High Potency Active Pharmaceutical Ingredients (HPAPIs) are highly potent pharmacologically active ingredients with high efficacy, requiring low daily therapeutic dose owing to its high selective mode of action due to its ability to bind to specific receptors, or inhibit specific enzymes. HPAPI is currently one of the fastest growing segments in the pharmaceutical industry, with a growth rate of 8-10 per cent, which is significantly higher than the five to six per cent growth rate of the overall pharma market. The high growth rate is attributed to its application in the formulation of high potent drugs, with the ability to target precise diseased cells, and is used mainly for cancer preparations and hormonal therapies.
In the limelight
HPAPI is a niche high growth segment, valued at $8-9 billion and contributes to around 10 per cent of the global API market. The target release characteristics of HPAPI have enabled its application in target therapies for cancer and hormonal replacements, which are high revenue segments in the industry. In addition, extended application of HPAPI in cardiovascular, central nervous system and musculoskeletal drugs adds to the attractiveness of the segment.
The last decade showed an increase in the number of patients with cancer and lifestyle related diseases, resulting in a huge increase in the demand for high potent products. In a bid to cater to the increasing demand, a majority of the top pharma MNCs like Roche, GSK, Pfizer, Merck etc. are currently focusing on building their pipelines with high potent drugs, especially for cancer treatments. Currently, there are 288 small molecule targeted therapies at various stages of development, for the treatment of cancer. For instance, phase III small molecule targeted therapy, Zytiga (Abiraterone) from Johnson & Johnson, for the treatment of prostate cancer, is expected to be a top revenue generator by 2019. Pharma MNCs and contract manufacturing organisations (CMOs) are looking to invest in infrastructure and technological capabilities for HPAPI manufacturing. HPAPI is poised to become a critical component of product portfolios, and will be a key area of focus for researchers and procurement managers in the next five years, as there is an increased focus on developing high efficacy drugs.
Trend analysis
Pharma markets have been showing a decline in growth due to increased patent expiries of major revenue generating drugs, fewer drugs in the pipeline of pharma MNCs, and rise of generic drug manufacturers who are posing stiff competition to pharma MNCs in pricing. HPAPI was expected to be a high growth area; however, the category witnessed a moderate growth rate of six to seven per cent between 2005 and 2010. As HPAPIs are increasingly used in the form of Antibody Drug Conjugates (ADCs), Monoclonal Antibodies (MAbs) and other biologically active drugs, the increase in the number of approvals for these are expected to drive the growth of the HPAPI market at a rate of eight to nine per cent between 2011 and 2015. For instance, monoclonal antibody Trastuzumab gives Herceptin, the targeted therapy for breast cancer from Roche, which has the cytotoxic capability to suppress cancerous cells.
Market drivers
The lucrativeness of the HPAPI market is in many ways tied to the growth of the global oncology market, as around 60 per cent of global HPAPI produced is being used for making high potent oncological drugs. Currently, approximately 80 per cent of the global production of HPAPI is focusing on developed markets like North America and Europe. This established market is home to major manufacturers such as AMPAC Fine Chemicals, SAFC, Teva, Cambrex Ferro, Bristol Myers Squibb, Bayer Schering, Boehringer Ingelheim and Carbogen Amcis. However, the oncology market in these developed markets are showing moderate growth rate and is expected to grow at around six to seven per cent in next five years.
APAC and pharmerging markets like BRICS etc. are the major growth drivers of the oncology market, with around 20 per cent growth rate. These regions are home to a large patient pool, affected by cancer and other lifestyle related disorders. Unlike the Asian API market, the APAC and pharmerging nations have only a few CMOs with HPAPI manufacturing capabilities, and account for only about 9-10 per cent of the global HPAPI production. For instance, only few of the domestic CMOs like Asymchem, China and Piramal Healthcare, India etc. have ventured into establishing manufacturing facilities for HPAPI. This can be attributed to the high barriers of entry into the market, as the cost of technology and processes to establish a plant and comply with the regulations is extremely challenging.
