GLOBAL BENCHMARKING SURVEY
2011
USA
Benchmarking the competitiveness of
the US animal health industry
A report by BioBridge Ltd
for IFAH and AHI
BioBridge Ltd
Cambridge UK
April 2012
Final report
Released on: June 15 2012
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Index
1 Summary – the Global Benchmarking Survey 2011 USA .............................................................. 4 Overview 4 Key recommendations 6 Summary of the detailed findings of the survey 8
2 The Global Benchmarking Survey 2011 – Background & Methodology ........................................ 17 Background to the GBS 17 2011 Global Benchmarking Survey content and scope 17 Methodology 19
3 The Global Animal Health Industry.......................................................................................... 24 The global animal health business climate 24 The global regulatory climate and innovation 28 The future 31
4 Background to Animal Health Industry and Regulatory Dynamics in the USA ............................. 34 5 The Global Benchmarking Survey 2011 – a review of the findings for the USA ............................. 43
Industry Profile in the USA 43 The AH Industry in the USA and innovation 52 The AH Industry in the USA and maintenance of existing products 60 The AH Industry and the Regulatory Environment in the USA 63 The regulatory process in the USA and specific impacts on innovation and existing products 78 The USA’s regulatory environment and interactions with the AH business 82 Regulatory predictability and quality of regulatory assessment 88 Progress since 2006 and hopes for the future 104
6 The Global Benchmarking Survey 2011 – Regional Comparisons ...............................................117 Appendix 1: Summary of 2011 GBS USA ......................................................................................... 129 Appendix 2: Global Benchmarking Survey Questionnaire 2011 - USA .................................................142 Appendix 3: Inter-regional key data summary 2011 ..........................................................................157 Appendix 4: The 2006 Global Benchmarking Survey USA – a summary...............................................177
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Glossary of abbreviations
Abbreviation Expansion
ADUFA, AGDUFA Animal Drug User Fees Act, Animal Generic Drug User Fees Act
AERP Adverse Experience Reporting Program, in Australia
AH Animal Health/animal health
AHA Animal Health Alliance (Australia)
AHI Animal Health Institute – the USA body
AMR Antimicrobial Resistance
API Active pharmaceutical ingredient
APVMA Australian Pesticides and Veterinary Medicines Authority
AQIS Australian Quarantine and Inspection Service
CAHI Canadian Animal Health Institute
CAP Companion Animal Product[s]
CapEx Capital expenditure
CDER US FDA’s Center for [human] drug evaluation and research
CFIA Canadian Food Inspection Agency
CGD Common Global Dossier
CMC Chemistry, Manufacture and Controls
CMDv In the EU, the Co-ordination Group for Mutual Recognition and Decentralised Procedures - Veterinary
CP Centralised Procedure
CRO Contract research organization
CTD Common Technical Document
CVMP Committee for Medicinal Products for Veterinary Use
DCP Decentralised Procedure
DNA Deoxyribonucleic acid
EARS Electronic Application and Registration System
EC European Commission
EMA European Medicines [Evaluation] Agency
EPA US Environmental Protection Agency
ERA Environmental Risk Assessment or, in USA, the CVM’s End Review Amendment process
EU European Union
EU MS Member State of the EU
FAP Farm Animal Product[s]
FDA CVM US Food & Drug Administration’s Center for Veterinary Medicines
FMD Foot & Mouth Disease
FSC Japan’s Food Safety Commission
GBS Global Benchmarking Survey
GCP, GLP, GMP Good Clinical Practice, Good Laboratory Practice, Good Manufacturing Practice
GDP Gross Domestic Product (economic output)
GM, GMO Genetically-modified, genetically-modified organism
GMN Global Multinational
HMA-V Heads of Agencies – Veterinary Medicines
IFAH International Federation for Animal Health
IFAH-Europe International Federation for Animal Health Europe
IP Intellectual Property
IVET FDA CVM’s InnoVation Exploration Team initiative
JECFA Joint FAO/WHO Expert Committee on Food Additives
J-MAFF Japan’s Ministry of Agriculture, Forestry and Fisheries
JVPA Japan Veterinary Products Association
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Abbreviation Expansion
M&A Merger and acquisition
MDR&D Mandatory Defensive R&D
MHLW Japan’s Ministry of Health, Labour and Welfare
MLS Manufacturers’ Licensing Scheme, in Australia
MRL Maximum Residue Limit (or level)
MRP Mutual Recognition Procedure
MS, MUMS Minor Species, Minor Uses-Minor Species
NADA, ANADA New Animal Drug Application, Abbreviated NADA (=generic)
NPD New Product Development – from discovery to first sales
NVAL Japan’s National Veterinary Assay Laboratory
OGTR Australia’s Office of the Gene Technology Regulator
ONADE FDA CVM’s Office of New Animal Drug Evaluation
OTC Over the counter (non-prescription VMP)
PMS Post-Marketing Surveillance
PSUR In the EU, Periodic Safety Update Report
R&D Research and Development
RDS Relative Decision Score
RIS Relative Impact Score; Regulatory Impact Score
SME Small- and Medium-sized Enterprise
SPC In the EU, Summary of Product Characteristics
USDA APHIS-CVB US Department of Agriculture Animal and Plant Health Inspection Service’s Center for Veterinary
Biologics
USP, EP, JP US, European and Japanese Pharmacop[o]eias
VC Venture Capital
VDD Canada’s Veterinary Drugs Directorate
VICH Veterinary International Conferences on Harmonization
VMP Veterinary Medicinal Product
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1 Summary – the Global Benchmarking Survey 2011 USA
Overview
Innovation is defined as new products, new technologies, new services that bring new benefits to the market.
From this point of view, new technologies used in product discovery and development work for new products,
and manufacturing and quality management and delivery of new and existing actives and antigens are
accountable as innovation. For individual companies, diversification and adoption of new marketing and
customer-management approaches might be regarded as innovation but in this context, the survey asked only
whether companies included new services in their R&D focus.
The Global Benchmarking Survey (GBS) of 2006 noted the emergence of an “era of caution” at the FDA,
leading to risk aversion; and “regulatory quality weaknesses” at USDA/APHIS. For animal pharmaceuticals,
implementation of ADUFA was thought to be leading to greater responsiveness by regulators and
improvements in the time needed to assess submissions, but it did not address all of the problems identified in
the survey. At APHIS, some actions had been taken since 2001 to improve regulatory quality, but further
action was needed to resolve all of the problems.
The prime consensus in interviews is that the FDA CVM has become more approachable, that ADUFA and
ADUFA II have been successful, that some new initiatives in the past 5 years from CVM and CVB are likely to
improve regulatory efficiencies. The animal health market is still attractive: the impact of generic animal
health products on continued sales by originator companies is far less than in human health, prospects for new
therapeutic areas in companion animal products are encouraging and a drive to disease prevention and higher
production in farm animals holds out great hopes. Added to this is an optimistic future for population increase,
protein demand and middle-class pursuits such as the companion animal bond, in the ‘emerging markets’,
characterized by China, Brazil and Russia. These countries are of course not a focus for this survey but they
were a highly-prevalent topic in interviews in a way that strongly suggests they need to be included in future
surveys.
Overlying all this however is serious disquiet with the current regulatory frameworks and how they seem to be
evolving. Particular issues were mentioned frequently in relation to the USA:
Lack of transparency, efficiency and predictability of the regulatory processes of all 3 agencies
Inconsistencies in interpretation and regulatory quality between reviewers and during the review process
by the same reviewer
Problems with FDA CVM in inflexibility on protocols, target animal safety and efficacy studies; a general
risk-averse rather than risk:benefit approach and the application of the End Review Amendment process
Difficulty in understanding why FDA, with more resources and fewer applications to review, still takes the
maximum length of time to respond in the approval process
Problems with USDA CVB in the lack of veterinary expertise, the application of the reference
requalification program, unpredictable timelines and an increasingly mechanistic biostatistics-driven
approach to assessment, moving away from considerations of clinical outcomes and relevance
Problems with EPA in the lack of veterinary expertise and inappropriate responses to adverse reaction
information
In general, loss of institutional expertise as more experienced reviewers retire, with an influx of young
reviewers who are too inexperienced to assess new products and innovations in any way other than a
doctrinaire, tick-box approach.
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Unwillingness or inability of regulatory authorities to accept data generated outside their regions, even if
they follow VICH guidelines. This enforces expensive reinvention of studies that, scientifically-speaking,
have already succeeded in showing safety, efficacy, stability or lack of environmental impact.
A wide degree of concern about over-stringency of manufacturing, pharmacy, quality and inspection
requirements, seen partly as driven by human medicines standards without attention to the conditions of
use, market-sizes and animal or disease targets of animal health products.
Concerns about ever-increasing demands for data on environmental impacts and on pharmacovigilance.
Frustration that politics is enforcing some regulatory approaches, notably the current attitudes to use of
antimicrobials in animals
Interviewees identified and discussed what they had experienced as the top regulatory factors inhibiting
innovation in USA, and there was consensus on three main problems:
Excessive time, costs and data hurdles;
An over-cautious ‘zero-risk’ approach in the agencies;
Insufficient predictability and consistency.
This confirms the outcome of the on-line survey.
A complaint common to all agencies is that reviewers do not understand the realities of the animal health
industry and how the products will be used in clinical practice, which is one factor involved in the perceived
inflexibility of the agencies and the regulatory process. Knowledge transfer, information, training, and
drafting of veterinarians into the agencies are seen as ways to counter this. More frequent discussions, at least
with CVM and CVB, are already reported as helping the process of mutual understanding.
A significant challenge expected in the near future is how new technologies are handled by regulators,
specifically products arising from biotechnology in both pharmaceutical and biologics areas. Industry
interviewees identify the following areas as targets for innovation:
Technology focus
- Biologics for disease prevention in place of antimicrobials for disease treatment
- Biopharmaceuticals including monoclonal antibody therapies
- Extending the uses and life-spans of existing actives through new delivery and controlled release
methods
- Formulation technology and nanotechnology for increasing safety of products, half-lives, shelf-life
and room-temperature stability for biologics
- Use of knowledge from genetics and the molecular basis for disease for developing new products
and approaches.
Innovation in diversification:
- Aquaculture as a market sector
- CAP for dental conditions, non-surgical sterilization, ophthalmology, cancers, atopic conditions
and diseases of aging
- Diagnostics for targeted intervention and for demonstrating metabolic affects from new products
- International collaboration on trans-geographic diseases.
Companies are concerned that, in general, and in spite of the CVM ONADE IVET initiative, a combination of
lack of specialist knowledge in the agencies and increased risk-averseness is likely to derail applications
through questions, demands and shifts in reviewer position that reflect the inefficiencies of agencies rather
than the deficiencies of an applications. In addition, companies do not like a perceived tendency of USDA to
hand over any biotechnology product that is not obviously whole-antigen based to FDA.
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However, CVM’s IVET initiative and the formulation of Tech Teams for specific innovative technologies or
products are seen by the Industry as a very positive moves. Although there has been no concrete outcome to
date, it demonstrates openness to the types of changes that may be required in evaluating and approving
unusual and different types of products that are likely to be developed in the future. Most company spokes-
people emphasize the need to “walk the talk” but there is universal praise for CVM in their acknowledgement
that the product review process of the future is not likely to be business as usual.
Key recommendations
Overall, there is a concern that all agencies are becoming less attuned to risk:benefit assessment of
products and becoming less flexible; there is a need therefore to pin down what is needed to secure a
trend to appropriate risk:benefit assessment, especially the tailoring of data requirements to the degree
of product risk. This is a matter for continued dialog with all agencies.
In addition, several comments pointed to a situation, certainly in EPA and CVB and perhaps also in CVM,
where newer recruits do not have an understanding of the context of the use and economics of veterinary
and animal health products, leading to inconsistent and impractical demands. Education and training
sessions are possible ways forward here. This is however a long-term activity, because of turnover of
staff. One suggestion might be to develop a diploma in veterinary regulatory affairs in collaboration with
a suitable University or land-grant institution, which would be accessible for agency staff as well as
industry, and might eventually become a necessary qualification.
It is clear that there have been advances in acceptance of certain data from outside USA, when studies
comply with VICH guidelines. However, there is more that can be done and that could be promoted as a
way to greater efficiency without loss of regulatory confidence – acceptance of overseas pharmacopeial
monographs, acceptance of peer-reviewed and published trials data, and harmonization of potency
requirements for antigens are some.
Continued work on electronic submissions is needed, especially as the current system in the USA is not
directly compatible with the systems and structures in use or under development in other regions.
How the industry and the regulators can work together more productively to ensure that CMC
assessments and inspections are appropriate to the context of manufacture and use of veterinary
medicines, biologicals and medicinal feed-additives is difficult to define, but it needs to be addressed. As
in the residual solvents experience, it might be possible to work with agencies after the event to show
them how specific requirements impact industry costs and time adversely, in relation to the target
hazards and risks, for no or only a marginally-enhanced prevention of these, but it is more efficient to
establish realistic approaches beforehand.
CVM
With ADUFA III in development, there are certain topics that could be raised, based on the responses to
the 2011 GBS and comments made in interviews:
Freeing up the time-lines so that CVM response times are not always the maximum as laid down in
procedures
Moving towards a situation where the End Review Amendment process is not used as a
compendium of points that could have been answered with less stress all round during earlier
stages of the approval process
Examining the reasons for the very lengthy overall approval process times and seeking appropriate
reductions that do not however compromise the safety and effectiveness of the industry’s
products.
