ingapore’s pharmaceuticals manufacturing sector has continued to hold its own over the years in spite of increasing competition from bigger countries in Asia, such as China and India.
In 2019, pharmaceutical manufacturing output rose 3% to S$21.90 billion, raising the overall performance of the biomedical cluster to a new record output of S$36.27 billion. The medical technology component in the cluster was 7.9% higher at S$14.37 billion (39.6% of cluster total).
Industry leaders such as Pfizer, Novartis, Sanofi, AbbVie and Amgen have global manufacturing hubs in Singapore producing a wide range of products including Active Pharmaceutical Ingredients (APIs), drug products and biologics drug substances.
As Covid-19 tips the Singapore economy into its deepest recession in its 55-year history, pharmaceutical manufacturing has defied the odds by posting strong gains. In the first half of 2020, Singapore’s pharmaceutical manufacturing output surged 35.8%, lifting the biomedical cluster’s output by 26.6% over the comparable period in 2019.
Superlative gains were clocked in March and April when higher production of pharmaceuticals, including APIs and biological products, saw a jump of 126.6% and 141% respectively.
In June, the pharmaceuticals sector helped to defy full-year contraction forecast for non-oil domestic exports (NODX), when together with electronics it lifted the month’s total by 16% year-on-year, according to trade agency Enterprise Singapore (ESG).
The Republic’s drug development effort received added boost with the launch of two new platforms in June 2019 to bridge the gap between basic science research and pharmaceutical enterprises, and catalyse collaboration across industry, research institutes, academia, and the hospitals.
Based in Biopolis, the Experimental Drug Development Centre (EDDC) serves as a platform for drug discovery and development to channel high potential drug candidates toward realising commercial outcomes leveraging on Singapore’s competitive advantage in combining biomedical sciences, clinical medicine and engineering. Formed following the integration of three existing entities in A*STAR, the centre is well placed to differentiate itself by focusing on novel therapeutics for Asian-prevalent diseases.
Helmed by EDDC, the Target Translation Consortium brings together A*STAR, Duke-NUS Medical School, Lee Kong Chian School of Medicine, Nanyang Technological University, National Healthcare Group, National University of Singapore, National University Health System, and SingHealth to carry out early-stage drug research. This collaborative approach between academia, healthcare institutions and government agencies are an important competitive edge for Singapore in an increasingly sophisticated drug discovery and development space.
To complement these two new platforms a grant scheme has been introduced to fund early-stage projects up to S$750,000. Called the Singapore Therapeutics Development Review, it consolidates three separate schemes by A*STAR, the National Health Innovation Centre Singapore as well as the Singapore–MIT Alliance for Research and Technology, ensuring projects with high potential are adequately funded without undue delay, strengthening the pipeline of home-grown drug candidates.
Covid-19 feeds into Singapore’s strength in research. As the search for diagnostics, vaccines and therapeutics continues in earnest, Singapore has marshalled its R&D capability to combat Covid-19, leveraging its multi-disciplinary and collaborative approach to research on infectious diseases.
Said Goh Wan Yee, senior vice-president of healthcare at the Economic Development Board, Singapore has a strong base of research and development and a "compelling value proposition" for the manufacture of pharmaceuticals and medical technology products. "A number of companies are interested to collaborate with Singapore, for instance in clinical trials.”
Together with Tan Tock Seng Hospital, A*STAR has developed a diagnostic kit, Fortitude Kit 2.0, to accurately detect the presence of the SARS-CoV-2 virus, which causes Covid-19. It has been implemented in 13 Singapore hospitals and labs, public and private and deployed to more than 20 countries globally.
In mid-August, Duke-NUS Medical School and U.S. pharmaceutical company Arcturus Therapeutics began early-stage clinical trial of their Lunar-Cov19 vaccine to determine immune response and its safety. If everything goes smoothly according to plan, results from the Phase I/II trial could be available before November.
"As one of the vaccine candidates in the world that has reached the clinical evaluation stage, this trial is definitely significant for Singapore," said Associate Professor Jenny Low, deputy clinical and scientific director of SingHealth Investigational Medicine Unit, which is administering the trial for the vaccine.
"If the vaccine is efficacious, Singapore would have played a key role in the global search for a Covid-19 vaccine, and hopefully be able to help find a solution to the current pandemic," Prof Low told The Straits Times.
