It would be disingenuous to claim 2019 was a revolutionary year for pharma as it continues its journey towards a patient-centric model. The twin objectives of unlocking innovative potential to bring new products to market and bettering patient lives in a rapidly evolving global landscape remain unchanged.
The journey is well underway, and companies are in the process of mapping out how they reach this futuristic destination.
What did change in 2019 was that some of the obstacles, warning signs and potential shortcuts along the road became much more clearly defined.
The industry is evaluating the numerous opportunities to speed up product life-cycles and bring further efficiencies to drug discovery, development, manufacturing and ultimate commercialisation.
And current incumbents should now be only too aware that their involvement in the future model is under threat: large, fast-moving and flexible consumer-based corporates are investing in the healthcare sector via joint ventures and acquisitions and offering disintermediation opportunities to payers under pressure to reduce healthcare spending.
Technology is playing a huge part in the transition and harnessing disruptive solutions such as artificial intelligence and machine learning to better utilise vast amounts of patient data is shaping into a key priority for pharma.
Investment in biologics is gaining impetus, and as more novel big molecule treatments such as cell and gene therapies reach the market, decisions must be made on whether to expand manufacturing capabilities or outsource to contract development and manufacturing organisations (CDMOs).
The shift towards a more biotech-centred approach has also thrown up the paradoxical issue of how to secure experienced top talent in complex fields still in their embryonic stage.
And while regulatory curveballs are nothing new in an industry where approval of products ultimately depends on stringent safety and efficacy testing in the development phase, 2019 saw this scrutiny affect API sourcing and manufacturing to a much greater extent.
With 2020 on the horizon, we asked several leading industry players to shed light on the key trends emerging across the entire pharma supply chain that they believe the industry needs to keep abreast of over the next twelve months…
1. Control of potential carcinogenic impurities – a collaborative effort
Rajesh Sadanandan, Region Head – North America & Europe API, Dr Reddy’s Laboratories
One key incident that has rocked the API world over the last two years has been the detection of nitrosamine impurities, a potentially carcinogenic ingredient, which was first found in sartan blood pressure medicines and later in ranitidine samples. We’ve seen that this resulted in numerous recalls of such medicines from pharma companies globally and required all manufacturers to diligently review their manufacturing processes and analytical methods. Health authorities have reacted strongly: the European Medicines Agency has come out with a new guideline requesting market authorization holders to conduct testing of all APIs, with risk evaluations identifying potentially affected products required to be completed by March 2020 at the latest. This presents a different set of challenges and problems to the pharmaceutical supply chain. These new reviews will be a continuous process and will have a massive impact on raw material sourcing and processing conditions. Tighter controls of key starting materials will further add to the complexity and the volume of key data required by API manufacturers from starting material vendors.
2020 will show how companies are prepared to keep up with these new regulations and challenges. It’s a collaborative effort of starting material, API and finished formulation manufacturers. It might be tough, but also provides a competitive edge for those manufacturers who already proactively have assessed their processes including starting material manufacturing. Pharma companies, API suppliers and ingredients manufacturer with a strong patient-focused culture are typically best positioned to anticipate and respond to these challenges, which ultimately will increase both access to high quality medications as well as patient health.
2. CDMOs need to adapt to evolving biologics landscape
Anil Kane, Global Head of Scientific and Technical Affairs, Thermo Fisher Scientific
The big long-term evolving trend in pharma over the last decade has been the move away from traditional small molecule drugs towards biotech-centred strategies. While the traditional synthetic small molecule is still a popular strategy, four out of 10 new drugs in the pipeline are biologicals.
The increasing investment by the pharmaceutical industry in their R&D pipeline of drugs in the category of high potent APIs, biologics and cell and gene therapy demands expertise, experience and the right infrastructure within CDMOs to progress the molecules from clinical development to approval. The pharma companies will continue to outsource their drug candidates to experienced and reputable CDMOs with development and manufacturing capacity. Sponsors are also seeking CDMOs as a one-stop shop from API development (small or large molecule), through clinical support and commercial capacity to bring speed and cost efficiencies including supply chain benefits.
