THE INDUSTRY

PHARMACEUTICAL IN THE
Q.F. KETI YUDIT MARREROS HERRERA
The pharmaceutical sector is responsible for supplying medicines for the
preservation of human health and animal health.

The importance of this lies in its relationship with health care and increasing the
life expectancy of the population.
► In the last decade:
► The national production of medicines presented negative variations.
► The main cause is the increase in the import of pharmaceutical products.
► The internal trade of pharmaceutical products showed a growth of more than
50%, if we compare the sales made in 2014 with respect to 2010.
► Imports by the main subsidiaries of the largest international laboratories (Bayer,
Bristol-Myers, Pfizer, Roche, among the main ones).
► So much so that from 2009 to 2014 imports increased by 8% on average
annually.
• On the economic side, this sector is part of:

The national industry has large companies that supply the

local market and also send products to external markets,
even positioning themselves with recognized brands
outside the national territory.
The Pharmaceutical Industry plays an important role in the economy of a country
BECAUSE:
❖ It contributes to the health of its population through the production and marketing
of medicines, and this in turn is directly related to the well-being and better quality
of life of citizens.
❖ Job creation
Tax payment
❖ Highly profitable production unlike other sectors.
❖ In Peru, the industry generates an annual GDP value of 918 million new soles
(1.4% on average).
❖ It employs around 23 thousand formal workers directly and around 140 thousand
workers indirectly.
❖ While the pharmaceutical industry in Mexico represents 0.6% of GDP (2014); in
Colombia, 8.6% (2009); in Argentina, 1.8% (2013); and in Brazil, 3.0% (2012),
Sector Report of the Ministry of Production (2015).
The importance of the pharmaceutical industry:

• Generates a direct impact on the health of the population (through the

reduction of morbidity and mortality)

• In the state (through reducing the level of

hospitalizations)

• It is one of the most complex industries and has always been

questioned due to the high prices of the products.
 Types of medicines: According to their production:
• Innovators: Generic: with innovative medicines, since no
which are obtained by which are investment is incurred in research and
transnational companies. manufactured development processes.
These companies undertake when the Brand generics, which maintain their
research and development patent of condition of
processes with a high innovative generic products but are positioned through
investment for production; For products a brand by the proprietary laboratory. Fits
this reason, they are granted a expires, and, highlight that in the latter cluster HE
20-year patent right for the as such, have finds the Peruvian pharmaceutical industry,
generation of a new medicine the same which places its products
in the industry, after which active through brands
another laboratory can begin ingredient. known places.
to produce the same medicine These HE
but in a generic way. produce with
lower costs
in
comparison
(S) Main types of pharmaceutical products in the Peruvian market
(Number of unit types manufactured per year and percentage share)

20.
Product Number of units

Tablet 7,955 40.696

Injectable 4,325 22.196

Solution 1,851 9.496
Capsule 1,676 8.6%
Suspension 1,419 7.296

Cream 594 3.096

Ophthalmic solution 409 2.19
Ointment 274 1.496
Gel 201 1.09
Inhaler 155 0.89
Ovum 153 0.89
Dust 108 0.696
Lotion 91 0.59
Others 383 2 096
Total 19.394 100.026
Types of medications: According to their condition of sale:

• Popular or over-the-counter products, which can be purchased freely in

pharmaceutical sales establishments.
► Prescription products, otherwise, they could generate counterproductive effects on
consumers. These products have more complex forms of labeling, where their
boxes or packaging must specify the way in which they are distributed to the public.
 (e Participation of the main pharmaceutical industrial companies, 2014
Industrial company Stake
l 7th)
THE INDUSTRY PHARMACEUTICAL IN THE 1
► In the last decade: 4
The importance of the pharmaceutical industry: 7
Types of medicines: According to their production: 8
Types of medications: According to their condition of sale: 10
Q)Number of companies in the pharmaceutical industry 13
Productive process of pharmaceutical products 16
Raw material: 16
► Labor 18
Stages of the generation process medicines 19
INVESTIGATION AND DEVELOPMENT 25
Principal problem: 28
Health spending 33