To date, 26 vaccine candidates worldwide either have been tested on humans or have received approval for testing, while another 139 are still at a pre-clinical phase.
Another immune system protein (TY027) is also starting its final clinic test phase. Developed by Singapore-based biotechnology company Tychan, the monoclonal antibody would be tested on recently diagnosed Covid-19 patients. It would take a few months before the vaccine could be approved for treatment.
Mixed results from pharma industry majors
In 2019, performance by major international pharmaceutical companies with manufacturing sites in Singapore was mixed.
Swiss drug maker Roche posted a strong set of results. Group sales rose 8.1% to CHF61.5 billion (US$63 billion) led by its pharmaceutical division. Pharma sales surged 11% to CHF 48.5 billion on demand for recently launched medicines, led by multiple sclerosis medicine Ocrevus, new haemophilia treatment Hemlibra, and cancer drugs Tecentriq and Perjeta.
Net income jumped 30% to CHF14.11 billion due to a healthy underlying performance as well as a goodwill impairment booked in the year prior.
At Pfizer, revenues eased 4% to US$51.8 billion in 2019 while net income rose by a sharper 40.6% to US$16.3 billion. While its top sellers - pneumonia vaccine Prevnar 13, cancer treatment Ibrance and blood thinner Eliquis, which it produces in partnership with Bristol-Myers Squibb - made strong gains, sales from older medicines fared poorly against competition from generics.
While Pfizer has struggled in recent years, the company expects a change for the better after it has streamlined its operation and made some strategic acquisitions. In July 2019, Pfizer bolstered its oncology pipeline with the acquisition of Array BioPharma for US$11.2 billion and expanded its rare disease portfolio with the purchase of Swiss based Therachon for US$340 million up front with another US$470 million in additional payments contingent on the achievement of key milestones.
Novartis turned in a strong set of results with revenue growth, margin expansion and breakthrough in innovation. Revenue rose 6% to US$47.4 billion in 2019 on strong sales while net income fell 7% to US$11.7 billion compared with the previous year, which had included a US$7 billion net gain from the sale of the consumer healthcare joint venture to GSK.
During the year, Novartis acquired Takeda Pharmaceutical’s dry-eye treatment Xiidra in a deal worth up to US$5.3 billion - US$3.4 billion upfront for global rights to the drug and up to US$1.9 billion in milestone payments which Takeda is eligible to receive upon the achievement of specified commercialisation.
The Swiss company also launched five all-new medicines during the financial year.
Covid-19 impacts half year results
The pharmaceutical industry has not been spared the contagion of the coronavirus on businesses everywhere. Companies’ first-half performance reflect the virus’ damaging impact as amid the pandemic, fewer doctor visits were made, and medical treatments were delayed.
Weighed down by the twin impact of the Covid-19 pandemic and strong Swiss franc, Roche’s sales eased 4% to CHF29.3 billion while net income fell 5% to CHF8.5 billion.
While the Swiss manufacturer benefitted from increased sales of diagnostic tests for Covid-19, routine testing fell with fewer hospitalisations and out-patient visits hitting sales of Ocrevus, Hemlibra, Lucentis and MabThera/Rituxan.
Roche had in March received emergency approval from US regulators for a new and much faster test for diagnosing the then rapidly spreading Covid-19. Using fully-automated equipment the diagnostic could churn out more results much faster than other tests available.
Having spun off its consumer health care business in 2019, Pfizer’s revenues dropped by a sharper 10% in the first half to US$23.8 billion while net income tumbled 24% to US$6.83 billion, The coronavirus also shaved about US$500 million, or 4% off its second-quarter revenue, with fewer new prescriptions and vaccinations as more people worked from home.
In the fourth week of July, it was announced that the U.S. government would pay Pfizer and BioNTech US$1.95 billion upon the receipt of the first 100 million doses of a Covid-19 vaccine the two companies were developing after they were approved or authorised by the Food and Drug Administration (FDA). The U.S. government also had an option to acquire up to an additional 500 million doses. A week later, Pfizer and its vaccine development collaborator announced that they were starting a global (except for China) Phase 2/3 safety and efficacy clinical study. This came after extensive review of preclinical and clinical data from Phase 1/2 clinical trials.
