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The Biggest Problems with Pharmaceutical Raw Materials Market, And How You Can Fix It

Nov 21, 2017

If you were to ever glance on the packaging of medicines, it would enlist the chemicals and composition used to manufacture that drug. However, chemicals are not the only raw material used in the pharmaceutical manufacturing process. Pharmaceutical raw materials also include natural raw materials like leaves, flowers, fruits, fungi, and seeds, in addition to synthetic materials and biologics. Pharmaceutical raw materials are classified into three groups namely active pharmaceutical ingredients (APIs), intermediaries, and additives. The pharmaceutical industry relies heavily on chemical suppliers and biologics manufacturers for their pharmaceutical supplies. The pharmaceutical industry has been witnessing stable growth with higher growth prospects in emerging regions such as the APAC, which is expected to grow at a CAGR of nearly 9%-10% by 2021. (SpendEdge Procurement Market Intelligence Report – Bulk Drug Raw Materials Market) Although the growth prospects look promising for the pharmaceutical industry, suppliers of pharmaceutical raw materials have been facing tough challenges that affect their growth.

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Top Challenges in the Pharmaceutical Raw Materials Market

Threat from Counterfeit Products

Falsified medicines or counterfeit drug products can easily enter the pharma supply chain across the world. Counterfeit drugs, usually contain low-quality APIs, wrong ingredient, or even the incorrect dosages. Such counterfeit products are then fraudulently mislabeled without compliance with intellectual property rights and can cause side-effects and other complexities when consumed. Pharmaceutical raw materials manufacturers will be negatively affected by such acts. As a result, medicine surveillance services and fake -identification technologies such as mass spectrometry (MS), infra-red (FTIR) spectroscopy, nuclear magnetic resonance (NMR) spectroscopy, Raman spectroscopy, and gas chromatography-mass spectrometry (GC-MS) are gaining prominence.

Increase in Trade Taxes

Manufacturing hubs of the final drug products are located in the primary markets such as the US and Europe. However, these companies procure pharmaceutical raw materials from emerging countries like Brazil, China, India, and Israel. The problem arises when drug manufacturers have to incur additional expenses in the form of trade taxes and customs expenses. To promote “Made in America” movement, the Trump administration has slapped a double-digit tariff for companies outsourcing drug manufacturing activities. Such regulations will discourage drug manufacturers to obtain pharmaceutical raw materials at a lower cost.

Increase in Regulatory Delays

Drugs and medicines being a sensitive matter regarding public health, are heavily regulated by governments and medical associations. Pharmaceutical raw materials suppliers, therefore, must obtain approval from regulatory bodies such as FDA and EMA to bring the final products to the market. Delays in the approval process can slow down the time-to-market, and risk expiry of patent validity along with other operational issues. Such delays severely affect the drug manufacturers profitability, thereby hindering the overall growth of the market.

Read more about the top challenges in the pharmaceutical raw materials market along with competitive landscape analysis, contract and SLA terms, pricing strategies, sourcing strategy, and procurement market intelligence in SpendEdge’s upcoming report on the global beef market.

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