Thermo Fisher has made significant investment in organic and inorganic growth across the breadth of service offerings, including: in small molecule and biologics manufacturing, drug product development, sterile fill-finish, viral vector manufacturing and cell and gene therapy along with continuous processing technologies to meet the growing needs of pharmaceutical sponsor organizations.
3. Harnessing AI and making better use of data will drive clinical trial outcomes
Ketan Patel, Product Director, Portfolio, Licensing and Clinical, Clarivate Analytics
One key trend that we’re seeing is the ability to use AI algorithms to predict drug timelines and success rate probabilities which feed into decision making in terms of in-licensing, business development or even mergers and acquisitions.
For example, a drug timeline success rate predictor can take about 15 years of historical pipeline data and build a machine learning model to predict which drugs are most likely to be successful as well as their timelines that are going to come out in the European, US and Japanese markets.
We’re also seeing AI innovation in the regulatory space. Currently, regulatory compliance and standards documents are being released and human beings disseminate that information within a pharma company to the compliance department. Those people in turn must look through internal documentation and quality management systems to figure out how these new regulations and guidelines may impact Standard Operating Procedures.
Tools are becoming available that take this regulatory intelligence and scan internal documents to establish if they need to be updated and provide a risk profile of possible exposure to the legislation. These types of technologies were built in the financial sector after the 2008 crash but are now starting to be deployed in the life sciences industry.
A lot of times, clinical trials fail because they can’t recruit enough patients. Pharma companies are now banding together to pool their clinical operational data and that is being anonymized, cleaned up and used for machine learning to identify the best countries for recruitment and the best clinical sites to use.
4. Process development will be key to CGT success
Fatma Aybegum Senkesen, Head of Strategic Marketing & Market Insights for Cell and Gene Therapies, Lonza
One of the key trends we will continue to observe is the variety of modalities and technologies that enter pharmaceutical pipelines. In these modalities, cell and gene therapies (CGT) will likely continue to be one of the focus areas in 2020. While the market interest remains, development of a robust, reproducible, and cGMP-compliant manufacturing process is the cornerstone of success for drug developers in CGT. Unfortunately, the risks involved in not properly addressing gaps in the manufacturing process are often under-estimated.
Some of the specific challenges include scalability of the processes, low productivity and yield of process, lack of flexibility and suboptimal technologies used in the manufacturing, and not having access to the right analytical methods that can provide accurate measurement of specific unit operations and process steps. From a quality point of view, for example, carrying out open, uncontrolled, 2D unit operations may be associated with increased risk of contamination. Some involve serum-dependent processes with lot-to-lot variability and lack proper cell characterization strategies. These risks can result in major setbacks in the transition of the process to manufacturing or recurring failures during the manufacturing runs.
It is important for us to ensure developers and researchers are aware of these challenges and have access to phase appropriate process development (PD) and bioassay services (BAS), removing the manufacturing (MFG) bottlenecks and reducing their cost of goods (COGs), preparing for the commercial readiness in advance.
5. Tech companies will continue to penetrate the healthcare sector
Aurelio Arias, Senior Consultant - European Thought Leadership, IQVIA
A large proportion of tech companies have entered healthcare and found it challenging to navigate the numerous stakeholders in a sector where it is not always clear who has the decision-making power to adopt their technologies.
Start-ups have come to realize that a patient-centric solution, although hugely important, may be of little use if the lack of robust clinical evidence or enhanced efficiency prevents adoption by prescribers and payers. Moreover, when elegant solutions do present themselves, it does not guarantee an easy journey if it requires the heavily regulated healthcare system to adapt rapidly.
