2009 Economic Outlook For The Global Food And Beverage Market Apr09
Medical & Pharmaceutical Trends Impacting The Chemicals And Materials Industry Feb09
1. 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
2. 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
2
4. The Integrated Industry Perspective – Healthcare
represents a crucial downstream end-user
Coatings,
Plastics
Adhesives Performance Specialty
and Packaging
and Materials Chemicals
Polymers
Sealants
Aerospace Aerospace Automotive & Automotive & Automotive &
& Defense & Defense Transportation Transportation Transportation
Automotive & Automotive &
Electronics Environment Electronics
Transportation Transportation
Electronics Electronics Healthcare Healthcare Environment
Healthcare Healthcare Food Construction Energy
Construction Construction Healthcare
Source: Frost & Sullivan
Source: Frost & Sullivan
4
5. The Medical and Pharmaceutical end-use markets for
Materials and Chemicals
Healthcare
Medical & Pharmaceutical
Materials in Chemicals Excipients for
Healthcare Pharmaceutical Drugs
Materials in Materials in
Medical Devices Medical
Packaging
5
7. Impact on Sectors of the Economy
Market Indices as an Indicator for Industry Prospects
• The effects of the downturn has disproportionately affected different segments of the
economy
• The healthcare sector has outperformed the broader market
US Market Indices
16,000
14,000
Indices value (units)
12,000
10,000
8,000 Healthcare
Indices, while
6,000 declining,
have still
4,000 outperformed
Dec-07 Feb-08 Mar-08 May-08 Jul-08 Aug-08 Oct-08 Nov-08 the broader
Dow Jones Industrial Average NasDaq Biotech market
NasDaq Financials NASDAQ Transportation
S&P HEALTHCARE INDEX PHLX SEMICONDUCTOR SECTOR INDEX
• This implies that investors expect that, while the healthcare sector will be
affected by the downturn, it will still out-perform the general economy
7
8. Winners and Losers…
High Elite: Companies which have
Elite Winners high cash reserves, but
Big Pharma unable to do much to improve
their business because of the
unfavorable situation
Big imaging
companies Winners: Companies which
Financial Leverage
Big device have high cash reserves and
companies
are able to leverage this
Big IVD situation successfully through
Losers Opportunists strategies like M&A /
Small device alliances.
companies
Discretionary product
manufacturers Generic Opportunists: Companies
manufacturers which have the best
Home care
opportunity to grow during the
companies economic downturn
Low Losers: Companies likely to
High Business risks in economic downturn Low loose their revenues due to
economic downturn
Source: Frost & Sullivan
8
9. What is the way forward …?
• Medical devices becomes a more attractive segment for plastics
suppliers 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 growth
in 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 for
their medical products are
well placed to grow in this
segment
9
10. What is the way forward …? (contd)
• As the era of blockbuster drugs continues to approach its end, the
smaller and specialist companies are better placed for survival.
• The pharmaceutical industry is more apprehensive about the upcoming
expirations of patented drugs than the global economic contraction.
• The expiration of patents means that manufacturers of excipients need to
be prepared to do business with a larger number of companies in a wider
geographical spread and at a more cost-driven supply basis.
• Strategic partnerships and
alliances will become more “In over 23 years in the industry,
crucial than ever. I've never really seen pharma
• Even amidst the current sales being affected by an
challenging economic climate economic downturn in the
the market for pharmaceutical western world. We're probably
excipients will perform better one of the industries that will be
than other chemicals markets affected the last and the least.quot;
with a forecast CAGR – CEO of one of world’s top 30
between 2009-2015 of 3.3%. pharma companies.
10
11. Key Medical & Pharmaceutical Drivers and Trends
“Doctor, I feel a pain in…”
11
12. Pharmaceutical trends with Respect to Chemicals &
Materials – what lies ahead…
• In 2000, 10% (606 million) of the global population was aged 60+. By 2050 this
will be more than 21% (2 billion).
• The aging of population and the need for more medical devices and
sophisticated drugs will create undisputedly more demand for materials, active
ingredients and chemical excipients.
• There is increasing
competition from low-cost
manufacturers. These are
located in Asia, especially in
India and China, and are
continuously enlarging their
capacity while improving at
the same time the quality,
credibility and reliability.