Peru: Main occupations in the pharmaceutical industry, 2015

 Main occupation Distribution
Sales agents 41.08%
Operative technicians 15.71%
Administrative employees Inspectors 13.58%
Technicians in physical and chemical sciences 9.74%
Messengers Cleaners 5.49%

Chemicals 5.46%

Interns 3.34%

Doctors and professionals 3.27%

1.48%
0.86%
Q)Number of companies in the pharmaceutical industry
According to business stratum, 2014

2007 2014
No. of No. of
Size Stake (%) Stake (%)
companies companies

Microenterprise 284 79.3 282 77.0

Small company 44 12.3 50 13.7
Medium company 3 0.8 ■■
0.8
Big company 27 7.5 31 8.5
Total 358 100.0 366 100.0
 @ Leading pharmaceutical industrial companies, 2014

Business Products marketed Department

name
THE INDUSTRY PHARMACEUTICAL IN THE 1
► In the last decade: 4
The importance of the pharmaceutical industry: 7
Types of medicines: According to their production: 8
Types of medications: According to their condition of sale: 10
Q)Number of companies in the pharmaceutical industry 13
Productive process of pharmaceutical products 16
Raw material: 16
► Labor 18
Stages of the generation process medicines 19
INVESTIGATION AND DEVELOPMENT 25
Principal problem: 28
Health spending 33
@ Leading pharmaceutical industrial companies, 2014

Portugal Laboratories BAHIA® NIMODIPO® LIPSTICK Arequipa

Source: I Annual Economic Sample 2015. ELaborcinDEMI PROOUCE

 Productive process
of pharmaceutical products
Productive factors in the production of pharmaceutical products:

Raw material:
► Currently, the country does not have pharmacochemical plants. All active substances are imported from the Asian continent
and to a lesser extent from Europe.
► The lack of pharmachemical plants shows signs of low interest in generating large investments by entities linked to the
sector (public and private).

► The benefits of having pharmacochemical plants are the generation of greater efficiency (optimization), reduction in the
delivery time of raw materials from the supplier to the pharmaceutical laboratory.

* The national availability and/or requirement of said substances DEPENDS ON foreign markets (import) to be able to carry
out their production.
Technology

► The companies installed in Peru have manufacturing technology to formulate and produce all the
medical forms that will be presented later (see table 4); However, despite the efforts to modernize
equipment, most of the machinery is still very old.

► Calderón (2010) points out the importance of technological adoption and transfer for the sector,
because there are other pharmaceutical production methods that require modern equipment and
sophisticated knowledge.

► The use of technology in the sector generates greater productivity and cost reduction. However,
reaching these levels of investment (especially the acquisition of new machinery)
► Labor
► The pharmaceutical industrial sector employs, on average, 20 thousand people annually. Among
the main professionals involved in the drug production process are biotechnologists, biologists,
pharmaceutical chemists, among others.
► Both the first and the second have the function of searching for active ingredients for the
preparation of medicines.
► The Q.F. (main person responsible) carries out the preparation of the medications. During this last
process, pharmaceutical technicians also participate, who assist the pharmaceutical chemists in
all functions of the production process.
► Operational technicians, who are in charge of machining, packaging, packaging, among other
activities.
 Stages of the generation process
medicines
► The stages of the drug manufacturing process, in a standard manner, are as follows:
This stage is described as The phase of the drug development process in which the
physical, chemical and mechanical properties are
characterized that allow the design of pharmaceutical
Stage II: forms that confer greater stability, safety and effectiveness
to the product.
Preformulation

During this stage we seek to obtain the necessary

information to determine toxicity. The mechanisms of
action. The pharmacokinetics2 and biological or
pharmacodynamic activity47 of the medication. These
Stage III: studies are based on experimental models in animals and
end when the drug is sufficiently studied to be
administered in humans.
 This stage is intended to determine the efficiency and
safety of the drug. It consists of tests performed on
patients with the purpose of determining or confirming
clinical, pharmacological, and/or other
Stage IV: pharmacodynamic effects. and/or to detect adverse
reactions, and/or to study the absorption, distribution,
essays metabolism and excretion of one or more drugs under
clinical study to determine their safety and/or their
effectiveness.
 During the formulation process, the ingredients are mixed to form a specific
product, which is called "prototype master formula." These products have a
complex composition where the active medicinal ingredients are associated
Stage V: with other substances through which their action is sought to be modified.
medicinal according to the defined therapeutic purposes.
Formulation