These dynamics will impel some shifts in digital tech in 2020:
• Start-ups focusing on positive outcomes. The primary focus of a digital product will shift from simply creating a commercially attractive solution to one that generates robust evidence as start-ups realize that it is outcomes data that leads to greatest adoption.
• Healthcare systems becoming more flexible and experimenting with existing workflows, especially when efficiency is increased. Radiology is an example where machine learning software is changing the way radiologists perform their work. Other departments will open up when confronted by actionable insights.
• Generic companies forming venture arms. Pressured by slow growth from generic medicines, generic companies will likely join innovative companies in forming venture arms to explore digital technologies. This will lead to a larger number of smaller portfolios.
6. CDMOs forming stronger, broader partnerships with Big Pharma
Peter Bigelow, President, xCell Strategic Consulting
We’re going to continue to see more consolidation in the CDMO sector because players feel they need to be seen as well-established and well known. Instead of just one-off transactions with clients, they want to give a full portfolio of offerings to clients and be more strategic with their relationships.
Achieving critical mass is incredibly important because CDMOs that have established broad service offerings and can boast a diversified customer base have proven to be more viable. A significant number of new drugs launched in the US in the last 5 years came from CDMOs, highlighting Big Pharma’s growing dependency on them. Because of that, Big Pharma is insisting on very high quality, reliability and consistency.
Because of this trend and because of the great desire by Big Pharma to shed assets, there are going to be more transformational partnerships between CDMOs and big pharma. Whereas in the past Big Pharma has been very transactional and has put driving product costs down as a priority, they are instead looking now at partnerships on baskets of products. This means the CDMOs must operate differently, be longer-term in the way they envision these relationships and they must commit to very high degrees of operational and quality improvement. It will still be transactional in lots of ways but it’s going to be a lot more strategic as time goes on and that will be important for CDMOs to embrace.
7. More M&A in the CDMO Space
Jim Miller, Founder and ex-President, Pharmsource
Expect to see more acquisitions of mid-size CDMOs in 2020. We saw the pace of deals involving companies in the $100 million - $1 billion size range pick up in 2019, including the acquisitions of Cambrex by private equity firm Permira, and Consort Medical by Recipharm.
Mid-size CDMOs need to broaden their capabilities and add scale to satisfy customer demand and compete effectively. However, the process is expensive, requiring capital to finance acquisitions and capacity expansions. Companies also need to increase operating overheads -- anathema to many -- to increase the bandwidth and sophistication of activities like finance, corporate development and human resources. Failure to recognize the resources needed to integrate acquisitions and operate a much larger company has led to trouble at several companies recently.
Private equity firms and large public companies attracted by the industry’s robust prospects are best positioned to enable acquired CDMOs to grow. In addition to access to capital and financial sophistication, they also shield CDMO management from near-term performance expectations, which can deter executives from making the capital and overhead investments necessary to achieve growth objectives. In addition to big-name private equity firms, large public companies like Thermo Fisher Scientific, Fujifilm, and Ajinomoto have been active acquirers of CDMOs in recent years, and that trend is likely to continue.
8. Biosimilars: focus on sustainability to sharpen in 2020
Duncan Emerton, Director, Informa Pharma Consulting
During 2019 there was a fascinating shift in the biosimilars narrative. Where there was once a focus on success (and sometimes, at any cost) the debate is now more focused on sustainability. There seems to be a genuine fear that the biosimilars market, in Europe, the US and elsewhere, will fail unless a longer-term approach is taken.
In Europe biosimilars have been available since 2006 and adoption has been robust. For certain products (e.g. filgrastim) biosimilars are now the market leaders in Europe having displaced their branded counterparts.
Despite this success, however, more needs to be done, says the European Commission (EC). Toward the end of 2019 the EC announced that more work is needed to exploit the potential savings to be reaped by biosimilars and generics in order to improve patient access and support the astute management of pharmaceutical budgets. 