In addition, the lesser per capita income of major segments of the population in APAC and Pharmerging regions, and lower affordability for high potent drugs are a challenge. Also, these markets are undergoing several pharma reforms like price cuts, international reference pricing, patient co-payment, and reimbursement benefit schemes. As a result, the adoption of high potent drugs in these markets would depend on the changing health care scenario of this region, over which the local governments and regulations have a huge say.
Future outlook
HPAPI has immense potential to be a highly lucrative segment in the near future, and the need of the hour for HPAPI manufacturers is to elevate their operational and technical efficiency to stay ahead of the market.
HPAPI is the potential cash cow of the pharma procurement basket for the following reasons:
- Increase in growth of the biologics segment resulting in an increase in the application of HPAPI in segments like hormonal therapies, glaucoma and targeted release therapies for cancer.
- High demand for bio-pharma formulations with smaller, highly potent dosages with specialised release characteristics.
- The expected increase in the affordability of high potency drugs in APAC and pharmerging markets with the anticipated strengthening of these markets through various governmental initiatives in the form of healthcare reforms and increasing per capita spend.
HPAPI sourcing strategy for pharma companies
As HPAPI is a relatively new technology, where pharma companies have limited working experience and entails capital intensive technology, pharma MNCs are looking at the potential of outsourcing the development and manufacturing of their HPAPI products to CMOs with technological supremacy. By forming strategic partnerships with leading CMOs, pharma MNCs will be able to tap the potential of the high potency drug market, and also optimise costs of operating in-house facilities, which would otherwise have required capital intensive high containment facilities and a skilled labour force adept at maintainig operational standards. While looking to enter into a strategic alliance with a HPAPI contract manufacturer, pharma MNCs need to ensure that the CMO has the potential to provide end to end services. With an integrated pharma development and commercial manufacturing portfolio, these CMOs will be able to reduce the time to market significantly, thereby ensuring successful high potency molecule development.
Scaling up the operating model of HPAPI manufacturers
The current operating model of HPAPI manufacturers is a risk-averse stand, wherein they have opted for reduced capital investment in the category, by opting for either of the following models:
- Utilisation of existing manufacturing facilities, through capacity expansion, by overhauling the machinery.
- Partnership with CMOs, a majority of whom have performed retrofitting of equipment for production of HPAPI in their existing API manufacturing facilities.
Pharma companies and CMOs, looking at HPAPI as a key revenue generating segment, may be required to elevate their operating business models. One of the approaches is, optimised capital investment in cost effective technology and processes, compliant with FDA thresholds. An example for this approach is SAFC, a major player in HPAPI space with a manufacturing plant at Verona, Wisconsin with capabilities in phase III and commercial HPAPI manufacturing. The company’s manufacturing plant is acclaimed to be an industry benchmark, for its continuous effort in increasing operational efficiency. In addition, it is a global leader in handling requirements for high-potency production, with its strict compliance to category IV standards. The future operating model, aimed at a double digit growth of HPAPI segment, may require manufacturers to achieve cost optimisation by increasing technical and processing efficiency through allocation of specialised containment facilities. In addition, manufacturers may look to have an effective labour force trained in the technology to handle requirements and safety regulations, so as to maintain the operating guidelines in keeping toxicity within the acceptable levels. Elevation of the maturity level would require a fine balance between cost and containment of the toxicity. Any concessions to the operating standards will add to the risk of a potential mishap due to occupational exposure limits going above the acceptable limits. A high degree of prudence and effective planning on the part of HPAPI manufacturers is the need of the hour to elevate the HPAPI market from its nascent stage. A two pronged approach of achieving operational efficiency and cost optimisation, by streamlining plant operations through technical capabilities and skilled labour, will enable conversion of HPAPI to a cash cow segment for pharmaceutical companies. With the right focus on products, in the R&D pipelines and a well scoped strategic approach on HPAPI technology management, companies will be able to elevate to a high, promising area in the industry.
References:
Interactions with multiple industry experts with 15+ years of experience
Contract Pharma Magazine, September 2011
Company websites: SAFC, Carbogen Amcis, Roche, GSK, Johnson and Johnson
Secondary Databases: IMS Health, Datamonitor