Source: Frost & Sullivan
12
13. 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 chronic
disease by 2025 with cancer and respiratory diseases increasingly
affecting more people.
• 75% of people aged 60+ have
one chronic condition, while
50% have two or more
chronic conditions.
• Chronic diseases account
for more than 60% of all
health care spending.
Source: Frost & Sullivan
13
15. Market Segmentation
Plastics in Medical Devices
Plastics in Medical Devices
Polypropylene Polyethylene PVC Eng Plastics
• Syringes • Syringe Plungers • Catheters • Surgical
Equipment
• Labware • Labware • Medical Bags
• Sterilisation
• Medical Bags • Medical Bags • Administration
Trays
Sets
• Administration
• Medical Device
Sets
Housings
• Implants
15
16. Key Themes in the Performance Materials Industry
Trends of Specific Importance to the Medical Device Industry
Performance Materials Market: Impact of Key Industry Themes,
Performance Materials Market: Impact of Key Industry Themes,
2009
2009
10
10 Key selling points for
Security Conservation of
Security Conservation of engineering and high
Safety resources
Safety resources performance plastics
Market Impact
Market Impact
Performance
Performance
Lifestyle trends
Lifestyle trends Differentiation
5
Differentiation
5
Multiple Technical and Service
Multiple
functionalities Differentiation
functionalities
Sustainable
Sustainable
production
production
Expansion PVC Replacement
Expansion
0
0
0 5 Supply chain 10
0 5 Supply chain 10
Internal Impact
Internal Impact
Source: Frost & Sullivan
Source: Frost & Sullivan
Key Trends with High Impact on the Medical Devices Market
16
17. Key Themes in the Performance Materials Industry (Contd…)
Changing Lifestyle Trends
2005
Patient Driven
Secondary Care
• Available personalised healthcare
and choice
2010
Changes in the • Patient knowledge through multiple
Changes in for
demand the Primary Care channels
demand
healthcare for
healthcare
diagnostics
diagnostics
• Public pressure on government
2015 • One stop shop
Home Care/ Self
Testing • Consumer responsive providers,
products and services
Source: Frost & Sullivan
Implications for Material Selection
Demand Volume • Unique design principles required
• Affordability • High robustness required off the
device
• Waiting Lists
• Aesthetics also assume higher
• Public Anxiety importance
• Development of demand • Opportunities are created therefore
for engineering plastics in these
management policies and strategies applications
e.g. demand driven financing
17
18. European Markets for Plastics in Medical Devices
Strong 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
350.0 800.0
300.0 700.0
600.0
250.0
€ Million
500.0
200.0
kt
400.0
150.0
300.0
100.0
200.0
50.0 100.0
0.0 0.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: Frost & Sullivan
18
19. Plastics in Medical Devices Market: For Plastics Suppliers Developing
Relationships with Key End User Groups is Crucial to Success
Direct supply is
Polymer Suppliers LyondellBasell
the most
preferred route
Compounding RTP Compounding
Gerresheimer
Tier 1 Component Producers Wilden
High influence on
material selection
Pharma Companies and often specify
Boehringer materials to be
Ingelheim used
Note: company
names are intended Source: Frost & Sullivan
as examples only
and do not represent
real relationships
19
20. Plastics in Medical Packaging:
The Pharmaceutical Blisters Market Excerpt
Key Market Segments
The Pharmaceutical Blisters Market Example –
• Containers Strong Drivers for Growth
• Vials & Ampoules
• Blister Packs
• Sachets & Strips Blister Market
Cost Efficiency
• Container Tubes of High
Growth
• Pre-fillable Syringes Volume
Restraints Containers
Key Growth Drivers
Growth in
Combination
Drugs
Increase
Source: MediSeal in Calendared
Increasing Smart
Efforts in Packaging
Growth in
Drug
Anti-
The pharmaceutical Increasing Counterfeiting Compliance
blisters market is Regulations for Efforts
Increasing Compliance
Drivers
expected to grow at a Barrier
Requirements
CAGR of 6.6% in the
period 2008-14
2008 2014 and beyond
Source: Frost & Sullivan
20
21. Frost & Sullivan Studies in the Area
Plastics in Medical Devices Medical Packaging
• European Markets for Plastics in • European Markets for Pharma
Medical Devices – M348 - Feb, 09 Packaging – M137 – Apr, 09
• U.S. Markets for Plastics in Medical • Materials for Medical Packaging – TI
Devices – N540 – Apr, 09 – D0E9 – Dec, 07
• U.S. Polymers in Medical Tubings
and Catheters – N498 – Jan, 09
• Western European Medical Silicones
Markets – M04A – Nov, 06
End Market Studies of Interest – Medical Devices IRG
• US Infusion Pumps Market – N3A5 - Feb, 09
• European Insulin Delivery Devices Market – M2CD – Oct, 08
• Others……..
