Generic drug production is set to return to the US, partly due to rising safety concerns surrounding overseas-manufactured drugs, and this represents a huge area of potential growth for US manufacturers, say new forecasts.
Over 70% of domestic firms responding to a new CPhI Pharma Insights study forecast growth in domestic production of generics - a trend that goes against recent history and natural outsourcing economics - particularly for off-patent prescription drugs and branded over-the-counter (OTC) medicines. 12.5% of respondents said they are undertaking a domestic acquisition and a further 25% are doing so internationally.
For US-based companies, over 60% of trade and net sales are still coming from within the US, although their interest in international acquisitions shows a desire to expand in higher-growth markets and, possibly, to increase potential domestic margins via lower costs, says the study.
In contrast, 30% of non-US drugmakers said they are mainly looking for acquisitions within the US and, with most reporting than they make under 10% of their total sales there, this suggests that international firms are attempting to increase their revenues from the world’s biggest market.
Nearly 75% of these firms do not yet currently have facilities in the US, and the consensus among them is that exporting drugs directly to the US remains prohibitive due to a complicated regulatory framework and a protective market. However, both international and domestic companies say that regulatory changes at the US Food and Drug Administration (FDA) provide more opportunities than threats.
Over 80% of US-based drugmakers believe they are well-placed to adapt and respond to changes due to their tacit knowledge of the market and experiences with the FDA, while only just over 50% of international firms hold this view. Larger European players believe these impending changes present significant opportunities, although smaller firms feel they are being regulated out of this market because they “do not have the resources to deal with a complex regulatory system.”
Surprisingly, over 75% of domestic firms do not regard US-made drugs as any safer than those produced in the European Union (EU), while over 50% of international firms view US production far more positively.
“Some domestic consumers would prefer to buy drugs manufactured in the USA, and this has seen a key trend of returning production. Even so, overall the US is still a mass importer of generics,” said Chris Kilbee, group director pharma at CPhI.
‘There has also been a surprising optimism towards the increasing FDA regulations and price controls. Domestic companies are using regulatory changes as an advantage, giving them a competitive edge over international companies. With further regulatory changes to come, domestic firms feel better able to adapt and confident in the regional pharma market. However, international companies are looking to combat this by planning more domestic acquisitions, allowing them to improve their penetration in the US market,” he added.