This stage includes specific results evaluation activities, which include the
development of the first pilot batches, evaluation of clinical study results and
stability, adjustment of the master formula, development of the first three
standardized industrial-sized batches, of definitive bioavailability studies of
accelerated stability studies in the first three batches mentioned to establish
the shelf life of the product and. finally, the development of definitive stability
studies to confirm or modify the useful life of the product under normal
marketing conditions.
Stage VI:
Assessment
 Vile Stage: This stage includes the process after the medicine is ready to be supplied and
marketed. Authorization is requested to introduce the manufactured medicine
on the market to the corresponding entity, which will have the power to accept
Process
or reject said request.
and registration

This stage is made up of handling activities and physical operations for

conditioning the raw materials, chemical reactions, physical operations for
separating the products and final conditioning of the drugs. The drug
manufacturing process begins with the handling of raw materials and others.
inputs and involves specific activities such as acquisition, reception, storage,
preparation and dosage. This process is conditioned by the type of
pharmaceutical form required (solid, liquid, powder), modifying its external
Stage VIII:
appearance, but preserving its chemical state, or chemical operations that
They produce changes in the nature of the substance. The process involves
Process of the packaging. c ie r re. packaging and labeling of the product, and its
manufacturing packaging and storage.
 In this stage, activities related to the management of medications are planned, specifically Lets
associated with the district. Lition, supply and storage of the same. Supply planning includes activities such as selection, definition of required
quantities, selection of suppliers, acquisition of medications, shipping and surveillance. of pee two. review of quantities received versus those
requested and shipping qualities, payment of suppliers, among others. The activities associated with distribution include reception, storage,
stock control, transportation and registration for surveillance and control.

This stage depends on the veracity of the diagnosis of the health problem. Which means
knowing the medications well. its indications and contraindications. dose, number of days of
treatment, side effects, costs, among others: in summary, the expertise of medical work.

The purpose of this is to detect and report possible adverse events that may occur due to the
use of a certain medication.

Vile Stage:
Farmnacovigilance
 INVESTIGATION AND
►DEVELOPMENT
The R&D process is long and consists Chart No. 1
of various stages. As seen in graph No. Stages in the +D process for the discovery of a new product
launched on the market
1
► Laboratory and animal studies are Approval by the Agency
14 years
Regulator in Charge*
characterized by high uncertainty. (Total)
Review by the Agency
► Then it goes through the three stages of Regulator in Charge)* 2
years
clinical studies where the effectiveness Clinical studies
3
and adverse effects of the chemical Third Phase: Extensive Clinical Testing
years
input are demonstrated, then it is Clinical studies
Second Phase: Effectiveness Testing 2
reviewed by the regulatory body and, years

finally, approved. Clinical studies

1 year
First Phase' Security Testing

► On average, this entire process takes

an average of 12-14 years. Laboratory and animal study 6
years

* In the case of the United States it is the FDA - Food and Drv^ Administration, while in the
Peruvian case it is the Office of Inventions and New Technologies of INDECOPI.
Source: Viscusi, Vernon and Harrington (2000)
► It is important to cultivate R&D for the pharmaceutical industry to develop, and Peruvian
pharmaceutical laboratories are investing in this to be able to have the technology in their
plants.
► Who should support research in the Peruvian market?
The state intervenes and must encourage and develop study and research through its public
entities to improve health.
► State intervention plays a very important role in the competitiveness of the Peruvian
Pharmaceutical industry, especially in the National Laboratories through:
► price regulation
► counterfeiting of medicines
► encouraging R&D
► The state must intervene so that Peruvian Laboratories can compete freely and thus the country continues to
develop in this industry that contributes so much to the health of a country.
Chart No. 2 shows the evolution of the profits and losses of
the process of creating a new Graph N 2
Evolution of cash flow for the discovery of a new product
medicine. The first 12 years are expenses assumed by the
company (until point A), to then generate exclusive profits
for the following eight years (from point A to B) until the
patent expires. Then there is a small period where they
continue generating profits (from point B to C) and, finally,
generic products enter, causing profitability to fall until,
possibly, reaching zero (from point F to D) which depends
mainly on the barriers to entry (among which is the
possibility of patent extension).

