Waldorf Time Again

waldorf clock One week before the custom pharmaceutical chemicals industry heads to DCAT Week, its annual conclave at the Waldorf Astoria in New York, the Chemical Pharmaceutical Generic Association (CPA), an Italian trade group, has issued a global market overview that may be of interest.  CPA puts the overall global market for active pharmaceutical ingredients at $113 billion in 2012, up from $91 billion in 2008, the year the global economy began to slide into recession. That comes to an annual average growth rate of 5.6%, compared to 7.2% growth between 2004 and 2008. The economic downturn is an obvious cause for the slowdown. But CPA cites some shifts in services to the pharmaceutical industry as contributing to the slowdown. The group notes that the captive market (APIs manufactured by pharmaceutical companies for their own use) has risen faster than the merchant market (APIs sold to third parties). The captive market has grown 5.8 % to $69 billion; the merchant market has grown 5.1% to $44 billion. CPA also notes an increased demand for value-added services, specifically finished dosage formulation, on the part of drug companies. The trend toward adding finished dosage services is particularly brisk in India and Israel, according to CPA. Consolidation and contraction in the pharmaceutical industry has spurred the demand for finished dosage services.   There are some interesting geographic market variances as well. The highest growth had been Asia over the last four years—an average annual rate of 13.9%. The lowest growth rates are in the U.S., Japan, and Europe—3.8%, 3.4%, and 2.5%. It is also noted that within the global merchant market, generic APIs are growing much faster than the APIs produced for branded pharmaceuticals. The merchant market for generic APIs has grown 7.3% annually on average since 2008 to $22.5 billion, whereas the merchant market for branded APIs has grown 3.1% to $21.5 billion. None of these figures is particularly surprising, though it seems strange that captive API production is growing faster than the merchant market, given the closure of plants and claims of increased outsoucing at major drug companies. One senses, however, that there will be a rebound in revenue, if not in sales volume, for API suppliers over the next four years. Some sources of potential growth can be gleaned from the trends analyzed by CPA. We are well out of the recession. And the move toward value-added services—including the broadening of research services at firms such as Albany Molecular Research in the U.S. and formulation services at firms such as Siegfried in Europe—is really only getting started. And drug approvals are picking up as the pharmaceutical industry inches toward personalized medicine. The volume of APIs sold will likely not change as significantly as the value of the API-plus (chemicals and services) offered to the downsized drug companies and advancing biotechs and virtual pharmas. The general “up” vibe at Informex in Anaheim last month will carry forward to New York this week—how much can change in so short a time? It will be interesting to get some four-years-out projections from folks at the Waldorf.

Author: Rick Mullin

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1 Comment

  1. I like the use of the word conclave– but good thing they let folks at this conclave talk to the media, amiright?