1. APIs – global business developments Gian Mario Baccalini EFCG Board Member, Chairman of EFCG Pharma Business Committee President, B&P Development Srl, Italy EFCG Press Conference, 9° October 2012, CPhI Madrid

2. New Legislation affecting APIs Global Business Developments Europe: Falsified Medicines Directive (FMD), 2011/62/EU 1 st July, 2011 USA: Generic Drug User Fee Act (GDUFA) 1 st October, 2012

3. The Falsified Medicines Directive (FMD) 2011/62/EU All EU countries are working on the transposition into national rules of the FMD within 18/24 months from its publication in the Official Journal (1st July, 2011) Some countries judge the Directive too strict and others too lenient (  a health risk for EU citizens!)

4. Features of the European API manufacturers Characterized by a high level of competence in fine chemistry: –Chemical synthesis, fermentation, purification and separation –Development in new technologies (enzymatic reactions, chiral chemistry, green chemistry, continuous flow chemistry) –Many reaction steps –Flexible multi-purpose plants and top-level dedicated equipment –High technology plants with reference to process and engineering, and EHSQ systems –Expertise in custom manufacturing activities with multi-national pharmaceutical companies (NCE, APIs, advanced intermediates), as a result of consolidated image of quality and reliability.

5. Features of the European API manufacturers Employ a range of skilled, qualified & experienced staff for:  Early assessment of market opportunities  All technical (incl. ESHQ) management requirements  Handling Intellectual Property Rights (e.g., patent issues)  Production compliance with Good Manufacturing Practices on the basis of inspections performed by Regulatory Authorities

6. Where do the European manufacturers stand?  APIs market is more and more a worldwide business, integrated in the supply chain  Manufacturers of APIs give more value to their production towards the dosage form  Companies increase their size  Manufacturers in new countries put more pressure on the market, for instance: Turkey, Eastern Europe, Middle East  Opportunities and challenges of selling APIs to BRICs countries As we are in a global market, we need to establish a global strategy

7. Some figures APIs:  Word market APIs: 32.0 billion US $  European APIs production: 12.0 billion US $  Italian market share APIs worldwide: 11% Activities of European manufacturing:  50% custom manufacturing  50% generic medicines

8. Present legislative situation  The current Directive covering human medicines does NOT ensure that the APIs used in EU comply with European GMP wherever they are made  Mandatory inspections of EU API sites are performed by EU Regulatory Authorities but there are no mandatory inspections of non-EU API sites  Over 70% of all APIs sold in EU now come from non-EU sites

9. Future API legislative situation  Evidence of illegal activities amongst APIs manufacturers in non-EU countries, especially China and India BUT...  The FMD Directive, designed to stop illegal activities does NOT require EU Regulatory Authorities to perform mandatory inspections of non-EU APIs production sites for compliance with EU standards  Instead, it relies on the EU Market Authorisation Holder to very this  Imported preparations/medicines entering the EU containing APIs from non-EU sources are to be even more leniently regulated

10. EFCG Proposals EFCG proposes global harmonization of the rules affecting the global market:  Mandatory inspections  Mutual Recognition Agreements (MRAs) It is important that the on-going pilot inspection programs between Regulatory Authorities result in MRAs.

11. EFCG Position Paper EFCG latest position paper awaits Board approval on 11° October, entitled: “ To harmonize the rules in order to guarantee the safety of pharmaceutical products and the citizen’s health. Why are mandatory inspections needed?” Its purpose is to inform all API stakeholders of EFCG’s case for mandatory inspections via an MRA approach performed by Regulatory Authorities.

12. FMD = EU Product Shortages?  Asian API manufacturers supply ~70% of the EU market since their low prices forced EU API manufacturers to stop making lower cost APIs  Some fear the FMD could result in product shortages until Asian suppliers meet EU GMP manufacturing standards  An alternative supply could be made available from EU manufacturers, especially those who used to make these APIs, provided the Regulatory Authorities fast-track the necesssary approvals.

13. Conclusion The implementation of mandatory inspections, via an MRA approach, is a relatively small price to pay to guarantee the quality of API meets the EU standard, irrespective of its global source, for the benefit of the health of the EU citizen and of the EU API manufacturing industry.

14. Thank you