Medical & Pharmaceutical Trends Impacting the Chemicals and Materials Industry - Feb09

8/14/2019 Medical & Pharmaceutical Trends Impacting the Chemicals and Materials Industry - Feb09

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Know Your End-Market!Medical & Pharmaceutical Trends Impacting the

Chemicals and Materials Industry

A panel discussion with Frost & Sullivan's leading Chemicals &Materials analysts:

Hariharan Ramasubramanian, Dr Leonidas Dokos

27 February 2009


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Focus Points

Introduction

Impact of Economic downturn

Key Medical & Pharmaceutical Trends Materials for Medical Devices

Product Segmentation

Challenges, Drivers and Growth

Chemical Excipients Product Segmentation

Challenges, Drivers and Growth

Major Industry Participants

Conclusion


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Introduction


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The Integrated Industry Perspective Healthcarerepresents a crucial downstream end-user

Source: Frost & Sullivan

Plasticsand

Polymers

Coatings,Adhesives

andSealants

Packaging

AerospaceAerospace

& Defense& Defense

Automotive &Automotive &TransportationTransportation

ElectronicsElectronics

HealthcareHealthcare

AerospaceAerospace

& Defense& Defense

Automotive &Automotive &TransportationTransportation



Automotive &Automotive &

TransportationTransportationAutomotive &Automotive &

TransportationTransportation



Automotive &Automotive &

TransportationTransportation

EnvironmentEnvironment



EnvironmentEnvironment

EnergyEnergy


PerformanceMaterials

SpecialtyChemicals

ConstructionConstruction



FoodFood



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The Medical and Pharmaceutical end-use markets forMaterials and Chemicals

Chemicals Excipients forPharmaceutical Drugs

Materials inHealthcare

Healthcare

Medical & Pharmaceutical

Materials in

Medical Devices

Materials in

MedicalPackaging


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Economic Downturn

Impact on Medical and Pharmaceutical Markets


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Impact on Sectors of the EconomyMarket Indices as an Indicator for Industry Prospects

The effects of the downturn has disproportionately affected different segments of theeconomy

The healthcare sector has outperformed the broader market

US Market Indices

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Dec-07 Feb-08 Mar-08 May-08 Jul-08 Aug-08 Oct-08 Nov-08

Indicesv

alue(units)

Dow Jones Industrial Average NasDaq Biotech

NasDaq Financials NASDAQ Transportation

S&P HEALTHCARE INDEX PHLX SEMICONDUCTOR SECTOR INDEX

HealthcareIndices, whiledeclining,have stilloutperformedthe broader

market

This implies that investors expect that, while the healthcare sector will beaffected by the downturn, it will still out-perform the general economy


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Winners and Losers

Elite: Companies which havehigh cash reserves, butunable to do much to improvetheir business because of the

unfavorable situation

Winners: Companies whichhave high cash reserves and

are able to leverage thissituation successfully through

strategies like M&A /alliances.

Opportunists: Companieswhich have the bestopportunity to grow during the

economic downturn

Losers: Companies likely toloose their revenues due toeconomic downturn

High

Low

High Low

FinancialLeverage

Business risks in economic downturn

Winners

OpportunistsLosers

EliteBig Pharma

Big IVD

Generic

manufacturers

Big imaging

companies

Home care

companies

Discretionary productmanufacturers

Big devicecompanies

Small device

companies



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What is the way forward ?

Medical devices becomes a more attractive segment for plasticssuppliers facing declines in their other key end user segments.

The prospects for higher margins and a stable demand acts as a

major incentive for companies to invest. However, a focussed - rather than piecemeal approach to the

market will be important for companies looking for long term growthin this segment.

Plastics in Medical devices to grow at a CAGR of 5.4% in the period

2009-2015.

Companies such as Invibio(Victrex) and LyondellBasell

that have built up a separate

brand image and identity fortheir medical products are

well placed to grow in thissegment


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What is the way forward ? (contd)

In over 23 years in the industry,I've never really seen pharma

sales being affected by an

economic downturn in thewestern world. We're probably

one of the industries that will beaffected the last and the least." CEO of one of worlds top 30

pharma companies.

As the era of blockbuster drugs continues to approach its end, thesmaller and specialist companies are better placed for survival.

The pharmaceutical industry is more apprehensive about the upcomingexpirations of patented drugs than the global economic contraction.

The expiration of patents means that manufacturers of excipients need tobe prepared to do business with a larger number of companies in a widergeographical spread and at a more cost-driven supply basis.

Strategic partnerships and

alliances will become morecrucial than ever.

Even amidst the currentchallenging economic climatethe market for pharmaceutical

excipients will perform betterthan other chemicals marketswith a forecast CAGRbetween 2009-2015 of 3.3%.


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Key Medical & Pharmaceutical Drivers and Trends

Doctor, I feel a pain in


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Pharmaceutical trends with Respect to Chemicals &Materials what lies ahead

In 2000, 10% (606 million) of the global population was aged 60+. By 2050 thiswill be more than 21% (2 billion).

