that have involved multinational pharmaceutical companies trying to protect their drug patents against domestic generic companies, have seen the decision go in favour of the latter.

In April 2010, the Korea Intellectual Property Tribunal invalidated Janssen's patent on Ultracet, claiming that the pain killer contained widely used materials. In March 2010, Pfizer lost its two year legal battle with six local pharmaceutical companies over the patent of Lipitor, its anti-cholesterol drug.

Further reading - A detailed analysis of the South Korean pharmaceutical market is available from Espicom: The Pharmaceutical Market: South Korea (published May 2010)

UK - How will the aftermath of the economic recession affect the UK pharmaceutical market?

Reductions in health spending and industry job cuts could have an impact on the market, but an ageing population and a health service under pressure will guarantee an increasing demand for pharmaceuticals.

The UK pharmaceutical market is set to experience moderate growth over the coming years, tempered slightly by the effects of the economic recession. Public spending cuts are inevitable, as public debt continues to increase, and health expenditure is set to suffer as a result. In 2010 the NHS budget is £102.3 billion, but this could fall by 2.5 to 3.0 per cent per annum from 2011/12. According to the Budget 2010, the NHS and the Department of Health will be required to make savings of £4.35 billion (US$6.81 billion) by 2012/13. This follows a period of huge growth in health spending under the Labour government, which has seen the NHS budget almost triple. Despite budget constraints, increased pressure on the NHS to cope with the health needs of an ageing population will lead to a rise in demand for pharmaceuticals, and a willingness to invest in new therapies to ensure effective treatments.

Many pharmaceutical companies based in the UK have announced job cuts and site closures in recent months, in an effort to reduce costs. AstraZeneca announced the closure of a number of its R&D sites in March 2010 leading to 3,500 job cuts worldwide, including a site in Charnwood and another in Cambridge. This follows a further 8,000 job cuts within the company worldwide, which were reported in January 2010. In February 2010, GlaxoSmithKline announced in 380 jobs cuts at its R&D site in Essex, following a shift in the company’s research focus. Furthermore, Eli Lilly, Pfizer, GlaxoSmithKline and AstraZeneca all announced job losses worldwide during 2009, affecting positions in the UK. These cuts are to be expected considering the economic climate, as well as upcoming challenges for these companies, including patent expiries, increased generic competition and slowing innovation.

Further reading - An in-depth review of the UK pharmaceutical market is available from Espicom: The Pharmaceutical Market: United Kingdom (published May 2010)

Switzerland - How will the government’s cost-containment plans affect the generics market?

The generics market will benefit from upcoming patent expiries, but further price controls may hinder growth in money terms.

The Swiss government is keen to contain costs in the healthcare sector, and a number of specific measures have been taken to rein in costs. The promotion of generics has been at the forefront, with spectacular success since 2001, when generic substitution was introduced.

The first price control on generic drugs was implemented in 2005; new generics had to be priced at least 30% below the level of the corresponding original drug in order to qualify for reimbursement. In 2008, this was reduced further to 40%. This is likely to boost generic use by volume, but will serve to hinder growth in value terms. The major companies in the market have been able to cope with previous price cuts by increasing volume sales, although the decreasing amount of ‘slack’ in the market may make growth harder to maintain in 2010. Patent expiries will become a far more significant source of growth.

By international standards the Swiss generics market remains uncompetitive. Over 70% of generic sales are made by two companies; Mepha, acquired by Cephalon in April 2010, and Sandoz. A more competitive environment would almost certainly lead to lower price levels. However, the government’s policy of period price reductions may prove counterproductive in this regard, by making the market less attractive for new players and further solidifying the position of the existing manufacturers. A few other companies, notably Teva, Actavis and sanofi-aventis (through Winthrop), are active in the market, but to date have not gained much market share. It is noticeable that, in stark contrast to the other leading markets of Western Europe, no Indian or central European companies have yet shown much interest in Switzerland.

Further reading - An in-depth analysis of the Swiss pharmaceutical market is available from Espicom: The Pharmaceutical Market: Switzerland (published May 2010)

Turkey - What are the future prospects for the Turkish pharmaceutical market?

The Turkish pharmaceutical market continues to exhibit strong growth.

Turkey is a key emerging market which is continuing to grow strongly, despite the government’s ongoing healthcare reforms and recent economic crisis. Due to its large population and GDP, Turkey accounts for around 40% the total Middle Eastern pharmaceutical market. The Turkish pharmaceutical market is expected to grow by a relatively high CAGR between 2010 and 2015, driven by import growth; the value of imports grew by 23.7% in 2008. Turkey carries out most of its trade with the EU and USA.

Around a third of the pharmaceutical market is represented by generic drugs, in value terms. As Turkey recovers from the economic downturn, generics may become a more popular alternative to expensive branded pharmaceuticals. This will be helped by the fact that generic substitution is legal in Turkey; the pharmacist is obliged to inform the patient of the substitution, but this may be declined. The ageing population and associated increase in health spending may also force the government to look into the possibility of using generics to cut costs.

Further reading - A detailed review of the Turkish pharmaceutical market is available from Espicom: The Pharmaceutical Market: Turkey (published May 2010)

USA - How will the new regulation of biosimilars impact the US pharmaceutical market?

The US pharmaceutical market has opened the market to biosimilars. It remains to be seen what will happen in practice.

In March 2010, the House of Representatives passed H.R. 3590. This is the bill as previously passed by the Senate, with some House amendments. The President signed it into law on 23rd March. H.R. 3590 includes the biosimilar pathway provisions.

Now that the legislation has become law, attention will move to its operation in practice, and it will be interesting to see when it will be used first, and by whom. There are a number of areas to watch: data exclusivity, evergreening, interchangeability and patent resolution.

Further reading - A detailed analysis of the US pharmaceutical market is available from Espicom: The Pharmaceutical Market: USA (published May 2010)