12 October 2009 17:13 [Source: ICIS news]
By Nigel Davis
Some segments are seeing signs of growth building on sequential, almost month-to-month improvements through much of this year. Underpinning sector growth, however, has been demand from the pharmaceutical industry. That sector’s strengths, weaknesses and trends have featured strongly in the chemicals picture.
The supply of chemicals and intermediates for use in pharmaceuticals manufacture is a vitally important business for many chemicals producers. The CPhI worldwide trade show, which starts in
The chemical majors, however, are at the show too. BASF, for instance is exhibiting its active drug substances, excipients, custom synthesis, intermediates, inorganics and catalysts, it said on Monday.
This has always been a tough business for chemicals manufacturers, at least in the sense of getting the offering right. Not so long ago companies were persuaded to spend hundreds of millions of dollars acquiring and developing dedicated ingredient manufacturing businesses.
They proved to be hugely over-exposed to the changing strategies of the pharmaceutical companies themselves, mega-mergers in the sector and, simply, the slowing rate of new active ingredient innovation in the business.
Specific products used in drugs manufacture too have faced intense competitive pressure from new manufacturers in the
But the makers of products for pharmaceuticals can be encouraged by the way in which pharmaceuticals demand, while depressed by the recession and changing spending patterns in healthcare, has held up through the downturn.
In the hard-hit
The ACC, however, predicts a return to growth in 2010 and 2011 of 2.1% and 2.3% respectively.
Chemicals production in the
Last month, the forecasting group, Oxford Economics, noted healthy pharmaceuticals growth in the
“This sector [in the
Global pharmaceuticals shipments were $837bn in 2008, according to the ACC, an amount which is 23% of $3,700bn global chemicals total.
Research group IMS said on Monday that it expected the value of the global pharmaceutical market to grow by between 4% and 6% in 2010 on a constant dollar basis to exceed $825bn. By 2013 it forecasts a global pharmaceutical market value of more than $975bn.
“While our outlook for the global market is more positive than earlier in the year, the fundamental dynamics of the innovation cycle, funding pressures and the broader macroeconomic environment will result in mid-single-digit growth over the next five years,” said senior vice president of IMS’s Healthcare Insight, Murray Aitken.
Spending on pharmaceuticals has been hit by the recession with countries where individuals pay most for their healthcare worst hit. But the
Significant challenges remain, the most important of which are the reduced pace of innovation and the number of drugs coming off patent over the next few years.
These factors are limiting the potential for pharmaceutical sales growth globally through 2013 but opening up opportunities for the producers of generics and their suppliers.
Over the next five years an “unprecedented” $137bn worth of pharmaceuticals sales are expected to face generic competition, IMS says. Over the same period new products for treating conditions such as osteoporosis, respiratory ailments, thrombosis, multiple sclerosis and cancer are not likely to generate the same magnitude of sales, it adds.
The shift in that balance will further alter the nature of the businesses supplying intermediates and active ingredients to the sector. They can expect more opportunities in generics but also more competitive pressure from the many new(er) players in the market.
There are challenges even in times of (relatively) healthy growth.
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