The IVET initiative is one that should be actively road-tested by industry, so that it can be fine-tuned in
response to industry feedback sooner rather than later; joint workshops on new developments of
common interest could be co-hosted by CVM and AHI.
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Encouraging a conditional license approach, as has been successful with CVB, would be helpful for some
products, especially minor-use, minor-species. It would however require some effort to establish what the
workable realistic data-package would be, rather than the maximum package.
CVB
A key issue reported in the survey is the increasing reliance on biometrics rather than clinical outcomes;
this suggests that information seminars on diseases and their prevention might have an impact in
enhancing background knowledge and confidence in animal trials results.
Establishing electronic release of batch biologics would be helpful.
EPA
The agency scored the lowest overall of the US agencies and often scored the lowest when compared
with the agencies of the other IFAH regions. This situation requires deeper analysis and a specific action
program to help move the regulatory system forward. For example, if there are problems such as
inappropriate interpretation of adverse reaction data that might affect the whole industry, then this
requires an industry-wide response, even if only a few companies are directly affected.
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Summary of the detailed findings of the survey
Industry profiles
In USA, 14 companies were involved in the 2011 Global Benchmarking Survey, of which all 14 were
members of AHI. 50% were headquartered in USA and 50% in Europe. Representatives of all of these
responded to the on-line survey. 17 interviews were carried out with personnel from 12 companies. The
companies involved represent about 85% of the overall animal health market in the USA and over 95% of
the biological market.
The companies involved reported total turnover in their most recent full trading year of around $15B world-
wide and $5.4B locally.
New products were a target for 79% of companies, new APIs/antigens for 71% and improved products for
64%, confirming that innovation is still a focus of the industry. Although all regions have these as their top 3
targets, a small percentage of US companies (14%) have new pharmaceutical or biological development
tools as one of their top targets, versus 0%-11% elsewhere.
In Australia, Canada and Japan, 82%-100% of companies employ fewer than 250 at regional level; in USA
and Europe the picture is skewed by GMN headquarters headcounts, so that 47% and 60% respectively of
companies report more than 500 employees at regional level.
At regional level, 50% of companies in USA have estimated sales of more than $1B compared with 0%-20%
of companies elsewhere. 64%-91% of companies in Australia, Canada and Japan have estimated sales of
less than US$100M.
Industry R&D in the USA
The majority of AH companies in the US survey had a global research and development spend of less than
10% of their global turnover (average spend was 6.1%). This compares with average R&D spend of 5.5% of
turnover reported by AH companies in the Canada survey, 6.3% for Japan, 7.7% for Australia and 7.7% for
Europe. The USA respondents reported the lowest percentage spend on pharmaceutical R&D compared
with other regions (65% versus 68%-78% elsewhere).
AH companies spent an average of 61% in the USA itself, an increase from 50% in 2006, with 24%, 59%,
<10% and 64% spent in Canada, Japan, Australia and Europe respectively. In the USA, 43% of companies
record a slight increase and 14% a large increase compared with 11%-22% in other regions.
The three reasons for changes seen since 2006 in the USA’s overall share of R&D were a deterioration in the
regulatory environment, an increased base cost of doing R&D in USA and acquisition of companies with
development programs, regarded as the single most important reasons by 27%, 18% and 18% of
companies respectively. The average percentage of contracted-out R&D was 53%, little different from
2006 (55%).
About 16% of R&D spend was on mandatory defensive work (a very small increase compared to 2006).
This is similar to the spend on MDR&D in Australia and Japan (14%-15%) but much smaller than Canada
(26%) or Europe (27% for GMNs and 51% for national companies).
64% of companies reported a slight increase in their MDR&D spend since 2006 and 14% reported a large
increase. The single most important factors leading to increased defensive spend were increased product
review activities by regulators (93% of companies), deterioration in the overall regulatory environment
(71%) and acquisitions (50%). This suggests that some of those reporting ‘little change’ had seen an
increase in expenditure. This is the same picture as in other regions.
Between 2006 and 2011 there was an overall shift of spend from CAP (companion animal product) projects
to FAP (farm animal product) projects of about 0.8%. However, this rather low shift is biased by one
respondent who reported a 25% shift from FAP spend to CAP over this period. Re-calculating when this
figure, which acts as an outlier, is excluded, gives a 3.1% shift of proportionate budget from CAP to FAP,
from 40:60 CAP:FAP in 2006 to 37:63 CAP:FAP in 2011.
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Drivers for competitive success
The most important drivers for short-term competitive success are improving production and sales and
marketing efficiencies and exploiting existing products more profitably, each ranked as very important
overall by 79% of companies; the majority of companies in every region, 50%-100%, regard these drivers as
very important, as well as providing new services to meet customers’ needs.
For long-term success, new product development was overwhelmingly regarded as very important, by 93%
of companies, and as the single most important driver by 86%. Providing new services was also seen as a
substantial contributor to both short- and long-term success, by 57% and 64% of companies respectively.
The three core drivers shared by 55%-100% of companies in Australia, Japan and USA, in addition to
developing major new products (89%-100%) are improving sales and marketing efficiency and reducing the
costs of production and distribution.
The Industry in the USA and innovation
The most important factor for successful innovation for 93% of companies was access to creativity and
ideas (including within the company); for 79% it was minimizing time-to-market and for 50% each, it was
access to critical skills, controlling development costs or minimizing uncertainty. Virtually all regions class
these same four factors as highly important for successful innovation; in USA controlling development
costs is also rated as very important, by 50% of companies.
64% of companies see regulations as having a negative impact on innovation and 7% a very negative
impact; compared with 60% in Australia, 87% in Europe, 54% in Japan and 36% in Canada. The main
reasons for this in USA were the US regulatory framework (86% of companies), inadequate intellectual
property protection (50% of companies) and lack of availability of financial resources (50%). The AH
industry in the US is less concerned about small size of market segments (43%), closure of geographic
markets (29%), negative consumer attitudes (21%), lack of skilled staff (21%) and poor technology transfer
mechanisms (14%) than in other regions.
The most important adverse impacts of regulatory factors on innovation are increasing the costs of
development (93% of companies), creation of significant uncertainty or unpredictability (86% of
companies) and an increase in development time (79%). These three factors, along with redirection of
resources into defensive R&D, are the ‘top four’ in all regions; in the US, 43% of companies rank this very
highly.
The industry in the USA and existing products
The most important overall impacts on existing products are pressure from competitors (including parallel
imports and generics), ranked 1-4 by 85% of companies, up substantially from 36% in 2006, reflecting
continuing problems with compounders, the USA’s regulatory framework for maintenance/extension of
licenses (54% of companies) and small size of market segments (54%).
The most important specific impacts of the regulatory framework on existing products were judged to be
the creation of disproportionate costs for maintaining/extending marketing authorizations (64% of
companies), diversion of financial resources away from the development of new, innovative products (57%)
and increasing the costs of production (57%).
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Time for regulatory approval and time and costs of new product development including approval
The regions fall quite definitely into two groups in terms of time-to-approval: Australia, Canada, Europe
and Japan; and the USA. The USA, partly because of phased submission and the need to discuss and
approve protocols, has by far the longest time to approval from first submission
- 6.0-9.4 years for pharmaceutical products, versus 1.5-3.2 years elsewhere;
- 2.8-6.0 years for different types of biological products versus 1.2-2.3 years elsewhere; and
- 3.5-6.0 years for pesticide-based products versus 1.4-3.0 years elsewhere.
The mean length of time for regulatory review of pharmaceutical FAP (farm animal products), CAP
(companion animal products) and MS (minor species) products by CVM (FDA’s Center for Veterinary
Medicines) was 9.4 yrs, 6.4 yrs and 6.0 yrs respectively.
The mean length of time for regulatory review of biologic FAP (farm animal products), CAP (companion
animal products) and MS (minor species) products by CVB (USDA-APHIS’s Center for Veterinary Biologics)
was variable depending on the type of product. For a full GM product it was 5.4 yrs, 5.0 yrs and 6.0 yrs
respectively. For a product using a new Master Seed, it was 4.3 yrs, 4.1 yrs and 5.5 yrs respectively. For a
product combining existing antigens, it was 3.6 yrs, 2.8 yrs and 3.0 yrs respectively. And for biologic
conditional licenses it was 2.8 yrs, 2.9 yrs and 3.5 yrs respectively.
In USA, the time for gaining a biologic conditional license exceeds the longest periods for full approval of
biological products elsewhere.
The mean length of time for regulatory review of pesticide-based FAP (farm animal products) and CAP
(companion animal products) by EPA was 6.0 yrs and 3.5 yrs respectively.
50%-75% of companies had experienced an increase in the overall development-plus-review time (research
to approval). For the period 2006-2011, this was +1.4 yrs, +1.1 yrs and +1.5 yrs for FAP, CAP and MS
products respectively, making the cumulative increases since 1991 +4.9 yrs, +5.0 yrs and +2.0 yrs.
Costs of new product development
Average direct costs of product development from discovery to approval varied from $3M for minor species
biologics to almost $39M for a pharmaceutical FAP with new active; costs are without CapEx
apportionment and failed product amortization.
Product category & direct cost estimates $M:
product extension Species category
FAP CAP MS
mean 38.8 21.6 8.0 Pharmaceutical product with
new API range 20.0-100.0 5.0-70.0 -
mean 26.7 - 12.0 Medicinal in-feed product
range 15.0-40.0 - -
mean 10.8 11.8 3.0 Biologic product
range 2.0-30.0 3.0-25.0 -
mean 14.0 22.6 - Pesticide-based product
range 10.0-20.0 5.0-65.0 -
Overall, the US companies reported the lowest ranges of direct costs for complete new product
development and registration; compared with Australia, where establishing a new AH pharmaceutical or
biological product is between 23% and almost 600% higher than USA; or with Canada and Japan, where
average costs range from the submission fee to US$1.7M little or no high-cost development work is carried
out locally.
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Costs have increased in the 2006-2011 period by 27%, 27% and 18% for FAP, CAP and MS product
respectively. Compound increases in cost over the period 2001-2011 were +162%, +171% and +108%
respectively. The greatest compound increases over 2001-2011 were in pharmaceuticals of all species
types (+73%, +82% and +68% for FAP, CAP and MS products respectively); in the period 2006-2011
however, the greatest increase was reported in biologic FAP (+30%), followed by pharmaceutical CAP
(+29%) and pharma and biologic MS products (+28%). Although the costs in previous surveys were based
on estimates of apportionment of capital expenditure, establishment costs, and amortized costs of failed
projects, it is reasonable to assume that direct costs also increased in the same or a closely similar
proportion.
Costs of establishing a new species use for an existing product
Direct costs of product extension including development and the approval process ranged from $2.5M-
$4.0M for MS products to over $10M for pharma FAP. Costs, with two exceptions, were generally between
30% and 50% of the cost of the original product types. The exceptions were biologic MS products, 83% of
full product costs, and pesticide-based FAP, 17% of full costs.
For extensions, USA is on the whole more expensive - costs for FAP range from $3.4M-11.3M in USA
compared with US$0.8M-5.0M in Australia and US$2.0M-6.8M in Europe; for CAP they range from $2.5M-
6.7M in USA, versus US$2.7M-6.2M in Australia and US$1.3M-5.3M in Europe; and for MS product
extensions, the range in USA is $2.5M-4.0M and in Europe is US$0.7M-2.3M. Reported costs in Canada and
Japan represent only the add-ons needed locally, from submission fees to US$1.7M when local work is
required (as for biologicals in Japan).
Impacts of specific regulations on innovation
For innovation, positive aspects included protection of IP (commercial data and patents), and the ADUFA
and MUMS processes; negative aspects included Environmental (ecotox), Antimicrobial Resistance
regulations and MRL regulations.
Marketing authorizations themselves are regarded as high impact – the system in USA was given a Relative
Impact Score (RIS) of +29%, compared with the MRP in the EU with RIS of +13%, J-MAFF in Japan with
+27%, the DCP in the EU with +33%, Canada’s VDD and CFIA with +70% and +60% and the EU’s CP with
+80%. Australia is notable for a RIS of -10% for the Marketing Authorization system of the APVMA.
Maximum Residue Limits regulations and Ecotoxicology rules are regarded as somewhat to highly
detrimental to innovation in all regions, with RISs of -13% to -60% (most extreme in Australia) and -27% to -
90% (most extreme in Europe and Canada) respectively. Antimicrobial Resistance/AMR rules were
regarded as highly detrimental to innovation in most regions (RISs -40% to -70%) but not at all in Australia.
Since 2006, APHIS-CVB has been involved in three new initiatives in the biologics area. The introduction of
conditional product licenses is highly-welcomed. The adoption of VICH GCP is regarded as neither positive
nor negative. However, the approach of CVB to biometrics is perceived as having a substantial negative
overall impact, with RIS of -36%.
