The annual Aschimfarma Forum has taken place this year in Milan in order to facilitate interaction between the producers of pharmaceutical raw materials, represented by the Association, and the world of finance. A unique chance is indeed currently available to strengthen the historically state-of-the-art position of Italian fine chemicals industry and to increase its competitiveness in the international market. Macroeconomics is summing different positive factors, i.e. a good exchange rate Euro vs. Dollar, low cost of energy, low interest rates. This could help the Italian pharmaceutical raw materials industry to be once again, after almost twenty years, the partner of choice for multinational pharma companies. «We have the capacity to win this challenge – said Aschimfarma’s president Gian Mario Baccalini during the Forum – but in order to do so we need some action to be urgently undertaken. The markets is changing: big pharma companies no longer invest in production and generic’s companies are now becoming true multinationals. The Italian pharmaceutical raw material industry have a long record of excellence with respect to the very high quality of its production and the capacity to strictly follow relevant regulations while maintaining an high flexibility in the approach».
The Italian way to pharma raw materials
Aschimfarma is the National Association of Italian Pharmaceutical Raw Materials manufacturers. APIs and pharmaceutical intermediates production generated revenues of € 3,3 bln in 2013, 85% of which has been exported. Italy still maintains the leadership as for export towards the US, thanks to the very high quality level of its production, the meticulous respect of GMP regulations and an harmonised approach to the inspection of production facilities. Investments made by the Italian industry in R&D and process optimisation amount to 3% of sales.
Back to Europe
2014 saw an increase of 1,5-2% in revenues, and Mr. Baccalini is optimistic also for 2015, as he told Pharma World: «Market trends are positive. We are experiencing the coming back to Italy and Europe of all big pharma companies, as they understood that the levels of service and reliability of Asiatic suppliers are not high enough. All the big pharma are asking our collaboration, this is a good signal. The growth of generics medicines has stopped in Europe and US, while is greatly increasing in the new markets, where prices are lower compared to European or American standards, but volumes are higher».
This encouraging framework has to face some difficulties that still delay the competitiveness and the ability of the Italian industry to attract foreign investments. The impact of bureaucracy in all industrial activities is still very high in Italy compared to other European countries, a factor that often alarms big companies and blocks investors. «This cause their move towards different suppliers, even within Europe, known for a lower quality of production compared to the Italian one but much more reliable as for the time needed to get all regulatory authorisations – tells Mr. Baccalini. – Competitiveness means the ability to reach a critical mass». The Italian way to do so is to create clusters of highly specialised medium and small companies, a sort of “flexible” multinational able to attract the financial capacity needed to take advantage of market opportunities. «In order to become attractive for the long-period investments of big pharma, we need to reach € 50-80 mln revenues – further adds Aschimfarma’s president -. Some Italian industrial group are yet reaching € 100-120 mln and the future shall see many mergers and acquisitions. Our activities are capital intensive, we need high investments to built new production facilities for API’s production».
A great vision to compete
The main characteristic distinguishing the Italian productive framework form others within Europe is its long top level entrepreneurial tradition combined to the very high capacity of innovation and to the ability to build a complete pharma supply chain, from raw materials and production equipment up to distribution. This is something asking for a great capacity of vision. The long lasting success of Italian API’s producers is built on the high level of investments in research vs. turnover, on the highly qualified manwork employed, on the top level standards of quality used and the ability to create close connections both with big pharma and the supply chain. «This allows for the delivery of “almost perfect” products, with extremely high levels of purity», tells Mr. Baccalini. The result is the generation of a multiplicative effect on the entire production framework: environmental respect and quality factors become more important for competition than low costs.
The need for urgent support
Macroeconomics is currently so favourable that the ability to attract foreign investments in the pharmaceutical raw material industry shall spin the recovery for entire Italian industry. The positive outlook shall not last for long, and Asiatic manufactures might also be able to reach comparable levels of quality for their production within more or less five years. It is thus fundamental for Italy to be able to exploit the moment, something calling for urgent support from politics and institutions in order to strongly simplify the bureaucratic milieu and make investments advantageous. «We are able to demonstrate to investors a tradition of reliability and business plans with trends of growth, but the market asks for a greater bureaucratic pragmatism. We are ready to sign big contracts, but we cannot be sure about the time needed to reach regulatory approval or delivery of documentation. Something is moving, but we still need to fill the gap with other countries: French and Spanish authorities release authorisations within three months, in Italy we might need nine. This is something that blocks competitiveness, because companies ask for certainty as for the time needed to start operations», tells Gian Mario Baccalini.
Aschimfarma is very active in asking the Italian Government for urgent reforms to ameliorate the global framework representing the country at the international level. The Association of raw material manufactures would like to become an actor politics should pay attention to in order to better understand the critical issues needing immediate decision to maintain competitiveness. «The Government should understand that this sector represents an excellence for Italy, thus it needs to be adequately protected. We do not ask to negotiate anything – adds Mr. Baccalini. – The regulatory Agency, Aifa, would also need to complete the announced reorganisation process. We ask for a simplified regulatory framework, in order to increase efficiency without decreasing quality. The very high standards we can reach in GMP and quality of production is our point of excellence, it would be wrong to lower the quality of our products. But the request for GMP should be the same all over the world. The FDA, for example, has introduced a fee in order afford reorganisation and to be able to maintain an high level of service. The introduction of the GDUFA fees has allowed FDA to increase the number of inspections. The result is that currently only 37% of APIs imported in the US are of extra-UE origin, while the percentage reaches 67% of imported APIs in Europe. We ask to work in strict collaboration with the Italian regulatory authority, in full respect of the roles, in order to reach the common goal and to grow together. The risk is to miss this train to increase competitiveness».
FDA’s GDUFA fees
The Generic Drug User Fee Amendments (GDUFA) has been introduced by the US Government in 2012 as a way to provide user fees for FDA to ensure timely review of applications for generic drugs. Costs reduction for the industry and safer and effective generic drugs for the public are also targets of the law. Fees are used by the FDA to supplement the costs of reviewing generic drug applications and inspecting facilities, thus reducing the current backlog of pending applications, cut the average time required to review generic drug applications for safety, and increase risk-based inspections.
The future for drug develompment
The pharmaceutical supply chain will significantly change in the next three years, as new trend of research and development are increasingly focusing on the search for tailor-made cocktails of medicines instead of new blockbusters. The highly scientific and technological Italian industrial environment shall be able to positively support such trend, that will see the need to overcome the difficulties to set up the production process and to reach very high purity levels for new drugs. The deep knowledge of regulations coupled to the high potential for innovation typical of the Italian “Made in” style and to the ability to introduce new technologies for the production of biotech, nanotech or slow release products shall represent a critical factor to win the competition in future years. «We are able to integrate research and other know-hows, this is our distinguishing excellence. If the optimal design for the production plant is not already in place, for example, we are able to find a way to solve the issue with high flexibility of approach, something quite difficult to find among competitors. We just need now to invest on the “last mile”, the last steps we need to implement in order to sign the contracts. To do this, we already have the high quality and technological culture needed to become a reliable partner for big pharma, but we need to do something better. We are a niche ”Made in” sector still not well know to institutions and finance, and we need to be supported to greatly simplify bureaucratic procedures and attract investors», says president Baccalini as the last remark.