The aging of population and the need for more medical devices andsophisticated drugs will create undisputedly more demand for materials, active

ingredients and chemical excipients. There is increasing

competition from low-costmanufacturers. These arelocated in Asia, especially in

India and China, and arecontinuously enlarging their

capacity while improving atthe same time the quality,credibility and reliability.



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Pharmaceutical trends with Respect to Chemicals &Materials what lies ahead (contd)


Global mortality from chronic diseases will increase 50% by 2025.

Cardiovascular diseases will remain the main global mortality chronicdisease by 2025 with cancer and respiratory diseases increasingly

affecting more people.

75% of people aged 60+ have

one chronic condition, while50% have two or more

chronic conditions. Chronic diseases account

for more than 60% of allhealth care spending.


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Performance Material Trends in the Medical Devicesand Pharma Packaging Markets


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Plastics in Medical Devices

Polypropylene Polyethylene PVC Eng Plastics

Syringe Plungers

Labware

Medical Bags

AdministrationSets

Catheters

Medical Bags

AdministrationSets

SurgicalEquipment

SterilisationTrays

Medical DeviceHousings

Implants

Market SegmentationPlastics in Medical Devices

Syringes

Labware

Medical Bags


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Performance Materials Market: Impact of Key Industry Themes,

2009

Supply chain

Expansion

Sustainable

production

Performance

Security Conservation of resources

Lifestyle trends

Safety

Differentiation

Multiple

functionalities

0

5

10

0 5 10

Internal Impact

Marke

tImpact


Performance Materials Market: Impact of Key Industry Themes,

2009

Supply chain

Expansion

Sustainable

production

Performance

Security Conservation of

resources

Lifestyle trends

Safety

Differentiation

Multiplefunctionalities

0

5

10

0 5 10

Internal Impact

Mark

etImpact


Key Themes in the Performance Materials IndustryTrends of Specific Importance to the Medical Device Industry

Key selling points for

engineering and highperformance plastics

PVC Replacement

Trends with High Impact on the Medical Devices Market

Technical and ServiceDifferentiation

Key


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Key Themes in the Performance Materials Industry (Contd)Changing Lifestyle Trends

Patient Driven

Available personalised healthcareand choice

Patient knowledge through multiplechannels

Public pressure on government

One stop shop

Consumer responsive providers,products and services

Demand Volume

Affordability

Waiting Lists

Public Anxiety Development of demand

management policies and strategiese.g. demand driven financing

20052005

20102010

Primary Care

20152015Home Care/ Self

Testing

Changes in the

demand forhealthcarediagnostics

Changes in thedemand for

healthcarediagnostics


Secondary Care

Implications for Material Selection

Unique design principles required

High robustness required off thedevice

Aesthetics also assume higher

importance Opportunities are created therefore

for engineering plastics in theseapplications


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European Markets for Plastics in Medical DevicesStrong Growth Prospects

Revenues forecast to grow at a CAGR of 6.2% in the period 2008-15


Plastics in Medical Devices: Volume and Revenue

Forecasts (Europe), 2005-2015

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

kt

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

M

illio

n


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Plastics in Medical Devices Market: For Plastics Suppliers DevelopingRelationships with Key End User Groups is Crucial to Success

Note: companynames are intended

as examples onlyand do not represent

real relationships

LyondellBasell

BoehringerIngelheim

Gerresheimer

Wilden

Polymer Suppliers

Compounding

Tier 1 Component Producers

Pharma Companies


RTP Compounding

Direct supply isthe mostpreferred route

High influence onmaterial selectionand often specifymaterials to beused


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Plastics in Medical Packaging:The Pharmaceutical Blisters Market Excerpt

Key Market Segments

Containers Vials & Ampoules

Blister Packs Sachets & Strips Container Tubes Pre-fillable Syringes

2008 2014 and beyond

KeyGrowthDrive

rs

Blister MarketGrowth

IncreasingBarrier

Requirements

Increasing

Regulations for

Compliance

Increasing

Efforts in

Drug

Compliance

Increase

in Calendared

Smart

PackagingGrowth in

Anti-

Counterfeiting

Efforts

Growth inCombination

Drugs

Cost Efficiency

of High

Volume

ContainersRestraintsRestraintsRestraintsRestraints

DriversDriversDriversDrivers

The Pharmaceutical Blisters Market Example

Strong Drivers for Growth


The pharmaceutical

blisters market isexpected to grow at aCAGR of 6.6% in the

period 2008-14

Source: MediSeal


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Frost & Sullivan Studies in the Area

Plastics in Medical Devices Medical Packaging

European Markets for Plastics inMedical Devices M348 - Feb, 09

U.S. Markets for Plastics in MedicalDevices N540 Apr, 09

U.S. Polymers in Medical Tubingsand Catheters N498 Jan, 09

Western European Medical Silicones

Markets M04A Nov, 06

European Markets for PharmaPackaging M137 Apr, 09

Materials for Medical Packaging TI D0E9 Dec, 07

End Market Studies of Interest Medical Devices IRG

US Infusion Pumps Market N3A5 - Feb, 09

European Insulin Delivery Devices Market M2CD Oct, 08

Others..