21
23. Pharmaceutical trends with Respect to Chemicals – the
expected shift
• New opportunities in the global pharmaceutical market will appear as
the 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-fungal
drug areas.
• By 2015 opportunities will Pre
2005
be more prominent in niche Blockbuster Model
drugs and research and
development. 2015
Opportunities
• By 2020 integrated in the Global Niche Drugs and R&D
Pharma
packages of products and Market
services will focus on patient 2020
monitoring & compliance. Integration & Supply Chain
• Integration of pharma,
diagnostics, medical devices,
Source: Frost & Sullivan
patient monitoring and
healthcare IT.
23
24. Introduction to Chemical Excipients for Pharmaceuticals
• Excipients are inactive ingredients used to formulate active ingredients
into finished dosage forms.
• Excipients are used to:
• provide a matrix in which the drug can be handled
• control rate of dosage
• aid in the processing of the drug delivery system during its
manufacture
• protect, support or enhance stability, bioavailability or patient
acceptability
• assist in product identification
• enhance any other attribute of the overall safety, effectiveness or
delivery of the drug during storage or use
• improve comfort when taking drug such ease of swallowing and better
taste
24
26. Major Challenges
• The global adoption of Current Good Manufacturing Practices (cGMPs) is the
major 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, food
products and Active Pharmaceutical Ingredients (APIs).
• Asian companies are trying to incorporate
cGMPs with various degrees of success.
• Since 2004, several blockbuster drugs have
lost patent protection and this trend is
expected to become more prominent up to
2011. Source: Colorcon
• 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
26
27. Major Drivers
• The fastest growing region is Asia, due to its growing economy, and
continued improvement in the health care system.
• The changing attitude of pharmaceutical industry towards excipients
considering 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 reasons
include the declining investments in research and
development (R&D), increasing generic
penetration, and the growing development costs.
• Modern contract manufacturing organisations
(CMOs) offer a wide range of services ranging from
pre-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, with
the need for fewer administrations, optimal use of the delivered drug, and
increased patient compliance with the treatment programme.
27
28. The global pharmaceutical excipients market will perform
better than other chemicals markets
• The downturn in growth is expected to last throughout 2009 and 2010
affecting at a different degree different regions.
• The market is expected to
return to previous level of
activities and growth from
2011.
• Even amidst the current
challenging economic climate
the market for pharmaceutical
excipients will perform better
than other chemicals markets.
• The CAGR of the period
2009-2015 will be 3.3%.
Source: Frost & Sullivan
28
29. Technologically advanced excipients and environmentally friendly
products will grow faster than commoditised excipients
• The Global Pharmaceutical Excipients market is valued at $2.28 billion and
was 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 including
commoditised products.
• Disintegrants are expected to
exhibit a CAGR of 4.6% during
the period 2009-2015.
• The market for controlled-
release pharmaceuticals is
growing rapidly with companies
increasingly turning to drug
delivery technologies as a means
of expanding product lifecycles,
enhancing drug efficacy and
maximizing revenues.
Source: Frost & Sullivan
29
31. 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 distribution
networks.
• Individual markets researched by Frost & Sullivan recently including the
plastics in medical devices and packaging and the global pharmaceutical
excipients are all showing excellent potential for market participants
31
32. Next Steps
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Join us at our 3rd Annual Customer Contact Executive MindXchange (June
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32
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34. For Additional Information
Steve Lee
Strategic Account Manager
Chemicals, Materials and Food, Asia Pacific
(65) 6890 0914
steve.lee@frost.com
Medical & Pharmaceutical Trends Impacting the Chemicals and Materials Industry
34