The highest-ranking improvements associated with regulation were public reassurance about safety
(compared with providing a stable business environment in the European GBS), and impacts on protecting
investment and providing confidence to invest ranked more highly than in Europe. The other most-
mentioned high-ranking factors were safety- and quality-related, as in Europe. Otherwise, USA was
notable for having, along with Europe, the lowest regard for any positive impact of Good Laboratory
Practice on innovation (score -7% versus +10% to +36% for Canada, Australia and Japan).
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Impacts of regulations on exploitation of existing products
Most regions are generally agreed on the top four obstacles to the exploitation of existing products:
pressure from competition including generics (56%-85% of companies, with the US AH companies scoring
this the most); the local regulatory framework (54%-94% - Europe scoring this most); the small size of
market segments (54%-78% - Australia scoring this most); and inadequate IP protection (18%-47% - Europe
and USA equally the most).
Companies in all regions are agreed that creation of disproportionate costs for maintaining existing
products is a very important impact of regulations (58%-94%; ranked very important by 64% of US
companies). Other factors are not ranked in the top four by all regions. Although overall, removal of
profitable products from the market, creation of significant uncertainty and restriction of
technology/product extension are substantial concerns for four of the five regions (36%-47%, 36%-86%,
27%-71% respectively), increased production costs and diversion of management time are important in
Canada, Japan and the USA (42%-57% of companies, and 43%-58%, respectively). Diversion of financial
resources away from innovation appears to hit hardest in those regions where R&D is headquartered,
Europe (53%) and USA (57%). In Australia, uncertainty and restriction of extensions are the top and second-
equal concerns, to 86% and 71% of companies respectively.
Compared with the other regions, the USA recorded the lowest scores for (ie regarded the most negatively)
pharmacovigilance systems, regulatory management of manufacturing changes and rules concerning
packaging and labeling modifications, -36% to -71%, versus a range from +18% to -59% elsewhere. Overall,
the USA was neutral or negative about 80% of the regulations identified by all regions as being important
for existing products, the same as in Europe, compared with 73% in Canada, 50% in Japan and 50% in
Australia.
Impacts of specific regulations on existing products
USA is almost as pessimistic as Europe about impacts of specific regulatory processes, with 70% of
processes regarded as negative, compared with 73% in Europe and 30%-64% elsewhere. USA stands out
for the neutral regard for the license maintenance process, the lowest regard for good manufacturing
practice (-7% versus 0% to +38% elsewhere) and overall the most negative scoring for pharmacovigilance,
processes for regulating manufacturing changes, environmental regulations and packaging or labeling
modification rules (-36% to -71% compared with +18% to -65% elsewhere). For the license maintenance
process, only Europe’s national agency procedures scored lower than USA’s.
Companies in USA showed moderate satisfaction with the protection of commercial data (score +43%)
compared with +73% for Japan but dissatisfaction in Australia, Canada and Europe (-38%, -8% and -6%
scores respectively).
Predictability and quality of the AH regulatory processes in the USA for new products
The AH industry in the USA provided feedback on the achievement of criteria of regulatory predictability
and regulatory quality for all 3 agencies. The percentage of companies regarding each agency as mostly or
always achieving these criteria were, for overall predictability and overall quality respectively: for FDA 62%
and 65%; for USDA 68% and 64%; and for EPA 33% and 41%, indicating a greater degree of dissatisfaction
with EPA’s overall performance.
For FDA’s predictability for new products, the high level of satisfaction with the final approval process has
been maintained since 2006, in terms of its basis on expert assessment (82% in 2011), though fewer
companies see this as being based on best available science (73% in 2011). Scoring for consistency with
respect to guidelines, transparency efficiency and predictability and basis in Risk Assessment has not
improved over the past five years (55%, 55% and 45% in 2011).
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FDA ranks 3rd to 6th in relevant criteria compared with the other regions’ agencies; CVB and the EU’s
Centralized Procedure tend to rank higher for all criteria (EU 4th for final approval and CVB 4th for
transparency).
For the quality of FDA’s performance, satisfaction with the caliber of efficacy assessors has increased
slightly since 2006 (82% of companies in 2011), but satisfaction has declined for others, markedly so for the
caliber of quality assessors (65% for quality and 55% for safety assessors in 2011). The criterion of clarity of
assessment and international respect is regarded as being achieved substantially less well (36% in 2011).
FDA’s ranks compared with regulatory authorities in other regions vary widely, from 2nd (for management
of submission and further interactions – the EMA is ranked 1st) to 9th of 11, for caliber of safety assessors.
Apart from management of pre-submission stages, where it is ranked 3rd (CVB is 1st and EMA is 2nd), and
caliber of efficacy assessors (4th, with Canada’s VDD and CFIA and Japan’s J-MAFF assessors ranked higher)
FDA ranks in the lower half of the comparisons (6th-9th).
For USDA and predictability for new products, a satisfactory achievement by CVB for all criteria is regarded
as having been reached, by more companies in 2011 than in 2006 – 43%-100% depending on criterion,
giving CVB 1st-3rd ranking for most criteria and 4th for transparency and predictability of the process of
approval.
For the quality of USDA CVB’s performance with new products, satisfaction with the caliber of purity,
potency & quality assessors has fallen since 2006, to 43% in 2011. Other aspects have improved (company
satisfaction ratings are 71%-100% for most criteria in 2011), some such as risk:benefit application of
guidelines improving markedly, to 86% in 2011.
CVB is ranked 1st-3rd amongst the agencies for management of pre-submission and further interactions,
risk:benefit basis of application of guidelines, and for clarity of and international respect for scientific
assessments. It is however ranked 7th-9th of 11 for other aspects. Lowest ranking (9th – 29% of companies) is
for transparency, efficiency and predictability of the process.
For EPA’s predictability for new products, levels of satisfaction with the achievement of all criteria have
fallen substantially since 2006, whether it is the scientific assessment, the final approval, or the
transparency and predictability of the process, with satisfaction scores (percentage of companies
considering they have achieved criteria ‘always’ or ‘mostly’) of 0% for transparency of process to 5) for
benefit:risk basis of expert assessment, giving them a ranking of 4th-8th of 8, compared with other agencies.
They rank 8th (bottom of the league) for the transparency, efficiency and predictability of the process of
approving new products.
For the quality of EPA’s performance, no criterion is regarded as having improved in achievement level.
Regard for the caliber of safety assessors seems to have dropped substantially, to 33% in 2011.
For quality of management of new products, EPA ranks in the bottom half, 5th-10th of 11 agencies, except
for clarity of and international respect for its scientific assessments, where it ranks 2nd, however with a
satisfaction score of only 50% (the EMA’s Centralised Procedure is 1st, with 72%).
For all agencies in the USA, the criteria that score least well for quality with regard to new products are
‘overall, scientific assessment of risks and benefits is clear and respected by other regulators
internationally’ and ‘the process of approving new products is transparent efficient and predictable’; the
latter also consistently scores worst with regard to regulatory predictability.
For existing products and regulatory predictability, companies judged no agency to always have met
criteria. Fewer than 50% of companies overall believed that agencies mostly met criteria. FDA was
regarded as overall meeting criteria mostly, by 33% of companies, sometimes by 60% and never by 7%;
USDA as meeting criteria mostly by 48%, sometimes by 52% and EPA as meeting criteria mostly by 39%
and sometimes by 61%. The range of satisfaction scores for specific criteria was fairly narrow for CVM
(20%-40%), but rather wide for CVB (14%-71%) and EPA (17%-67%) for EPA.
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By comparison with 2006, although perceptions of high achievement of regulatory predictability in 2011
were not held by a large percentage of companies (and no agency was regarded as always achieving
criteria), nevertheless some aspects have improved since 2006, especially the basis for expert assessment
(CVB scoring 71%) and transparency of the division between risk assessment and risk management (CVB
scoring 57% and EPA 67%). EPA’s assessment process is less well thought of, generally. The rating of all
agencies fell for their approach to new tests and reviews and whether these were based on a rigorous
analysis of pharmacovigilance data or relevant scientific advances – 20% of companies for CVM, 14% for
CVB and 17% for EPA.
By comparison with other agencies, CVM was 4th-6th of 7, CVB 2nd-6th and EPA 1st for risk assessment:risk
management division but 5th-7th (bottom) for others. EPA was rated lowest on the criterion that expert
assessment was based on best available science and risk assessment.
Interviewees in USA put forward at least 30 suggestions for consideration to mitigate concerns in
regulation, in four general areas of regulatory processes, regulatory policies, people and resources and
advice and interactions.
The overall impact of politics and the regulatory framework on business
The most important problems created by political involvement were uncertainty for future product
development (62% of companies, compared with 64% in 2006); increased cost of developing new products
(54% of companies, down from 79% in 2006); and increased time needed to develop new products (46% of
companies, down from 86% in 2006).
CapEx decisions were made by similar percentage ranges across the regions, and US companies were not
distinctive in either the decision (selling or buying companies, investing in production inside or outside USA
or locating R&D facilities inside or outside USA) or the amount of regulatory influence. 42% of companies
made an acquisition; there was a regulatory influence in 20% of those cases. 67% of companies invested in
production inside USA and 50% of those cases were influenced to some extent by regulatory
considerations. 33% of companies located R&D inside USA and in 25% of those case, regulations influenced
the decision.
Market decisions were also made by a similar range of companies across the regions, with some
exceptions. The decisions were increasing or restricting geographic focus, increasing or reducing product
range, increasing species/indications or reducing them, and introducing more or fewer breakthrough
products. 50% of US companies increased geographic range, with 17% of cases influenced by regulatory
considerations. No US company reduced its range, as in Australia, and unlike the situation elsewhere,
where 6%-10% of companies did this. 67% of companies in USA increased their product range, compared
with 50%-100% elsewhere, and 12% of cases were influenced by regulations. Regulatory influences played
a part in 75% of the decisions to reduce product range, made by 33% of companies in US, compared with
10%-31% of companies and 0%-100% regulatory influence elsewhere. 58% of US companies increased
coverage of species or indications for products, compared with 50%-73£ elsewhere, and there was some
influence of regulations in 29% of cases, whereas there was 100% regulatory influence for those 17% of
companies who decided to reduce the coverage of species or indications. 50% of US companies put more
breakthrough products on the market, compared with 44%-60% elsewhere, with regulatory influence in
17% of those cases. Regulations influenced 100% of the decisions made by 17% of companies to introduce
fewer breakthrough products in the USA – 9%-50% of companies elsewhere did this, the highest
percentage in Australia, with 50%-100% of decisions influenced by regulations, significantly so in 50%-75%
of cases.
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Decisions involving innovation and technologies include switching R&D budgets inside or outside the
region, focusing on new or older/existing technologies and developing or avoiding certain technologies.
R&D budgets were switched in by 17% of US companies (9%-44% elsewhere) and switched out by 25%
(9%-38% elsewhere). For both decisions, the percentage of companies was lowest in Japan and highest in
Europe. The US was the leader in both focusing on new technologies (83% of companies compared with
30%-63% elsewhere) and focusing on older or existing ones (75% of companies compared with 27%-57%
elsewhere). Regulations had an influence in 20% of the first decision, compared with 40%-67% elsewhere,
and 33% of its opposite, compared with 25%-80% elsewhere; the highest percentage of companies for
either decision was reported in Canada. The US had the highest percentage of companies that developed
certain product technologies (67% versus 18%-43% elsewhere) and second-highest percentage that
avoided product technologies (58% versus 9%-10% for Japan and Canada, 44% for Europe and 63% for
Australia). Regulations were significant or highly significant in 12% of cases of decisions to develop certain
technologies and 100% of those where technologies were deliberately avoided.
The picture seems on the whole more positive and robust than in 2006 – fewer of the more frequent
decisions involved regulatory influences, and those decisions with a strong regulatory influence were for
the most part taken by few companies.
Reforms since 2006 and reforms for the future
In looking at reforms expected in 2006 for innovations, a substantial percentage of US AH companies
recognized that international harmonization of requirements and incentives for small-market products had
taken place. This is the only reform that is recognized by all regions as having been achieved, by 45%-93%
of companies), and regarded as very high impact by 30%-75%.
All other regions have done better than USA in three areas: basing test requirements only on best science
and risk assessment (US 9% versus 18%-71% elsewhere); using scientific justification when changing test
requirements (USA 9%, others 18%-71%); and basing quality standard only on AH requirements (0% versus
18%-64% elsewhere). USA joins Australia and Canada for low recognition of removal of political
involvement in testing and approval (0%-9% versus 30% and 64% in Japan and Europe). Some reforms that
have achieved moderate recognition in USA (27% of companies) are recognized as being high-impact, such
as tailoring tests to a product’s specific risks or removing redundant or overlapping guidelines.
The reform regarded by all US AH companies as not having been achieved was basing quality standards
entirely on animal health industry needs not on human health requirements. In other regions, 13%-64%
regard this as having been achieved, with an impact rating of 9%-36%, the highest percentage in Europe
for both aspects.
With regard to products for minor use, minor species (MUMS), interviewees pointed out that it is very
difficult to justify a MUMS product when regulatory demands are extremely high, especially for the CMC
aspects of applications. Obtaining a realistic determination of the threshold number of animals and getting
this in a timely fashion seems to be a challenge as well, with negative commercial outcomes if it is not
realistically-determined. Companies suggested two possible ways forward: amend the FDA guidelines to
allow a conditional license approach as used by CVB; amend the FDA guidelines to eliminate the
requirement for ‘substantial evidence’. In general, the threshold numbers should be re-evaluated and
increased.
