The most popular program of each year’s AAM Annual Meeting is always the CEO unplugged session.  Oftentimes there are significant disagreements between the different CEOs regarding strategy, but this year there was almost complete agreement on strategic issues, policy, the marketplace, and regulatory issues.  The four panelists were Sven Dethlefs, Ph.D, Executive Vice President, North America Commercial, Teva; Vinita Gupta, CEO, Lupin Limited; Chirag Patel, President and Co-CEO, Amneal Pharmaceuticals; and Richard Saynor, CEO, Sandoz, and the session was moderated by Dan Leonard, President and CEO, AAM. The bullet points presented below highlight some of their comments:

  • Number one concern is the supply chain, and each discussed how they are dealing with supply chain issues. The most interesting thing noted was that getting finished product to the market was extremely challenging, with some noting that they had to ship finished product by air at a loss so they ensure that they could get product to the patients in a timely fashion. However, the issues with the supply chain made obtaining materials necessary to manufacture product (including active pharmaceutical ingredients, inactive ingredients, bottle caps labels, vials tooling, and on and on). Each step of the way, there have been challenges and delays to overcome.
  • Employees’ security and safety from the start of the pandemic has been paramount to these companies and continues to be an ongoing challenge. But with the right protocols in place, the companies have learned to live within the bounds of constraints imposed by the pandemic.
  • Inflationary pressures throughout the supply chain continue to make it difficult to maintain a reasonable and sometimes sustainable level of profitability in some instances, and this will be a big challenge going forward. Additional pressure from buyers and insurers also contribute to the pricing pressure placed on the generic industry (which is the only market segment where prices have been deflationary over the last few years).
  • The biosimilars market is attractive but it is necessary to choose your target product wisely, as it is possible to make a lot of money on one product and perhaps little to no revenue on another.
  • Biosimilar strategic issues such as getting payors including Medicare and Medicaid and insurance companies to pay for the biosimilars in a timely manner continues to be a problem, which is a shared experience for some small molecule products based on payment tiers and deals made by innovator companies through contractual arrangements with payors.
  • Capital investments for biosimilars and complex generics are also a concern and a challenge to the CEOs because specialized equipment and additional manufacturing space and capacity may be required for multiple different products due to manufacturing processes or requiring different manufacturing equipment.
  • There are tremendous investment requirements for pursuing development and regulatory approval and commercial manufacturing of biosimilars and complex generics with some products costing in the neighborhood of $120 million dollars to bring to market.

While these barriers and challenges seem steep, the CEOs shine a bright light on the future for the generics and biosimilar markets.  That is very reassuring for the continued effort of AAM and the industry to pursue those legislative and regulatory changes that might make the journey easier.