Norvatis bucked the trend by posting gains in the first half with a 3% increase in net sales to US$26.6 billion and 2 % gain in net income to US$4 billion. But growth was uneven. A 11% sales spike in the first quarter as customers stocked up on medicine just as the pandemic took hold, was followed by a 1% dip in the second quarter.
Earlier around mid-July, the company had announced that it would make available “zero profit” 15 generic and OTC medicines from Sandoz division “to address urgent unmet needs of low- and lower-middle-income countries to treat patients with COVID-19 symptoms”.
With a second wave of infections from mid-year in the U.S, South America and Europe, there’s no telling how life science companies will be impacted for the rest of 2020.
Global healthcare spending continues to climb
In its latest report “Global Medicine Spending and Usage Trends: Outlook to 2024”, the IQVIA Institute for Human Data Science projects that global medicine spending will increase at 2–5% annually and exceed US$1.1 trillion in 2024.
With their sizeable population, pharmerging markets will drive industry growth. Treatment areas identified as global health priorities, such as diabetes and cardiovascular diseases, have seen significant increased use of medicines.
Manufacturer net prices are expected to ease as countries are constrained by budgets and are negotiating aggressively with drug manufacturers. Any increase will be small – by about 2% – well below historic levels.
Many drugs also are expected to lose patent protection or some other form of exclusivity over the next five years.
While more drugs will be made available with the healthy R&D pipeline, they are not expanding the market fast enough to mitigate the impact of the price reductions and patent expirations.
Another significant trend, said the report, is the adoption of specialty medicines for the treatment of chronic, complex or rare diseases. By 2024, specialty medicines will account for 40% of global spending on medicines, up from about 36%.
The future is bright but will come with challenges. Said Murray Aitken, IQVIA senior vice president and executive director, “The number of daily doses of drugs that are consumed globally is currently at about 1.8 trillion doses, up from 1.6 trillion five years ago. The volume is rising fastest in those drugs used to treat noncommunicable diseases, which includes cardiovascular disease, diabetes, respiratory disorders, and cancer.”
new drug approvals
Forty-eight drugs were approved by the FDA’s Center for Drug Evaluation and Research’s (CDER) in 2019, making it another strong year for innovation and advances. Though lower than the 59 approved in 2018, it is still high by historical standards, bringing the total approved over three years from 2017 to 2019, to 153, making it the most productive period for drug companies in over two decades.
Oncology represented a big chunk of CDER approvals, with new drugs for prostate, bladder, breast, lung and bone marrow cancers, but several other disease areas also picked up steam.
“The quality of the drugs over the last decade or so has steadily improved since the depths of the innovation crisis 10 to 12 years ago,” Bernard Munos, a senior fellow at FasterCures, a drug research think tank, told Chemical and Engineering News. “We’re seeing stuff that frankly would have looked like science fiction back then.”
As in previous years, 2019 saw advancements in the approval of biosimilars. CDER approved 10 new biosimilars, which will further help to create competition, increase patient access and potentially reduce the cost of important biological drug therapies. These new approvals can help patients suffering from a wide range of conditions, such as rheumatoid arthritis, plaque psoriasis, and a variety of cancers and blood disorders, including breast cancer, metastatic stomach cancer and metastatic colorectal cancer.
More M&As aimed at acquiring innovative therapies
Squeezed by the threat of new competition and the loss of patent protection for several top-selling medications, big pharma is on an acquisition trail for innovative therapies to boost revenue. In 2019, pharma M&A was one of the highest in recent years.
Together the three largest - Bristol-Myers Squibb for Celgene, AbbVie for Allergan, and Amgen for Celgene’s psoriasis drug Otezla - amounted to more than US$150 billion, with the US$74 billion Celgene takeover being one of the highest pharma deals on record.
Oncology and gene therapy, a promising approach to altering the genetic composition of cells to correct disease-causing mutations or to express proteins, are key factors driving M&As.
More deals are expected to be concluded going forward, though they may not be on the same scale as those in 2019, where the average M&A was US$16 billion, which attracted much scrutiny from antitrust watchdogs. Companies will probably go after "bolt-ons" like Amgen's US$13.4 billion purchase of Celgene's psoriasis drug Otezla or Sanofi's US$2.5 billion acquisition of Synthorx to bolster its immuno-oncology.