In looking at reforms expected in 2006 for existing products, at US level, those identified as having been
achieved, and scored by 60-80% of companies as high-impact, were speeding up review times at CVM by
increasing the number of review/support staff; and requiring all animal health companies to pay user fees.
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Comparing with other regions, the reforms most widely recognized as having been achieved for existing
products are reduction of restrictions on minor formulation and manufacturing changes (43%-90% of
companies – US 50%), regarded as high-impact by 20%-80% of companies (US 20%; the highest for both
aspects is Japan); provision of additional protection for product extension data (achievement 10%-43%,
high-impact 10%-38%, US scoring lowest for both aspects); and basing need for dossier reviews solely on
pharmacovigilance or relevant scientific advances (achievement 10%-23%, US 20%; high-impact 10%-46%,
US 10%).
Reforms that had been achieved 2006-2011 and that gave US AH companies the most problems included
continued actions against growth promotants and antimicrobials; the way CVM uses End Review
Amendments; CMC issues, including residual solvents for pharmaceuticals and changing potency and
stability assay requirements at CVB; and the use by CVB of biometrics and biostatistical assessment.
Looking forward for the next 5 years or more, US survey respondents and interviewees were asked to
identify what reforms they could see occurring that would have positive or negative impacts on their
business. The most positive impacts, with +67% to +83% impact scores, were moving from zero-risk to
risk:benefit approach; moving towards common technical documents; the CVB initiative on performance-
based requirements for vaccines; and electronic submissions. Those with the highest expected negative
impacts (relative impact scores of -67% and -92%) were increased globalization of post-marketing
surveillance outcomes and increasing requirements for post-marketing surveillance and
pharmacovigilance.
Europe was the most pessimistic region. The USA was the next-most pessimistic, with a mid-to-low
percentage of companies regarding positive trends as likely to have a high positive impact and a higher
percentage of companies regarding negative trends as likely to have a high negative impact.
Compared with other regions, US is less concerned about wider participation and public involvement in
regulation (RIS of -8% compared with, for example, -59% for Europe, though RIS is +33% for Japan); is
solidly in favor of the CTD (+75% RIS compared with +6% for Europe and +58%-+100% for other regions),
electronic submissions (+67% versus +59% to +93% elsewhere), and moving to a benefit:risk approach
(+83% versus +56%-+100% elsewhere, the highest score for Canada). In other cases, US companies were
less positive or more concerned about certain trends than other regions: acceptance of JECFA agreements
for residues (+25% versus +47%-+100% for other regions, the highest for Canada); increased data
disclosure transparency (-8% compared with -47% for Europe, and +9%-+67% for other regions); increasing
globalization of PMS data (-67% compared with +8% for Japan, -9% for Canada and -41% for Europe); and
increasing PMS and pharmacovigilance requirements (-92%, versus -17% to -58% elsewhere).
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2 The Global Benchmarking Survey 2011 – Background & Methodology
Background to the GBS
Since 1996 IFAH has been reviewing and benchmarking the status of regulatory assessment of animal health
products, the impacts this has on the industry, and the practices and impacts of the regulatory process. In
1996 and 2001, Europe and USA were included in the surveys. In 2006, the survey was expanded to include 5
regions of the world, Australia, Canada, Europe, Japan and USA. The analysis in 2006 involved companies
representing more than 80% of sales in USA and in Europe. In addition, the 2006 survey involved 60
companies in in-depth interviews.
This 2011 survey, carried out by BioBridge Ltd, builds on the foundations created in the previous surveys for
IFAH by the consultancy Business Decisions Ltd. The companies involved represent at least 80% of sales in
their regions. To ensure comparability, it closely follows the earlier surveys but expands them in selected
areas. For example, the interactions between regulatory systems and innovation have been explored in more
depth, and a strong strategic element has been introduced into the survey. The overall survey takes into
account whether and how the approach and attitudes of regulatory authorities round the 5 selected regions
have changed over the past 5 years and what trends the industry sees, or hopes to see.
2011 Global Benchmarking Survey content and scope
Content
Broadly, each survey includes the following:
Comments on the Animal Health Industry globally and for each region
A profile of the industry as it is in 2010-2011, including the company members of IFAH’s constituent
organizations in the regions concerned
An R&D profile of the industry in the region, and innovation trends that might raise certain issues of
regulatory efficiency
The competitiveness of the industry - the drivers of long-term success for companies, and the drivers of
short-term competitiveness
The obstacles to competitiveness, particularly the importance of the regional regulatory framework
The impact of the regulatory framework on the industry – innovation and existing products
The trends in the attitudes and practices of the regulatory authorities in the regions concerned, as seen by
industry companies, looking back over the past 5 years and forward for the next 5-10 years
Regulatory process for veterinary medicines – predictability and quality
External forces such as political involvement in regulation and the industry and global growth dynamics
affecting the future and profitability of the industry
The cumulative (‘knock-on’) effect of regulatory factors on major strategic decisions, such as the overall
level of investment, the location of major investments, the width of the product range, and technology
choices
Priorities for regulatory reform
A view on what the industry itself expects to happen in the short-term (i.e. next 5 years); and
Hopes for the future.
Overall, it aims to identify opportunities for improvements to inform future discussions with regulators, and to
make the environment for the AH industry more favorable to innovation and the maintenance of existing
products. The 2011 survey reports include relevant data from the previous reports. The bases for data and
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analysis have not remained identical over the 4 surveys and 15 years, but comparisons are instructive
nonetheless.
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Scope of the 2011 GBS
The 2011 GBS focuses on animal health and veterinary products in the following product sectors:
pharmaceuticals, in-feed medicated products (therapeutics) and biological products. It does not consider
nutritional products, feed additives that are not regulated as therapeutics, or non-regulated semi- or pseudo-
medical products used in animals.
It is targeted at innovation. Innovation is defined as new products, new technologies and new services that
bring new benefits to the market. It includes new APIs (active pharmaceutical ingredients) and antigens. It also
includes new technologies used in product discovery and development work for new products, manufacturing
and quality management or delivery of new and existing actives and antigens are accountable as innovation.
These are the geographic targets (referred to as ‘regions’ even if all but one are countries):
Australia
Canada
Europe (the EU and certain non-EU countries such as Switzerland that are part of the European Economic
Area)
Japan
USA.
It does not consider China, Brazil, India, Russia or other rapidly-growing countries, but comments on prospects
and dynamics in these countries have been gathered during interviews and are included in the reports.
Methodology
Information has been obtained from companies through two routes:
An on-line survey, with a core of questions basically the same from region-to-region, but then tailored to
each region – for example taking into account the involvement of different agencies in regulation such as
the EMA in Europe and EPA, USDA and FDA in USA.
A series of interviews with the majority of business and regulatory heads in each region and a smaller
number of R&D heads.
Interviews were held face-to-face and by telephone, and all information is reported in a way that anonymises
output.
Respondents
A total of 69 companies were invited to take part in IFAH’s 2011 GBS, representing all the full members of
IFAH’s regional member organizations. The on-line survey return rate was 86%. There were 58 interviews
undertaken with companies from this group.
In addition, 5 members of IFAH-Europe’s national member associations responded to an invitation to take part
in the on-line survey, and 14 interviews were held with corporate members of IFAH itself. Table 1 shows the
overall distribution.
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Table 1: Overview of IFAH Global Benchmarking Survey 2011 – companies, surveys and interviews
Region
Number of IFAH
member companies
invited
Number of
companies
responding
Return rate
Number of
interviews
undertaken
Australia 10 9 90% 6
Canada 19 14 74% 11
Europe 14 11* 79% 14
Japan 12 12 92% 11
USA 14 14 100% 16
Total IFAH regions 69 60 88% -
European national associations - 5 - -
IFAH’s corporate members 11 - - 14
Total interviews 78 - - 72 * In Europe an additional 5 regional or national companies were included, making a total of 16 responses overall.
On-line survey
The on-line surveys were developed in close cooperation between BioBridge, IFAH’s Regulatory Strategy
Team and IFAH member organizations’ staff. The Japan region survey was also translated into Japanese to aid
communication. IFAH’s constituent organizations in Australia, Canada, Europe and USA also discussed a late
working draft version of each regional survey with contacts at the regional regulatory agencies, to get
informed feedback, in order to finalize each survey questionnaire.
Each survey consists of a section that profiles the company, substantially corporate data for multinational
companies, then a series of sections that examine specific issues in the companies’ regions. Answers are in
most cases numerical (eg total R&D spend), relative (eg how much have costs increased) or rankings (eg rank
the factors involved in quality of regulatory assessments). Overall feedback has been excellent for the survey
and for the on-line method and few problems were experienced when the survey was used.
The survey respondents were agreed by each responding company, for all regions involved. In the majority of
cases, regulatory heads were nominated as responsible for the on-line surveys, but in some cases R&D or
business heads were the nominees, the latter more often in Japan and Canada than elsewhere (Figure 1).
Figure 1: Survey Nominees: Profiles
0% 20% 40% 60% 80% 100%
Australia
Canada
Europe
Japan
USA
overall
regulatory
business
R&D
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0% 20% 40% 60% 80% 100%
Australia
Canada
Europe
Japan
USA
Overall
regulatory
business
R&D
Data analysis
The analytical methodology used a relatively simple relational database, which allows data to be aggregated
within each database (all the answers to each question, by question, and, if necessary, factor-by-factor within
a question) then processed to obtain percentages, rankings and other summations and comparisons.
The following aspects have been taken into account in an evaluation of the results: not all companies reply to
all questions, so the sample for each question is not always constant; turning results into percentages may be
less valid for responses with fewer than 9 respondents; a number of questions involved ranking (for example,
the importance of different aspects of regulation), and to give a meaningful output, these were assessed using
the percentage of companies ranking each criterion at position 1 (the single most important factor) and sum of
ranks 2-4 (‘very important’ factors) – this being comparable with the scores of ‘important’ and ‘very important’
used in previous surveys; others, usually questions about impact, asked how helpful or unhelpful aspects were
and, to give a meaningful output, these have been scored by summing negative scores and positive scores and
subtracting the negatives from the positives, as a percentage of companies, thus providing a relative impact
score.
Interview program
For the interview program, interviewees were nominated by IFAH, IFAH constituent organizations and
company CEOs/Presidents. The interviews were in most cases recorded and transcribed, whether they were
conducted face-to-face or by telephone. The transcripts have been coded and edited to anonymise the
interviewees as much as possible. The recordings have been eliminated after transcription validation.
The interviews covered issues in a more strategic way. They allowed interviewees to address the topics they
felt were most important in the relationships between companies, business, R&D and innovation and
regulation, complementing and amplifying the data available from the on-line surveys, with a wealth of
experience and commentary.
Efforts were made to increase the proportion of business respondents (including Scientific and Government
Affairs staff, when these were not obviously regulatory) (see Figure 2). Material from the interviews is used
throughout the report to provide context to the survey findings and to emphasize areas of opportunity,
concern, pessimism and optimism.
Figure 2: Interviewees: Profiles
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Appendices
Appendices 1 and 2 are a summary of the IFAH GBS 2011 survey results, showing comparisons with previous
surveys, and the 2011 survey questionnaire respectively. Appendix 3 is the inter-regional comparison of the
results of the 2011 survey. Appendix 4 is a summary of the IFAH GBS 2006.
Where exchange rates have been used, they are according to the following table, which shows the average
annual rate for 2010.
Table 2: Currency exchange rates
convert to convert
from US$ € A$ C$ ¥
1US$ 1.00 0.75 1.09 1.03 87.78 Source www.oanda.com fxAverage accessed 09.2011
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3 The Global Animal Health Industry
The Animal Health Industry can be regarded as part of a social bargain. The industry provides products for
food animals that enhance and maintain safe and secure food, and products for companion animals that
enhance and support human well-being. It is about 2.5% the size of the human health market. From this point
of view, it has a disproportionately high and positive impact. The Animal Health (AH) Industry needs to make a
profit, in order to maintain its business, reward its investors and employees, and allow innovations and new
products to be developed.
On behalf of their public, governments apply regulations to enforce responsibilities within that social bargain,
of providing safe, effective products without undesirable impacts on target animals, humans (whether users,
owners or consumers) and the environment. One of the purposes of this Global Benchmarking Survey is to
examine whether the enforcement of those responsibilities is proportionate and realistic, whether the
regulatory frameworks through which products reach the market are facilitatory or counter-productive, and
whether the situation is deteriorating or improving.
The global animal health business climate
Markets
Over the past 5 years, the animal health market has moved from est. $18.6B to over $20B in 2010 and c. $21B
for 2011, about 2.5% of the global human health market (est. at $800B). The top 3 companies (Pfizer, MSD
Animal Health, Merial) have about 45% of the market, Pfizer with sales of >$3B, MSD Animal Health and
Merial both approaching that threshold. This is a highly-concentrated market compared with the human
pharmaceutical sector, where Pfizer, Novartis and Merck are responsible for about 16% of the total market
between them1. An important challenge of the market is the diversity of species and types of business when
compared with human health. This leads to a complex of small and larger markets, niche products and major
products, and routes-to-market - OTC (over-the-counter) direct to the customer; prescription veterinary
products to professionals, and farm animal products, most like a direct business-to-business supply route –
with no single pattern in every country.