It’s true that not all markets have embraced biosimilars in the same way. Biosimilars in some European countries have barely made a dent in branded market shares, and uptake of biosimilars in the US has also been described as anaemic (although improvements are being seen).
I’m in favour of all policy efforts that seek to drive better patient access to potentially life-saving medicines. Significant inequities in access to medicines exist all over the world, even in affluent Western nations.
The risk is, however, that with all the focus on delivering improvements in access we could find ourselves in a situation where it becomes commercially unattractive to compete.
On that basis, 2020 has the potential to be the year where this balancing act comes into sharper focus for all key stakeholders.
9. M&A growth expected to continue but deal values likely to be volatile
Daniel Chancellor, Principal Analyst, Informa Pharma Intelligence
All the fundamentals are in place for Pharma M&A volumes to continue at their current 10% growth rate in 2020, which would translate to around 260 deals executed through 2020 – one for every working day of the year. It is harder to predict the combined values of these transactions because they are so heavily driven by one-off mega-mergers – I doubt many would have put money on AbbVie combining with Allergan – so it may be that the total values getting exchanged are somewhat volatile.
Regeneron and Biogen are two of the larger companies which could take part in the headline transactions next year – either as acquirer or take-out target – although with the current bounce Biogen has received with its aducanumab resubmission then any interested Big Pharma would need to have a large risk appetite.
Opportunities exist for biopharma companies looking to make bolt-on acquisitions, which typically form the bulk of M&A deals. Several research-stage companies can be expected to transition into commercial operations as their drugs reach key regulatory milestones, and it is here where larger companies with global scale are best placed to create value. Intercept Pharmaceuticals represents one such opportunity, should it gain approval for the first NASH drug, entering a large untapped specialty market.
As always, expect oncology to be a fundamental driver for much deal-making activity, as it encompasses over one third of both pipeline assets and clinical trials. It may not be too late to make further moves in gene therapy manufacturing and discovery, despite the sky-high valuations.
We may also see further deals with digital health components such as real-world data, AI-ML and digital therapeutics. Thus far, biopharma companies have predominantly been partnering to add these capabilities to their own operations but having internal expertise may allow the industry to better face the encroaching threats of large tech companies entering the healthcare space.
10. Further advances in targeted nasal drug delivery on the way
Pascale Farjas, Marketing Manager – Ear Nose & Throat, Nemera
Within the nasal drug delivery space, there has been lots of work on different devices with features to improve patient compliance.
With the emergence of drugs repurposed through nasal delivery with a systemic action and on-going developments on nose-to-brain delivery from the pharmaceutical industry, we’ve been working on different modes for targeted delivery of drugs to the nose, the main objective being to enhance drug efficacy.
One new generation spray provides the unique feature of user-independence, with 100% of the dose delivered for each actuation, whatever the profile.
Extended prime retention is another useful and interesting feature keeping the patient free from having to re-prime the pump too often while preservative-free versions are being offered in case of chronic disease, with a daily use over time.
Electronic concept devices with add-ons can send reminders to the patient through an app when it is time to deliver a spray and provide feedback to the patient when a dose is effectively delivered. One of the latest developments is a smart electronic concept device to monitor drugs delivered and prevent any overdosing with potent drugs.
It’s about working on how to target the zone you need. That’s why we are putting our R&D efforts in that area, while improving our knowledge of the nasal physio-pathology and using new models such as nasal casts to assess in a timely manner the impact of the device design on drug deposition.
A big thank you to all who contributed their expertise and time to this article.
Any there any other trends you feel urgently require the industry’s attention? We’re in the process of building the 2020 content programme for CPhI Worldwide and need your insight! If there is an exciting trend or development you think we should focus on for this year, please get in touch - email Gareth Carpenter at [email protected]
 State of Health in the EU Companion Report 2019 (November 2019). Available from https://ec.europa.eu/commission/presscorner/api/files/document/print/en/ip_19_6336/IP_19_6336_EN.pdf [Accessed 6 December 2019].