4------------------------------------------------•
Legal Life of the Patent

Source Viscusi, Vernon and Harrington (2000)

Principal problem:
► The constant dynamism of the industry

► Different related interests (the development or to stop the growth of the Peruvian
pharmaceutical industry)
► Ángela Flores, executive director of the National Association of Pharmaceutical
Laboratories of Peru (Alafarpe), mentions that the publication of the clinical research
regulations is pending, in order to increase their investments in Research and
Development (R&D).
► Between the years 2005 and 2008, counterfeiting medicines in the
country registered a
average variation 45% annually where it was verified he predominance of the
counterfeiting of nationally produced medicines.
THE INDUSTRY PHARMACEUTICAL IN THE 1
► In the last decade: 4
The importance of the pharmaceutical industry: 7
Types of medicines: According to their production: 8
Types of medications: According to their condition of sale: 10
Q)Number of companies in the pharmaceutical industry 13
Productive process of pharmaceutical products 16
Raw material: 16
► Labor 18
Stages of the generation process medicines 19
INVESTIGATION AND DEVELOPMENT 25
Principal problem: 28
Health spending 33

►
 medicines . Therefore, the consumption of generic medications must be encouraged by the
State by establishing policies for this purpose.
► In this regard, the role of the State is very important: without becoming an interventionist State, it
is obliged to generate the legal framework and conditions to encourage and promote the
development of generic medicines.
► On the other hand, the Ministry of Production in its Research Study of the Pharmaceutical
Sector (2015), identifies a single type of registration for medicines, be it for new medicines or
the update of the permit after the five years of validity have passed.

► The necessary requirements for locally produced medicines are the same for those that are
imported; A different case occurs in Colombia, for example, where the inspection to grant
marketing permission to an imported product is very strict, going so far as to audit the foreign
company before it enters the local market.

► Lack of regulations and state intervention to encourage the growth of the national
pharmaceutical industry.
Graphic 12
Distribution diagram of national pharmaceutical products

PRODUCER

Patient
 Health spending
► Total health spending includes:
Purchase medicines
The provision of health services (preventive and curative)
Family planning activities
Nutrition activities
Emergency Assistance
► In effect, health has a direct impact on the productivity of workers and
generates an indirect effect through education, because
improvements in health affect less absenteeism and an increase in
the educational level.
► Health spending increases consumption
► Depending on the financing source, health spending can be:
 Public spending on health: Includes recurrent spending and
of capital from public budgets, the
external debt, donations and funds of
Social and mandatory health insurance.
EXPENDITURE Private health spending: Includes expenses disbursed by the
patient directly, including gratuities and payments in
kind to doctors and suppliers of drugs, devices
therapeutics and other goods and services intended primarily for
the best of the state of health.
HEALTH
Peru: Public and private spending on health, 2009 - 2014
(in millions of dollars^ at current prices)

2009 2010 2011 2012 2013 2014

Public spending Private spending

 ico JN 8: Export of pharmaceutical products by company
FOB value (US$ Million) Volume (Tons) 1
COMPANY Jan • Aug
2015 2015
2014______ 2014 1
AGROVET MARKET SA 7.0 16 352.8 183 0
MEDIFARMASA 46 1.3 12448 898 3
TAGUMEDICA SA 3.5 2.1 25.7 15 6
BIOMONT LABORATORIES SA 28 0.9 222 9 61.5
HENDER PERU SA 2.4 1.3 15Z0 1084
FARMINDUSTRIAS.A. 2.3 15 70.9 54.0

B,BRAUN MEDICAL PERU SA 2.0 09 2,256.4 1,068.6

QUIMTIAS.A 20 08 1046 54 0
BAYER SA 2.0 10 212 1Z4
LABORATORIES PORTUGAL SRL 18 18 1850 14ZS
Rest of companies 18.2 113 825 8 535 8
EXPORTS ________48.5 28.5 7,469.3 s : :1 I
Sector Report No. 9 — October 2016. Pharmaceutical Products Industry

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