There is no consensus on whether the animal health market is becoming more competitive (in the sense of
pressure from competition); a typical comment is that the level of competition has been quite high and has
changed only marginally over the past 5 or even 10 years: “It is however not the case that competition is making
life generally difficult: if you focus on the right sub-segments you can still compete, even for smaller companies.
The big problem is how to grow above a certain size and move out of an existing market niche.”
Since the 2006 GBS, two phenomena have emerged as the main drivers of change in the animal health
market: the merger and acquisition activities of major human pharmaceutical companies with animal health
and veterinary medicine interests; and geographic expansion of mid-sized companies into high-growth and
emerging markets. Overlying this are changing patterns of animal production and ownership, with farm
livestock sectors generally depressed in Europe and to a lesser extent in USA but showing tremendous
expansion in other regions, notably Asia and Latin America.
1 Source: Pharmaceutical Executive May 2011, www.pharmexec.com
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Table 3 shows the top 10 animal health companies based on 2010 sales, excluding the diagnostics company
Idexx, which reported sales of $1B, incidentally making the diagnostics sector quite interesting as a
component of an animal health mix.
Table 3: Top 10 animal health product companies 2010
Company2 Turnover
Pfizer $3.6B
MSD Animal Health $2.9B
Merial $2.6B
Bayer $1.5B
Elanco $1.4B
Boehringer-Ingelheim $1.2B
Novartis $1.2B
Virbac $0.8B
Ceva $0.6B
Phibro $0.5B .
In the farm livestock sector, the emergence of strong internationally-integrated producers has changed the
face of company-customer relationships, and the pressures that are passed up the food production chain, for
example from major retailers, to input manufacturers such as the AH industry. Trade demands (for example
export residue levels in Australia) impose heavier requirements on industry than product regulations
themselves.
Surprisingly, the emergence of generic products and companies has had less impact than feared on the global
animal health market, where there appears to be far stronger brand loyalty than in the human medical sector.
Opinions within the industry vary, however. Regulatory personnel in Europe see the issue as important from a
technical and structural viewpoint, with EU changes (notably Directive 2004/28) favoring generics and feared,
paradoxically, to be leading to increased use of cheaper antimicrobials, for example. Business personnel,
particularly those with experience of human pharma or in subsidiaries of human health companies, note that
the market-leaders in animal health may lose 30% of their market over a 5 year period (and even maintain or
increase sales), whereas a human pharmaceutical product can expect to lose 80% or more of its market over a
few months following patent expiry and introduction of a competing generic. In USA and Canada, the ability
of enterprises to import their own active ingredients and create unapproved equivalents of licensed products
continues to arouse strong passions in the industry.
2 Source: Animal Pharm/Vetnosis: sales rounded to nearest $0.1B; Virbac, Ceva and Phibro are ranked 9
th, 10
th & 11
th - Idexx, the
diagnostics company, is 8th
at $1.0B sales
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Mergers and Acquisitions
“When large human health companies acquire another, they find in the basket
some companies which they may not even have known were there, or [they did
not think] of the consequences. This has made mergers more complex and slows
down the process and aren’t targeting the AH market or its future. Examples are
the purchases of Pharmacia by Pfizer, SP by Merck, Wyeth by Pfizer – all these
not targeting the needs of the animal health market, so that animal health has
not been deciding its own future.”
The industry is buoyant about the future of the sector – they see human health companies retaining and
developing their animal healthy businesses, as their human product portfolio becomes more and more
generic, and a renewed interest from financial investors in the animal health market due to significant overall
market growth rate (versus human under pressure with generics and price control issues) and manageable
amounts of investments for mid-sized companies around the $1B mark. Investors do not see animal health
regulations as less stringent than in human pharma. The major difference, and the major driver for interest in
animal health, is the importance of pricing, and pressure regarding pricing.
The industry’s large-scale acquisitions have led to divestments and the opportunity to buy that, for some
companies, have offered a significant boost to growth; for others, pressures, doubts and indecisions of
potential mergers may well have stalled their drive and held them back. The outcome, however, has been the
creation of mega-companies with sales of more than $3B, a second tier that is widely thought to have
challenges for significant growth, and a number of mid-stream to smaller companies with growth rates in
excess of 15%, including Boehringer-Ingelheim, Ceva, Elanco, Vétoquinol and Virbac.
The purchase of Wyeth by Pfizer, completed in October 2009, led to strategic reallocations of the combined
portfolio of animal health products, Pfizer divesting a number of elements of Wyeth’s Fort Dodge business on
product line and geographic bases. The beneficiaries from this asset realization included Boehringer Ingelheim
(Fort Dodge products in Australia, Canada, USA and South Africa and cattle vaccines in Mexico), Virbac (farm
livestock vaccines and antiparasitics in Australia); and Elanco (antiparasitics, feed additives, vaccines in
Europe). King Pharmaceuticals’ purchase of Alpharma in 2008 and then acquisition of King by Pfizer in Feb
2011 has meant addition of the Alpharma feed additives range to the Pfizer AH portfolio.
Merck and Schering-Plough merged in November 2009, bringing Intervet (acquired by Schering Plough in
2007 with the purchase of Organon from Akzo-Nobel) into the fold and creating the Intervet/Schering-Plough
Animal Health unit. Following the abandonment of the planned merger with Merial, Merck rebranded ISP,
recreating the old and well-known MSD Animal Health name outside North America, with Merck Animal
Health used in USA and Canada.
Merial was established in 1997 as a 50:50 joint AH venture by Merck Inc (MSD AgVet) and Rhône-Mérieux, the
animal health business of the chemical & pharma company Rhône-Poulenc. Rhône-Poulenc and Hoechst
combined their pharma businesses in 1999 to form Aventis; Sanofi acquired Aventis in 2004 and in 2009
bought Merck’s 50% share of the Merial animal health business for $4B. During 2010, Sanofi was fully-
expected to create a revised joint venture business between Merial and the new Merck/ISP, creating a
blockbuster company with a valuation of more than $16.5B and sales of well over $5B. But this did not happen,
disappointing many companies who had planned to buy up divested products and operations, and Merial still
remains in Sanofi-Aventis ownership, moving its global HQ back to France in autumn 2011.
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Most recently, Elanco completed its acquisition of the animal health interests of the Belgian company Janssen
Pharmaceutica, part of Johnson & Johnson, in July 2011.
Companies once regarded as regional players have become important multinationals through acquisition of
territorial and product-range coverage – notably the French companies Ceva, Virbac and Vétoquinol. Also
notable by their lack of ties to human health parents, they are largely able to pursue their strategies without
the potential for interference and prolonged internal discussions. These companies are well-placed to take
advantage of growth in emerging markets. Virbac, for example, spent almost €30M on acquisitions in
Colombia, South Africa, China and Australia, and securing the Leishmania vaccine.
Novartis, Elanco and Bayer, currently sitting behind the top 3, face difficult times without finding acquisitions
to boost their presence. Novartis has stated it would be willing to “gain scale” by buying in companies or
products for $1-2B. Bayer bid for ISP before Merck gained the prize and is also quoted as being willing to go to
more than $1B to move onward. Where acquisitions will come from is difficult to see, unless it is in the rapid-
growing parts of the world, notably Brazil or China, or in complementary areas of business, as seen in Pfizer’s
purchase of Synbiotics, which added diagnostics firepower to its offering.
However, Pfizer announced a review of its four operating units outside the human medicine discovery area in
February 2011, with Pfizer AH named as a business to be divested along with the Baby Food & Nutrition unit it
acquired with the Wyeth purchase. This begins a period of uncertainty for the Animal Health unit. A straight
divestment might give the middle-ground companies some hope for a surge ahead through acquisition.
Regional dynamics
“The panorama of the production animal market is changing. The avian business
was strong in the EU but the birds are moving out of Europe to South America,
Asia, Russia so the future position is that you’ll produce animal protein where it’s
needed, and you’ll need to sell the animal health products there as well i.e. China,
India, Asia, Russia, S America, Africa … the industry in general will have to keep
its position in USA and Europe but will have to expand activity to those areas,
when we know that business there is mainly driven by local small companies. It
will be critical to look outside EU and US and develop organizations with R&D and
business to be able to respond to the huge increase in the demand for animal
protein. This is not easy, it’s hard to enter China, India, Russia. The industry is
currently succeeding in South America, because Brazil was relatively open.”
The overwhelming consensus is that the growth opportunities are in other regions than Europe and USA,
including China, India and Russia, and in Latin America, especially Brazil, which one interviewee regarded as
the 2nd largest AH market at the moment. This growth is a result of tremendously increasing demand for
milk, meat and eggs. Prospects for the companion animal sector are linked with general economic
performance of a country or region and it seems likelier that the future will see better growth and
opportunities, as the economic situation stabilizes in established markets and emerging markets can afford
more pets. The industry consistently commented that a very important goal is to make sure that market
expansions and the opportunities these bring are not compromised by over-restrictive, inflexible or
unharmonised regulation.
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The global regulatory climate and innovation
“Our executive board is always dreaming of one single product which could be
registered and marketed the same day, everywhere.”
Regulation
The most important aspect of the regulatory process is when it delays the time to market of new products.
This delay arises from a number of elements, though lack of scientific and administrative predictability and
transparency in the regulatory process underlies most of these. This situation seems to have deteriorated on
the whole since 2006 except in certain rather specific areas – product establishment for minor species and
provisional biologics licenses in the USA; management of variations; and accessibility of regulatory discussion
pre-submission in Europe.
Over the past 5 years, new product development time has expanded considerably – one interviewee reports an
increase for major products from 5 years to 8 years and “because it is now taking 8 years to develop a new
product, the marketing colleagues are unable to plan a commercial strategy because the time lag is too long once
the decision to start developing a new product is taken; this is a real problem that must be communicated to
regulatory and policy makers everywhere.” Regulatory staff increasingly need to be able to “interact with
regulatory agencies and drive the [company] agenda more effectively. Regulatory affairs people are in the centre
of the organization and can make a difference for approval timelines, protocols, etc. [There has been] a change in
the last couple of years – they are no longer the bureaucratic department.” In the absence of external regulatory
training courses focused on animal health, companies have to train their people to fit this role themselves,
according to one interviewee.
A common theme that is sweeping across the world, which is now influencing buying decisions as well as
political stances, is the challenge to the continuing use of antimicrobials in farm livestock (and indeed in
companion animals). The industry has fought hard since the 1980s to ensure rigorous science is used to
examine the claims that use of antibiotics, whether for growth and performance promotion or, more recently,
for treatment of individuals and preventative mass-medication, leads directly and dangerously to emergence
of medically-significant antibiotic resistance in humans. This debate is ongoing and is driving industry
sentiment towards vaccines and biological ways of controlling disease and performance. This may pose
problems for companies not currently in the biologicals field, or strongly-placed – there is quite a high barrier
to entry because of the need to create facilities and the business position.
There is an issue here with the perception of regulatory agencies by industry: “Though the regulatory agencies
say they see the need for innovation and would like to support it, they stop at trying to understand the science
behind the innovation from an academic point of view. There is a clear element of not wanting to take risks,
especially with food animal products; [there seems no realization that] it is not in the industry’s interest to put
forward products that carry risk. Clearly this is an element within the regulatory authorities which does not help
innovation.”
Industry has responded in different ways – interviewees report that animal health R&D organization is
benchmarking itself more successfully against other industries in terms of efficiency. However, there are
challenges for smaller companies compared with large ones that can invest $100-300 million in R & D, not just
in the number of projects that can be managed but the impact of any new regulation on ongoing or new
projects.
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A particularly strong comment was that “every company is at fault in accepting all the hurdles that regulators
put in their way on questions and requests for further data etc just to get past the “winning post” as quickly as
possible. This perpetuates the problem of regulators always asking for more. Companies must work on how to
address this big problem.”
Industry suggested that there could be a real advantage in improving and expanding the coordination of
scientific advice that occurs already to some extent between FDA and EMA, across global regulatory agencies,
certainly within the VICH model, to improve all the coordination of regulating new technologies and the
accompanying communication strategy that needs to occur.
The importance of regulation is recognized by industry; ‘good’ regulation is beneficial: “Definitely, regulated
countries in Europe, in the US, and Canada are countries where you can establish an innovative product and put
some resources and finances in. You know by comparing what is currently done with the human health industry
that innovative products – including an innovative formulation, and the technology of manufacturing the product
itself - are really well accepted in Europe and the US, even from the regulatory aspect. For example, in Europe,
when you refer to EMA, they do want to really put a push on innovative products and they do like to review
innovative products.”
Innovation
“We can say that there are fewer unmet needs than 10-15 years ago. It is more
challenging therefore to bring innovation through to products. The lack of flow
and slowness to market means some companies won’t prioritize the biotech
approach for their developments. But vaccine-based molecular technologies and
biopharm proteins will make up 20-30% of the portfolio of a company that wants
to move forward in this area. There will definitely be more innovation coming to
the market through those technologies.”
The industry believes that customers are prepared to pay for animal health innovation if it really adds value.
Companies with human health parents may find this more difficult, since the pharmaceutical world is moving
more and more into specialty products, and to translate these into animal health means tackling niche
markets such as an oncology or eye product for cats.