COVID-19 could reshape pharmaceutical supply chain
Although production and shipment in the first quarter of 2020 was not seriously affected, the pandemic had sparked concerns over the security of pharmaceutical supply chain. It has heightened concerns in some quarters over China’s domination of APIs and the need for rebalance to ensure supply security.
As far back as October 2019, the FDA’s Center for Drug Evaluation and Research in a House of Representatives subcommittee hearing on health had raised its concern about the U.S. dependence on China for API supply. Three months later, the European Fine Chemicals Group, an association representing API manufacturers, urged the European Commission to support measures to help relocate pharma chemical production back to Europe and not to rely on any one region for essential raw materials and APIs.
Asia has come to dominate the pharma supply chain in recent years. Besides China’s increasing volumes of raw materials production, the shift of production of key generic drugs to India has also become an issue. India is the largest provider of generic drugs globally, supplying 40% of global demand.
This has triggered proposals in the U.S. for a “Buy American” executive order for purchases of APIs and finished drugs from China to end by 2022. To increase its self-sufficiency, the U.S. government in July 2020 extended US$765 million loans to Kodak to facilitate its shift from photography film into drug manufacturing.
Kodak Pharmaceuticals will produce pharmaceutical components for drugs that the FDA declares as being essential but in chronic national shortage and requires leveraging "vast infrastructure, deep expertise in chemicals manufacturing, and heritage of innovation and quality", said Kodak’s executive chair Jim Continenza. It would take three or four years to reach large-scale production, he added.
Post-pandemic, we can expect life science companies to come under close scrutiny by governments as they assess the path ahead, with possible new regulations requiring them to come up with plans to address vulnerabilities including dependency on limited supply sites and restructuring supply networks.
Singapore - Biotech Location of the Future
When Singapore embarked on its biomedical journey in 2000 its vision was clear: to invest in basic science, develop drugs and find cures for diseases. There were detractors even among the advisers, questioning how Singapore could succeed.
It proved to be a far-sighted move. Through comprehensive government policies and processes, public investments in R&D and sound track record of quality and regulatory compliance, today Singapore is a leading biomedical science hub for manufacturing, R&D and commercial operations in the region.
The biomedical ecosystem continues to expand. Danish life science investor Novo Holdings set up an Asia office in Singapore in August 2020 with its focus on three fields – to make investments in leading life sciences companies, provide expansion capital to high-growth life science firms, and invest in venture stage biotech and medical technology operations.
Existing companies are also continuing to ramp up their presence. In October 2019, GSK opened its Asian headquarters in Singapore, 60 years after it established a presence here. Based in Rochester Park, GSK Asia House is working alongside GSK's US hub to support its global headquarters in the UK in managing commercial activities around the world.
Since its first facility in Singapore in 1959, GSK has invested more than US$2.5 billion in the city-state. It now has manufacturing sites in Quality Road and Jurong, as well as a vaccine manufacturing facility in Tuas employing around 1,600 people.
In its inaugural ranking, news and foreign direct investment publication fDi Intelligence named Singapore as the Biotech Location of the Future, ahead of Dublin and San Francisco, citing its impressive record of job creation and intellectual property protection.
To stay ahead of the game, pharmaceutical plants will have to evolve “from meeting minimum manufacturing quality threshold to achieving quality management maturity” along the lines of what the FDA has in mind.
It will include using new technologies such as continuous manufacturing where APIs or finished products are produced in a continuous stream.
A report issued by the FDA on 2 June 2020 has encouraged the industry to invest in Mature Quality Management Systems and Advanced Manufacturing Technology.
The report on “Covid-19 and Beyond: Oversight of the FDA’s Foreign Drug Manufacturing Inspection Process” before the U.S. Senate Committee on Finance said “it is critical that industry evolve from meeting the minimum manufacturing quality threshold to achieving quality management maturity”.
The Committee said that some pharma firms have been slow to implement “robust, mature quality systems …to improve the quality and reliability of drug supply”.
It had previously recommended developing and implementing a rating system for quality management maturity that is based on objective criteria that “could enable purchasers to compare differences in quality and choose whether to reward more reliable manufacturers financially and with increased market share”.
FDA also wants to see manufacturers invest in advanced manufacturing technology to improve their processes and, therefore, better quality output.
As suppliers of raw materials and APIs, this is something pharmaceutical manufacturers in Singapore, many of which are trusted international brands, cannot afford to ignore.