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Chemical Excipients for the Pharmaceutical Industry

Product Segmentation


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Pharmaceutical trends with Respect to Chemicals theexpected shift

PrePre

20052005

Blockbuster Model

20152015

Niche Drugs and R&D

20202020

Integration & Supply Chain

Opportunitiesin the Global

PharmaMarket


New opportunities in the global pharmaceutical market will appear asthe business and market models are evolving.

Liposomal technologies have the potential to increase the effectiveness

of compounds especially in the anti-cancer, neurological and anti-fungaldrug areas.

By 2015 opportunities willbe more prominent in nichedrugs and research and

development. By 2020 integrated

packages of products andservices will focus on patientmonitoring & compliance.

Integration of pharma,

diagnostics, medical devices,patient monitoring and

healthcare IT.


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Chemical Excipients - Main Product Types

Sweeteners

Flavourants &

Colourants

Disintegrants

Binders & Fillers

Preservatives &

Antioxidants

Glidants &Lubricants

Coatings

Excipients


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Major Challenges

The global adoption of Current Good Manufacturing Practices (cGMPs) is themajor challenge for this industry representing the required total commitment of a

company to a set of regulations, codes, and guidelines for the highest possible

quality in manufacture of drugs, medical devices, diagnostic products, foodproducts and Active Pharmaceutical Ingredients (APIs).

Source: Colorcon

Asian companies are trying to incorporate

cGMPs with various degrees of success.

Since 2004, several blockbuster drugs have

lost patent protection and this trend isexpected to become more prominent up to2011.

The active promotion of generics as a high-quality low-expense alternative is expected to

widen the market base for these products.

Source: Innercap Technologies


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Major Drivers

The fastest growing region is Asia, due to its growing economy, andcontinued improvement in the health care system.

The changing attitude of pharmaceutical industry towards excipientsconsidering them more than just inactive ingredients but crucial in improving the

performance of the end-product (medicinal drug). The outsourcing of services in the

pharmaceutical industry is growing. The reasonsinclude the declining investments in research anddevelopment (R&D), increasing generic

penetration, and the growing development costs.

Modern contract manufacturing organisations(CMOs) offer a wide range of services ranging frompre-clinical development to commercial batch

manufacturing to active/non-active manufacturing,as well as packaging and distribution.

Smooth delivery of a consistent dosage over time is the objective, withthe need for fewer administrations, optimal use of the delivered drug, and

increased patient compliance with the treatment programme.


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The global pharmaceutical excipients market will performbetter than other chemicals markets

The downturn in growth is expected to last throughout 2009 and 2010affecting at a different degree different regions.


The market is expected to

return to previous level ofactivities and growth from2011.

Even amidst the currentchallenging economic climate

the market for pharmaceuticalexcipients will perform betterthan other chemicals markets.

The CAGR of the period

2009-2015 will be 3.3%.


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Technologically advanced excipients and environmentally friendlyproducts will grow faster than commoditised excipients

The Global Pharmaceutical Excipients market is valued at $2.28 billion andwas divided among the following excipients market segments as shown below.

The market for pharmaceutical excipients will perform better than other chemicals

markets.

Binders represent the largest market segment, albeit mostly includingcommoditised products.

Disintegrants are expected toexhibit a CAGR of 4.6% duringthe period 2009-2015.

The market for controlled-release pharmaceuticals isgrowing rapidly with companiesincreasingly turning to drugdelivery technologies as a means

of expanding product lifecycles,enhancing drug efficacy andmaximizing revenues.


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Major Industry Participants

Pharmaceutical Excipients - Materials for Medical Applications


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Conclusion

The healthcare sector (medical & pharmaceutical) continues to provide

opportunities for innovative companies, even in the current economic scenario Companies willing to enter/strengthen their position in the market will however

have to invest in developing the R&D capabilities, and also strong business

development and technical service teams to cater to this segment

In the pharmaceuticals segment, industry participants need to forge business

relationships with generics manufacturers and align accordingly their distributionnetworks.

Individual markets researched by Frost & Sullivan recently including theplastics in medical devices and packaging and the global pharmaceuticalexcipients are all showing excellent potential for market participants


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Next Steps

Register for Frost & Sullivans Growth Opportunity Newsletter and keepabreast of innovative growth opportunities(www.frost.com/news)

Register for the next Chairmans Series on Growth:(www.frost.com/growthEU)

Join us at our 3rd Annual Customer Contact Executive MindXchange (June2009, Europe)

Join us in London on 19 20 May at Growth, Innovation and Leadership2009: A Frost & Sullivan Global Congress on Corporate Growth Event(www.frost.com/giluk)

Request a proposal for a Growth Partnership Service to support you and yourteam to accelerate the growth of your company.


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For Additional Information

Medical & Pharmaceutical Trends Impacting the Chemicals and Materials Industry

Steve LeeStrategic Account Manager

Chemicals, Materials and Food, Asia Pacific(65) 6890 [email protected]

Documents

Medical & Pharmaceutical Trends Impacting the Chemicals and Materials Industry - Feb09