Other approaches are seen as increasingly important, including management of hygiene and animal
movement to avoid disease pressure. This raises the question of how the AH industry might engage with the
animal production units of the future, when breeding and management techniques minimize disease
susceptibility and challenge. Diagnosis forms part of this and Pfizer Animal Health’s purchase of Synbiotics
Corporation perhaps marks the beginning of a major trend.
It seems clear that those companies with sufficient resource are maintaining research departments and
certainly development expertise in-house. But even the largest companies recognize that “90% of the world’s
animal health research is being carried out outside the company”, that many companies cannot develop
products in the wide range of therapeutic fields that are envisaged for a balanced portfolio, or develop novel
formulation, manufacture or delivery technologies. Partnering, in-licensing, collaborations with universities
and research institutions are all part of the innovation mix. Even the smaller companies need some high-
quality internal expertise, since they must still manage external projects effectively. There is also a general
understanding of the need for continuing innovation. Some companies have separated the functions of
innovation planning from R&D and aligned them more with business development planning: this initiative
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“consists of scientific people challenging the needs of the future customer, balancing the trends of the market and
creating some major portfolios for the future.”
In globalizing innovation R&D, the biggest challenge seen by interviewees is to manage the complexity of
development projects and the inevitable limited resources, including specialists, spread over a number of sites.
Managing this involves strict governance, discipline and prioritization, and clear milestones with strong
decision-making. “Approving more projects than people available leads to disasters, especially if you take into
account the increasing regulatory requirements. Many companies are still not doing this very effectively, though
this has improved.”
Regional issues in regulation – the IFAH regions
“Europe is the first area of concern. It is still the most difficult and costly for the
industry; in 2006 the data was very clear about this - there is a demand to redo
everything.” “There is also a complexity coming from the number of countries,
languages, different product-supply rules and the fact that individual markets are
very small.”
Most focus in the survey is on comparison between the US and Europe, the two major markets. There are well-
recognized problems introduced by regional differences (requirement for trials protocol approval in US,
absence of an EU-type cascade system in US that favors compounding, different approaches to statistical
methodology and validation of quality methods, absence of timetables in US compared with the EU and
different approaches to data protection periods, with US much less favorable) but a major issue raised in
interview is the system for electronic submissions adopted in the US, the FDA eSubmitter, which is not
compatible or compliant with any systems already in use or in development (Documentum®-compliant,
TIGes-Vet) elsewhere. This is currently a barrier to a true global dossier, and adds unnecessary cost and waste
to the industry.
From the global perspective of regulation, for pharmaceuticals and veterinary medicines, a decrease in quality
and predictability in the US system has been observed by industry compared with a continuous increase in
these in the EU system.
For biologicals, the US seems in general to be a region open to vaccine innovation; Europe is harder on
innovative vaccines, probably because of difficulties with the acceptance of GMOs in the EU. The reactions of
farmers in Europe also make field trials harder to set up and run, compared with the USA. On the other hand,
the USDA is still considered by interviewees as an authority that acts in isolation, which could be providing
more meaningful commitment to all VICH agreements such as in the pharmacovigilance area for example.
USDA’s focus on domestic companies and the interests of the local producers means that they seem less
interested in harmonization and global regulatory affairs. “Industry has their specific US products and licenses,
facilities and US antigens. European industry has given up on the idea that there are vaccines, antigens made in
EU that should be freely available in US for use or research.”
For Canada, there were few direct comparisons made with regions outside North America. The main concerns
are compounding, the import and formulation of active ingredients in direct competition with licensed
products, and the ‘own-use’ product rules, which are intended to allow use of products for unapproved
purposes in tightly-controlled circumstances but are widely-abused. For Australia, there is a general high level
of dissatisfaction with the regulatory agencies, particularly in relation to the processes within the import and
inspection services, and the imposition of residue thresholds for trade purposes that are more stringent than
can be scientifically justified. In Japan, companies indicated that the situation had improved somewhat over
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the previous 5 years, especially that the authorities are getting more approachable and more open to
negotiations, that attitudes to GM vaccines were more relaxed than in Europe, but that the pace of change in
abandoning outdated animal tests and adopting newer more effective ones was rather slow.
Regional issues in regulation – emerging markets
Although the GBS 2011 was intended to cover only the nominated 5 IFAH regions, interviewees also talked
about emerging markets, as the territory for expansion. Many companies are already established in Latin
America and some Asian countries; others are beginning to be much more active in India, China and South
Africa. Many noted local protectionism in China: “there is a 2-speed system between local and foreign
companies; and China also accepts quality standards from local companies that in some cases are so low that
they damage their own industry.”
There is a trend to a type of Common Global Dossier in countries such as Brazil, South Africa, Australia,
Taiwan, Thailand and China. In Asia, the benchmark, especially for vaccines, is the European dossier. On the
other hand, there are concerns that governments in these countries are setting up their own new regulatory
standards at a high level, taking what they like best from other countries, making it very complex and very
demanding to get approval for new products: “As long as the selling price for new products is in line with the
costs and resources needed to get approval, that is fine but right now, investment is way too high in relation to the
selling price. Either regulatory standards need to be reduced or selling prices need to be increased. But if a country
keeps its barriers to innovation too high, then it will not have new products.”
There are small markets where it might be possible to do things faster but on the whole the emerging markets
such as Brazil and Russia are more conservative than the US towards innovation.
There are IP (intellectual property) protection issues with releasing the degree of detail required to some of
the regulatory agencies. China is currently a concern in this regard. Although one interviewee noted that the
authorities are really trying hard to be approachable, this is typical of comments: “for biologicals, the Chinese
authorities request details and demand strains; this produces a strong internal debate on how to deal with the
situation but, as China is the number 2 or 3 market in the world, it is impossible to stay out of it – we need to be
sure of the market, but also get into it in a way we don’t regret later.”
The future
The markets
“The long life cycles in the animal health business mean that a company can’t easily
change its profile quickly via its internal resources, eg to move into aquaculture or to
change from companion animal to a food animal focus will take at least a decade. Where
we do see a change is in different channels to get the product to the customer. Apart from
the traditional customers (vet, OTC and government) we see the new channel (direct to
customer via internet) coming up. Since we deal with medicines that require optimal
application to ensure optimal effects this new trend needs to be managed carefully.”
The outlook to 2015 (Vetnosis) is that the market will continue to grow at a compound rate of 5% per annum.
There is general agreement that a three-tiered AH industry will develop, with the existing ‘Big 3’ at the top
still, then a tier of medium sized players, all owned by big pharma, and then a tier of ‘pure players’. Those in
the middle face some challenges to grow, and will need to acquire, or become stand-alone by divestment.
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In some ways, the ‘pure-play’ companies are in the best position – they can continue to grow as they are doing
at the moment, by acquiring product ranges and local companies to consolidate their positions in the
established regions and to expand into the rapidly-growing new regions.
Less optimistically: “If you want to fulfill all the requirements of society in the coming 50 years, the power will be
in the hands of a few companies and there will be quite a group of companies trying to survive, but will not
substantially contribute to the scene.”
Companies that can take advantage of changes in food-chain management and the need for additional
protein in areas of the world outside North America and Europe will be well-placed. Whether animal health
companies will still be subsidiaries of human health companies in 5-10 years’ time is difficult to say – it is
difficult to imagine Pfizer and MSD Animal Health merging at the corporate level, and interviewees expect the
current wave of Human Health-driven mergers to come to an end. A successful sale of Pfizer Animal Health
coupled with a positive revaluation for Pfizer Inc may well stimulate other owners to divest their animal health
businesses, or animal health companies themselves may look for synergies and concentrate by merging. On
the other hand, one interviewee commented “There is a pendulum to and away from diversified companies –
and it seems more likely now that there is a trend towards diversified companies.”
Perhaps in 5-10 years’ time, Asian or Latin American animal health companies may buy European or North
American companies. Some of the integrated animal production companies are already looking to buy, and it
would be reasonable to expect disease treatment and prevention companies to follow.
Influencing the Future
Apart from a continuing lack of inter-regional harmonization (in spite of VICH and the potential for electronic
submissions), the single biggest challenge in the AH business over the next 5-15 years is likely to be how to
manage the bipolar situation of pressure on antimicrobials and the increased need for food in rapidly-growing
markets. The 2000-2010 decade was very much about food safety; though this is still important, regulatory
authorities have not caught up with the current decade’s needs of food security & supply. At a time when the
large poultry and swine integrated producers are all working on trials of how to continue productivity without
antibiotics, the industry needs to think hard about how to respond. In addition, as one interviewee said: “We
need to be clear that the channels now, vets and feed mills, are not the channels of the future – these are the
integrated businesses, food deliverers such as McDonalds and retailers and they will be far more important.”
The emerging markets want to generate more animal protein so will need to grow towards more integration,
move away from back-yard animals and will leapfrog the mistakes made in US and Europe on the way to
integration. The increasing importance of Brazil and China as growing markets means that animal health
companies will invest in access to those markets and in products that service them. Managing this process
requires different approaches. Some companies may start their international regulatory programs in “Taiwan,
Brazil or India, matching the needs of big meat producers with ease of market entry and markets with big growth.”
Another notes: “The local companies in these countries don’t have the ability to evolve, to innovate, to develop eg
biocides and vaccines with sustained production, quality and supply. The question for the existing animal health
industry is do you have to acquire a local business, merge or set up a facility from scratch – it’s not clear which is
the best decision. In penetrating the new markets, it is not possible to do this with the same approach as for USA
or EU – you have to take account of local requirements for product approval and sales.” Local needs may also
demand flexibility in the approach to manufacturing: “we do recognize that the products needed for those
countries will be products with cheap manufacturing cost. Therefore it is not innovative products in terms of
products that do everything, which are really brilliant for every therapeutic domain, but it is going to be basic,
good, robust products which are cheap to manufacture, still with [the required] quality. That’s where you can
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develop the business. For these emerging countries, innovative technology or companion animal products
development is not really going to drive the business in our view.”
There may be a chance for promotion of intra-regional harmonization by following examples from human
health: “In the human pharma world, we can see this sort of thing happening, in Asia-Pacific - interactions
between Japan, Korea, Singapore, even China – they all realized they needed to cooperate if they wanted to get
innovation and international clinical trials. Without even the industry asking for it, the authorities were meeting
twice a year in Singapore and trying to harmonize clinical trials and parts of dossiers. As our industry is linked with
human rules, I would be very surprised if within Asia and Latin America the animal health authorities would not
seek some type of collaboration and knowledge-sharing. Perhaps IFAH could stimulate the idea for it to happen in
the AH world - regular meetings etc. VICH is a harmonization procedure, but the initiative seen in Asia-Pacific is
different – eg the Japanese MHLW audit Chinese centers so that China-generated data is acceptable in Japan and
vice versa.”
All interviewees addressed the need for Public Relations & Communications as part of managing the
regulatory and political world of the near- and middle-future. Many could see a stronger role for IFAH and its
constituent organizations and greater use of social networking media (Facebook/Twitter/LinkedIn) to boost
product information to the public:
“Many members of the public don’t realize that animals need to be treated, both for the health of the
animal and that of the public, who need be aware that giving antiparasitics or antibiotics is not just a
money-making process. Industry should make efforts to ensure that public opinion is not negatively-
orientated simply through lack of information or because of their immediate response to a media article.
Currently the industry is in a more defensive rather than proactive mode; it’s more a question of
identifying negative word-of-mouth and working out how to counteract this.”
“The whole industry needs to vigorously challenge [a recent posting on the] EMA [website] calling for
greater transparency in product information; in particular a draft for consultation on what more can be
published after the authorization as an extended EPAR; this proposal is quite shocking. The proposals list
data and information that is company-confidential and goes way beyond what can be considered
acceptable. Currently this is only for the human side but it is envisaged for the vet side too.”
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4 Background to Animal Health Industry and Regulatory Dynamics in the USA
Market dynamics
Since 2006 there have been a number of changes in the US animal health industry, some a result of regulatory
trends, others business-related, including the far greater prominence of generics and large-scale mergers or
acquisitions and some the result of macroeconomic trends in animal agriculture and the food industry.
The animal health industry provides an extensive range of pharmaceuticals, vaccines, diagnostics and services
for livestock and companion animals. The US represents the largest segment of the global animal health
pharmaceutical market and, as such, companies feel obliged to do business in the US even if their
headquarters are based outside of the country. However, it is under pressure. In the farm livestock sector,
animal numbers continue to decline. The market is becoming more competitive, partly through the
consolidation experienced recently and partly through a growing saturation of product types and market
needs: “Almost everyone has the same sort of products and is fighting for the same dollars.” Generic products
are posing competition – even Walmart, the major retailer, has its own fipronil product for companion
animals.
The animal health market has become significant more ‘industrialized’, with consolidation in all aspects – farm
operations, integrated food producers, veterinary clinics and product distribution companies. Feed costs have
increased and market prices for farm animal outputs have fluctuated, increasing pressures on this sector.
In farming, the poultry, swine and cattle-raising industries have all become more concentrated. The
consolidation of livestock owners has increased competition for all pharmaceutical companies because there
are fewer avenues to sell product and greater price negotiation power. However, this has been accompanied
by a general increase in level of knowledge that allows a more rational discussion of herd health and a product
and service packages.
