Editor’s Note: Ed Price, President of PCI Synthesis, Inc. (www.pcisynthesis.com), a manufacturer of new chemical entities (NCEs), generic active pharmaceutical ingredients (APIs), and other specialty chemical products based within the Boston area life science cluster, issues an annual list of trends that he feels will continue to affect the emerging biotech and generic drug industries in 2015:

· Drug development, including generics, costs more and takes longer. It can take 10 years and more than $2.5 billion to get a drug to market, and more than five years to get a generic drug approved. That’s due both to new regulatory hurdles as well as to targeting increasingly complex diseases that require equally complex APIs. Generics have a 50 percent chance of getting approved; and even if approved, several other competing generics could hit the market simultaneously. Expect prices to continue to rise to offset greater risk.

· GDUFA (the Generic Drug User Fee Amendments) still won’t speed approvals. The backlog is so severe — the Abbreviated New Drug Application (ANDA) backlog alone exceeds 2,800 applications — that the goal of the FDA’s Office of Generic Drugs (OGD) is to act on them by 2017. Meanwhile, GDUFA seems better at raising fees for applications and Drug Master Files (DMFs), which continue to squeeze smaller companies, increases risk, stifle innovation and increase prices for generics.
 
· Increased inspections of international facilities still must make inroads into China. There was an increase this year in the number of inspections of Indian drug and API manufacturers, and PCI expects that to continue in 2015. However, the FDA still won’t be able to conduct an adequate number of foreign inspections. China continues to be a problem because the Chinese government essentially continues to block FDA inspections.

· The barriers to entry favor big pharma over small biotechs. Facility fees that can reach $220,000 annually represent a significant barrier for small firms, which typically lack enough products to amortize the necessary investments. The result: More manufacturers will follow the lead of Ben Venue Laboratories and Hospira and will get out the business while major players look to product or corporate acquisitions as patent-cliff protection. With approvals so backed up, biotechs need to build a business case that the additional wait until after 2017 is worth the investment.

· Recruiting continues to be a big issue as required skill sets evolve. To meet the demands of a rapidly shifting industry, companies need employees whose education and skills equip them to be productive in today’s environment. Companies need to support and encourage employees and prospective employees to continue to take coursework that keeps their skills current.

· Demand for U.S. manufacturing will increase. Wage inflation in India and China that continues to jump, increased facility costs to meet FDA inspections, and different cultural expectations that led to bribery investigations are all helping biotechs to consider bringing back work to U.S. CMOs. Perhaps reflecting this trend, Boston-area real estate available for lab space has tightened, with vacancy rates below 10 percent, according to Transwestern RBJ report.
 
This is an industry that knows extremes: We’re seeing a biotech bubble at the same time we’re seeing companies squeezed out by rising costs and fees necessary to just stay in business. Pressures, including regulatory and dwindling competition, are driving price increases among generics while at the same time, there are drug shortages. We’ve got increased regulatory scrutiny of U.S. facilities while FDA inspections are being blocked in China. Through it all, we help our clients prepare and manage for the future — one made more uncertain in 2015 given likely changes to our healthcare system under new Republican majorities.”