The companion animal market is seen as one that will continue to grow in the USA. There has been an
increase in large veterinary clinic chains such as Banfield, which has also increased competition and price
pressure. In particular, the promise of higher growth in the companion animal sector may be compromised by
a combination of less favorable economic situation and changes in how pet owners interact with vets and
where they get their products from.
The equine market is reported as having declined, with the suggestion that this has been the result of
population contraction following removal of funding for inspection of horse slaughter-houses in 2006 and
increased export of horses to Mexico and Canada for slaughter. Renewal of inspection funding was signed into
law in October 2011, which may have a positive impact on sales of equine products. In this context, the
partnership between The Hippolia Foundation, a Europe-based collaboration of research institutes and
universities in France and Belgium, and Pfizer Animal Health is of interest. Announced in February 2012, this
global strategic fundamental research alliance will be pump-primed by Pfizer, initially with $0.5M over 3 years,
to work on viral and respiratory diseases and investigate immunotherapies. Pfizer expects the funding to
facilitate additional investment from government.
The acquisition of local distributors by larger, national distribution companies has more effect on smaller
players that do not have a large sales force selling directly to customers. There are opportunities in
responding to the increasing sophistication of business operations, however, and this accounts for an
increased interest in providing services as well as products being seen in some companies.
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AHI reported 2010 sales of veterinary products for farm and companion animal products of nearly $6.9B in
2010, or 35% of global sales of about $20B. US sales were reported as growing 8% overall, compared with
2009, with a split of 5% for biologics, almost 9% for pharmaceuticals and 10% for in-feed products. This is
slightly more encouraging than the picture suggested by the previous survey, which reported a total US
market of $5.3B for 2005 and a growth rate of approximately 2% p.a. since 1991. AHI members account for
90% of the veterinary products market in the USA. Against the ‘Vetnosis’ estimate of 4% growth, comments
on the 2010-2011 market are varied – some interviewees experienced roughly the same but others report
outperforming the market. Some of this is the impact of acquisitions.
The most notable changes in the industry over the last several years have resulted from extensive merger and
acquisition activity with some top tier companies getting much bigger and certain mid-tier companies
showing significant growth due to acquisition of divested assets. Some companies now have a sales force of
more than 300 people. Acquisitions have given some companies the chance to move away from their historic
sector focus – Elanco is a prime case, and its diversification into companion animals without losing focus in the
farm animal sector has allowed it to post higher growth (15%) than some other companies. Others have
capitalized on strengths and acquired complementary products (Boehringer-Ingelheim Vetmedica’s
acquisition of Pfizer divestments, for example). Interviewees noted that as well as market power, there is a
critical mass that brings access to relationships with regulatory agencies to expedite approvals that isn’t seen
with smaller companies.
The M&A activity has also increased the visibility of the AH industry and its attractiveness to venture capital
and private equity companies and there is an increasing number of small VC-funded ‘virtual’ companies, who
may well become the originators of future innovative products: “Examples are Putney and Aratana. $30 million
can get a lot of stuff done in animal health and a lot less in human health.” The establishment of the Kansas
Animal Health corridor has also raised the industry’s profile and generated interest in its potential
contributions to innovation and the economy.
The animal health and veterinary products market in the USA is dominated by the ‘Big 3’ multinational
companies Pfizer Animal Health, Merck Animal Health and Merial. Although Pfizer AH has benefited from its
parent’s purchase of King, which brought Alpharma’s feed additives business, and Wyeth, which brought Fort
Dodge into the Pfizer AH fold, its own recent acquisition strategy has been focused on animal health interests.
Purchases since the last IFAH GSB include Embrex in ovo poultry vaccines company in 2006, Vetnex generic
pharma and vaccines in India in 2009, and Synbiotics for diagnostics and Microtek International for
aquaculture in 2010. In late 2011, its subsidiary China-Pfizer Animal Health Ltd announced a joint venture (Jilin
Pfizer Guoyuan AH Co) with Jilin Guoyuan Animal Health Co, to develop, manufacture and sell vaccines in
China, targeting a sector stated to be worth $800M in a total animal health market worth $3.4B. A market
which, incidentally, doesn’t yet figure in the conventional global total of $20B for animal health.
For those companies with human health parents, the dynamic seems on balance more positive than
previously, though integration may produce stress as functions are assessed and streamlined, with loss of staff
and transfer of responsibilities, sometimes into and sometimes out of the USA. R&D linkages are reported to
have improved in some cases. Commercial pressures and the need for the animal health subsidiary to conform
in its Public Relations Dept and communication activities with the human parent procedures were cited as
examples of disadvantages, however. The major pressure on animal health subsidiaries is to continue to
deliver the profitability and shareholder value that have persuaded human health parents to retain them.
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Market challenges
Especially for the companion animal market, the use of alternative distribution channels has increased, with
some animal health companies choosing to market product through an OTC channel as well as, or instead of,
through veterinary clinics: “There is a shift from vets to OTC. The trend will continue and we have to learn to take
advantage of it.” This change has been particularly significant for companion animal flea and tick products,
thought to be one of the reasons for a decline in visits by owners to veterinary clinics. Another is the increasing
use of the internet, partly by owners who check disease signs on-line and make up their own minds about
treatment and partly because owners can buy product on line: “It is a matter of how [the industry] will adapt
because it isn’t going away.”
Managing the changes in balance between farm animals and companion animals and between the US market
and the opportunities in rapidly-growing markets such as Latin America and China is already being met by
some companies.
Product pipelines are a concern – they do not seem to be so full of real innovation, hence the reported interest
in licensing-in from other companies and academics, and the search for growth through acquisitions of
companies or product portfolios. Unmet needs in the market may increasingly lie in niche and small markets,
and neither industry nor the regulatory systems is well-equipped to manage the disparity between costs for
development and approval and returns. An exception may be the overall area of food safety, which might
combine many existing and new products to advance the area – therapeutics, biologics, diagnostics, biocides
and specific in-feed health and hygiene maintainers. The challenge here might be how to bring products and
practices not previously thought of as ‘veterinary’ within the animal health industry’s remit.
Generics were a strong topic of discussion during interviews. Interviewees definitely see them as a challenge,
however, the perception is that companies may lose more than they gain when they move into generics, and
that often having a generic in the marketplace doesn’t decrease sales of an innovator’s product significantly.
The impact of patent expiry on a product is not as marked as on human health products – an example given
being the Japanese company Astellas’s compound tamsulosin, marketed as Flomax® for supporting urine flow
in benign prostate hyperplasia, which lost more than 99% of its market as soon as generics were available. On
the other hand, if a major AH company secures a therapeutic switch for one of its top products, or makes the
decision to extend a product from professional-only to over-the-counter sales in the USA (the example given
as a potential was Merial’s ‘Frontline® Plus’), this would cause a real market challenge for other companies. In
addition, some distributors have launched their own-label products, becoming direct competitors to the AH
industry in the process.
AHI members face an unquantified challenge in the shape of compounding. This is the formulation of animal
remedies from known active ingredients, often available as bulk commodity molecules and often imported
into the USA. While legislation exists that should prevent compounding when an approved product is
available, because of conflicting court decisions there is a perception that FDA is reluctant on enforcement.
Although FDA took a compounder to court recently, it lost the case. Compounders will continue to supply
cheaper product because of their much lower manufacturing standards and lack of GMP compliance costs.
This is a disincentive to the development and approval of smaller products with limited market potential. One
example is a product developed specifically for horses, which will be the first FDA-approved product in a
market where compounding currently satisfies the demand; it is still uncertain whether FDA will take steps to
stamp out compounding after the licensed product becomes available.
GBS 2011
USA
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37
Regulatory dynamics
The US animal health industry is regulated by the Federal government through three agencies, each of which
has prime responsibility for a particular product category. The Center for Veterinary Medicine (CVM), a
branch of the Food and Drug Administration (FDA), regulates pharmaceuticals, which generally encompasses
all products except vaccines and pesticides. Vaccines, defined as products that prevent or treat diseases by
stimulation of the immune system, are regulated by the Center for Veterinary Biologics (CVB), which is based
within the Animal and Plant Inspection Service (APHIS) of the US Department of Agriculture (USDA).
Regulation of the newer biopharmaceuticals is more complicated and USDA will often relinquish responsibility
to FDA. The Environmental Protection Agency (EPA) regulates pesticides, generally defined as products that
kill external parasites by a local, non-systemic mechanism.
Changes at FDA since the last survey include the full deployment of the Animal Drug User Fee Act (ADUFA),
which imposed user fees on animal health companies with approved products in the US market and on new
animal drug applications submitted to CVM beginning in financial year (FY) 2004. The additional funds
generated allowed CVM to increase staffing and resources to meet the progressive performance goals
required under the Act for the 5-year period through FY 2008. ADUFA was reauthorized (‘ADUFA II’) in 2008
for a 5-year period beginning FY 2009 with new performance criteria that included the end review amendment
process and development of an electronic submission tool. To date CVM has met the required performance
criteria and negotiations will begin in 2012 for the performance criteria that will be applied when ADUFA is
reauthorized in 2013. Comments from interviewees on ADUFA and CVM are included later in this report.
FDA is seen as doing “a good job of making meetings productive so that sponsors can make decisions. They are
willing to engage sponsors. They are responsive to questions – will provide answers.”; “CVM is willing to talk and
we hope that the dialogue will bring changes. FDA sees that they need to promote innovation. They have the
idea.”; and “the CVM is meeting deadlines because of ADUFA and the ERA [End Review Amendment process] is
having a positive impact.” These are all positive industry opinions, from interviewees, that demonstrate some
grounds for optimism.
FDA has established IVET, the innovation initiative, within CVM’s Office of New Animal Drug Evaluation. In
principle it appears to offer the boost that is needed for the products of the future. Company personnel report
having met members of the team and finding them positive and eager to act; the leader receives
commendations from industry for the initiative; but interviewees say that the evidence for benefits still has to
be seen. It is probably a little premature to judge the impact of this initiative on review and approval times for
innovation.
The Animal Generic Drug User Fee Act (AGDUFA) was passed in 2008. This act imposes fees on generic
animal drug applications coming forward to CVM, also called abbreviated new animal drug applications
(ANADA). The additional funds generated were to allow CVM to meet the progressive performance goals for
ANADAs over the 5-year period required under the act. AGDUFA fees have resulted in a significant decrease
in generic drug applications and CVM is already close to meeting the 5-year goals.
GBS 2011
USA
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38
USDA CVB is seen by some as having resource and expertise problems that have built up since 2006. The
resource limitation is seen as driving a reluctance to tackle new products where there might be ambivalence
on whether they are USDA-regulatable or FDA-regulatable. This is likely to cause increasing problems as new
biotechnological and biopharmaceutical products are developed, some of which may be less viable under the
timelines and costs imposed by FDA requirements.
USDA was once regarded as understanding the needs of industry and the market, but there is an increasing
concern from interviewees about USDA’s reluctance to change and to implement potential harmonization
with other regions. Many biologics-involved interviewees mentioned an increasing and serious problem in
USDA reviewers of an over-reliance on statistics and biometrics with insufficient regard of clinical outcomes.
However, a promising change was introduced in early 2011, the extension of vaccine antigen reference
requalification period to 15 years. Pressure also built up over the past 5 years about vaccine manufacture in
USA for export only, especially concerning the labeling, and legislation has been changed to allow labels
approved by overseas agencies to be used, not USDA-approved labels only.
EPA is thought to have been rather overwhelmed by the boom in companion animal ectoparasiticides and
spot-on products. In addition, it was seen that there were politically-motivated cuts in EPA’s budget to restrict
their activities in carbon-emission reduction that had had a knock-on effect on resources available for product
regulation.
The existence of multiple agencies has both positive and negative impacts. The CVM evaluation process is
generally the most stringent and lengthy but the agency is well-staffed and has statutory turnaround times for
various types of submissions. The USDA evaluation process is shorter but recently staff shortages have
extended review timelines and it is no longer possible to predict submission response time with any
confidence. The EPA’s remit is primarily concerned with environmental matters and reviewers, who are not
veterinarians, may be less knowledgeable about the practical aspects of animal health product development
and field use than staff from the other agencies. In addition, EPA requires that all data is generated in
compliance with their specific GLP regulations, which means that additional work is often needed to generate
the GMP/GCP data that is required for non-US markets.
Initiatives from the agencies that have the capacity to improve industry’s position include the efforts by CVB in
refinement of testing, to reduce the usage of animals, introduce less stringent endpoints and wherever
provable, replace animal-based potency tests by serological or other tests. This has had a positive impact for
biologics activities, especially in the qualification and requalification of antigens, which have also benefited
from relaxation in the requalification frequency. More recently, FDA has established innovation teams in the
ONADE (Office of New Animal Drug Evaluation), with whom companies can discuss upcoming innovations, in
order to explore how to manage these when they come forward as New Animal Drug Applications (NADAs).
Companies report that relationships with the FDA CVM have improved over the past 5 years and that there is
more communication. In general, companies are satisfied with the predictability of timelines for the NADA
review and approval process that is a direct result of the ADUFA legislation, even if they believe that the time
overall is too long, and they are highly-appreciative of the process of phased submission, especially compared
with other regions such as Japan, where submission can only take place when the dossier is complete.
GBS 2011
USA
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39
Set against this is a general perception that the agencies have become far more risk-averse and this makes it
much more difficult to get products cleared. “Regulatory agencies have increased scrutiny. We probably don’t
get any benefit from this – no additive benefit for the effort. There is no increased value in the product sold.”
Regulatory challenges
Other aspects of change are more challenging. The End Review Amendment (ERA) process was introduced in
ADUFA II and appears to have been useful for some aspects such as protocol concurrence and finalization of
the approval process, but can overwhelm an applicant with too many requirements at a very late stage; one
interviewee quoted an ERA with 40 comments for action. Some feel that the process falls short of what
industry was looking for and is becoming over-used, perhaps as a way of hitting time targets whilst putting
applicants into clock-stop. Some other changes introduced by FDA CVM, such a electronic submissions and
pharmacovigilance processes, are regarded by the agency as improvements but demand many more
resources from industry than is optimum.
The CVM has a specific section devoted to products for minor use and minor species (MUMS) but most
companies report that the regulatory requirements, particularly the need for a full Chemistry, Manufacturing
and Controls (CMC) section, makes it uneconomical to develop products in this category given the limited
sales potential and competition from compounders.
Indeed, over-stringent CMC requirements, and a demand for data that should be part of GMP requirements in
the CMC part of the dossier, are disincentives for large companies too, some of whom report dropping
products from their portfolios as a result.
To-date, USDA has not operated an ADUFA system and the industry’s view is that the agency should use its
government funding more efficiently rather than introduce user fees.
A significant challenge expected in the near future is how new technologies are handled by regulators,
specifically products arising from biotechnology in both pharmaceutical and biologics areas. Industry
interviewees identify the following areas as targets for innovation:
Technology focus
- Biologics for disease prevention in place of antimicrobials for disease treatment
- Biopharmaceuticals including monoclonal antibody therapies
- Extending the uses and life-spans of existing actives through new delivery and controlled release
methods
- Formulation technology and nanotechnology for increasing safety of products, half-lives, shelf-life
and room-temperature stability for biologics
- Use of knowledge from genetics and the molecular basis for disease for developing new products
and approaches.
Innovation in diversification:
- Aquaculture as a market sector
- CAP for dental conditions, non-surgical sterilization, ophthalmology, cancers, atopic conditions
and diseases of aging
- Diagnostics for targeted intervention and for demonstrating metabolic affects from new products
- International collaboration on trans-geographic diseases.
GBS 2011
USA
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Companies are concerned that, in general, and in spite of the CVM ONADE initiative, a combination of lack of
specialist knowledge in the agencies and increased risk-averseness is likely to derail applications through
questions, demands and shifts in reviewer position that reflect the inefficiencies of agencies rather than the
deficiencies of an applications. In addition, companies do not like a perceived tendency of USDA to hand over
any biotechnology product that is not obviously whole-antigen based to FDA: “The challenge also is with the
emergence of new technology, trying to work out who regulates what. It’s not as simple as “this is a vaccine”,
“this is a drug”. This creates uncertainly for the company. The short development period if a bio [and regulated by
USDA] can be multiplied by 2 or 3 for an FDA product.”
Specific regulatory issues
Figure 3: The top regulatory concerns in the USA
2%
2%
2%
2%
2%
7%
10%
10%
10%
12%
17%
24%
unclear approach to innovations
pharmacovigilance system too onerous
CVB reference requalification for existing products
fast-track possibility at CVM seems to have disappeared
too many submissions classified as 'H' by CVM, increasing
timelines
lack of knowledge and understanding of product use/context
budget and resource issues
inability to handle, plan for or understand innovation
CMC burden inappropriate for AH products and niche products
insufficient predictability and consistency at agency and reviewer
levels
political pressures leading to zero-risk
time, costs and hurdles too high
% of responses
Interviewees identified and discussed what they had experienced as the top regulatory factors inhibiting
innovation in USA, and there was consensus on three main problems:
Excessive time, costs and data hurdles;
An over-cautious ‘zero-risk’ approach in the agencies;
Insufficient predictability and consistency.
GBS 2011
USA
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41
CVM
Of all the technical sections, CMC is most likely to require multiple review cycles. Industry gives several
reasons why regulatory oversight is problematic: unnecessary stringency in requirements; a lack of
understanding of the unusual nature of some animal health products such as in-feed premixes; the
requirement to include data in the technical section that was previously required only during site inspections;
and a lack of understanding of the financial potential of animal health products which mean that it is not
economically viable to manufacture the demanded multiple large batches during development. Although
CVM reports that 50% of CMC technical sections are approved in a single review cycle, this does not seem to
be the experience for AHI member companies.
The USP issued a new general chapter concerning residual solvents in 2008. This has become one of the most
contentious and time-consuming issues, because FDA has mandated that it also applies to animal health
products. All companies were required to submit information for each of their products demonstrating
compliance with the new USP requirements. Significant resources were required to make the submissions
and to address the ‘incomplete letters’ generated in response. One company alone reported receiving more
than 40 ‘incomplete letters’. One interviewee noted: “Residual solvents in human health are handled by local
inspectors. CDER has stayed away from it. CVM said they didn’t trust local inspectors and companies had to
submit data to CVM.”
There is a general consensus that there is a much greater chance of regulatory success and better speed to
market for companion animal pharmaceutical products. Many companies are re-directing funds to companion
animal projects because of the high regulatory hurdles and long development timelines for livestock
pharmaceuticals.
Several companies have flagged the CVM’s environmental assessment requirements as being particularly
onerous with reviewers uncertain of what is really required and virtually every product having to go to a Tier 2
assessment. Submissions often require multiple review cycles with new questions in each of the ‘incomplete
response’ letters.
USDA
Over the last 5 years USDA has increased review turnaround time and concerns have also been raised about
the lack of consistency between reviewers. These problems are generally attributed to lack of resources and
less experienced staff. In spite of the improvements demonstrated at CVM, as a direct result of the levying of
user fees, there is resistance from companies to a suggestion that user fees are also imposed for CVB.
Companies report that they can establish good relationships with CVB reviewers but there are increasing
concerns at the Agency’s reliance on statistical analyses in the face of poor communication concerning
statistical models and outcomes and an apparent lack of attention to clinical relevance.
EPA
EPA is perceived as not being prepared for the boom in companion animal flea and tick products. They are not
technically experienced in animal health and veterinary medicine and do not have the same open
communication process as CVM and CVB. Their assessment method for pharmacovigilance and product
reports takes no account of doses of product sold and used in a reporting period or the source of the product.
On the positive side, they have a conditional registration system that includes a commitment to provide
additional data in a defined period, which is viewed as positive compared with the CVM process for
pharmaceuticals where no such provisional license exists.
GBS 2011
USA
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The future
There are industry-wide concerns about the ability of all of the Agencies to deal with review and approval of
new innovative products. However, CVM’s iVET initiative and the formulation of Tech Teams for specific
innovative technologies or products are seen by the Industry as a very positive moves. Although there has
been no concrete outcome to date, it demonstrates openness to the types of changes that may be required in
evaluating and approving unusual and different types of products that are likely to be developed in the future.
Most company spoke people emphasize the need to “walk the talk” but there is universal praise for CVM in
their acknowledgement that the product review process of the future is not likely to be business as usual.
GBS 2011
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5 The Global Benchmarking Survey 2011 – a review of the findings for the USA
Industry Profile in the USA
Number and size (sales and personnel)
14 companies were involved in the 2011 GBS in the USA, of which 10 classed themselves as global
multinationals and 4 as focused on the USA plus some exports to and/or subsidiaries in other countries. All 14
provided survey responses and 12 agreed to be interviewed. 7 have their headquarters in the USA and 7 in
Europe. Table 4 compares the company numbers with previous surveys.
Table 4: Animal Health companies in the USA survey 2001-2011
Number of companies
2011 2006 2001
14 14 13
Note: 2006, 2001 data based on global multinational companies only
Of the interviewees in the 2011 survey, 47% had been involved in the 2006 survey, and 7% in the 2001 survey
also; 7% had not been involved in 2006 but were aware in varying degrees of the outcomes, 40% had not been
involved and were not aware of the outcomes; 13% had probably been involved but did not recall completely.
Figure 4 shows reported annual sales of 12 companies, amounting to almost $15B worldwide and a little over
$5.4B within the USA itself (36.3% of the total). Companies were asked to give their sales for the most recent
complete trading year. The companies involved represent about 85% of the overall animal health market in
the USA and over 95% of the biological market.
Figure 4: Reported total and regional turnover for companies in USA survey 2011
8%
33%
8%
25% 25%
17%
33% 33%
17%
<$50M $50-$500M $500M-$1B $1B-$2B >$2B
% o
f co
mp
an
ies
total sales
regional sales
Survey respondents employed almost 33,500 staff world-wide, of which almost 9,900 are based in the USA
(29.5% of the total). The range of employee numbers is wide, taking in almost one-third at US level with 100
employees or fewer and almost 50% with over 500. Figure 5 shows the distribution of numbers world-wide and
in USA itself.
GBS 2011
USA
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44
Figure 5: Size of companies by global and regional employment 2011
15%
8%
15%
8%
54%
31%
23%
8%
31%
8%
<100 employees
101-500 employees
501-1000 employees
1001-2000 employees
>2000 employees
% of companies
regional
total
Profile of Business activity
Figure 6 shows the market focus of respondents’ companies: 33% were comprehensive, covering most species
and disease classes, and a further 27% specific product areas or types such as biologicals or in-feed products.
Figure 6: Market focus – USA 2011
33%
0%
20% 20%
27%
comprehensive specific disease types selected species specific species or
diseases
specific product areas
portfolio type
% o
f co
mp
an
ies
Figure 7 shows the product focus of companies, which is mixed-portfolio (40%) or mainly veterinary
pharmaceuticals (20%), with biologics (13%), in-feed products (13%) or pharma+bios (7%) forming most of the
balance; primarily pesticide-based products companies were in a minority.
GBS 2011
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Figure 7: Product focus – USA 2011
40%
20%
13% 13%
7% 7%
a mix of
types
primarily
pharma
primarily bios primarily in-
feed
primarily
pesticides
primarily
pharma +
bios
% o
f re
spo
nd
en
ts
Tables 5 & 6 compare the results in 2011 with those from previous surveys, for market focus of the business
and product focus. The responses suggest a slightly more limited range has developed, as far as market focus
is concerned, but the types of product are more likely to be mixed.
Table 5: Market focus of AH companies in USA 2001-2011
% of companies market focus
2011 2006 2001
Comprehensive 33% 36% 38%
Specific disease types 0% 7% 23%
Selected species 20% 21% 15%
Specific species or diseases 20% 29% 24%
Specific product types 27% 7% 0%
Table 6: Product focus of AH companies in USA 2001-2011
% of companies product focus
2011 2006 2001
A mix of types 40% 29% 46%
Primarily pharma 20% 29% 15%
Primarily bios 13% 14% 23%
Primarily (medicinal) in-feed 13% 21% 15%
Primarily pesticide-based 7% - -
Other (pharma+bios) 7% 7% 0%
GBS 2011
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R&D spend and profile
The average percentage of turnover spent on R&D was 6.1%, with the majority of companies (62%) falling into
the 5-10% band (Figure 8). This continues the decline seen since 1996 (Table 7).
Figure 8: Percentage of turnover spent on R&D by USA companies 2011
31%
62%
8%
<5% 5%-10% >10%
% of turnover spent on R&D
% o
f co
mp
an
ies
Table 7: R&D as % of annual global turnover of US companies 1996-2011
2011 2006 2001 1996
6.1% 9-10% 12% 12%
Annual R&D spend can be estimated by taking reported annual turnover and factoring by reported percentage
R&D. This produces an estimate of total world-wide annual R&D spend by regional companies of almost $1B,
with a biphasic distribution that is related to the overall turnover (Figure 9).
Figure 9: Estimated global R&D spend of US companies 2011
38%
23%
38%
<$10M $10M-$100M >$100M
estimated global R&D spend
% o
f co
mp
an
ies
For the purpose of the survey, companies were asked to include all relevant internal costs, such as personnel,
apportioned establishment costs, and allocated research costs, outside resources such as CROs, field trials etc,
and allocations for defensive R&D in the overall R&D spend. They were not asked to include apportioned
CapEx or amortized failure costs.
GBS 2011
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The distribution of average R&D expenditure is 65% spend on pharmaceuticals, 35% on biologicals, with over
70% spending over 50% of their R&D on pharmaceuticals, 21% exclusively so (Figure 10). 29% of companies
spent >50% of their global R&D spend in biologicals R&D.
Figure 10: Percentage of R&D spent on pharmaceuticals USA 2011
14%
0%
14%
29%
21% 21%
0% 1-20% 21-50% 51-80% 81-99% 100%
% of R&D spent on pharmaceuticals
% o
f co
mp
an
ies
Between 2006 and 2011 there was an overall shift of spend from CAP (companion animal product) projects to
FAP (farm animal product) projects of about 0.8% (Figure 11). However, this rather low shift is biased by one
respondent who reported a 25% shift from FAP spend to CAP over this period. Re-calculating when this figure,
which acts as an outlier, is excluded, gives a 3.1% shift of proportionate budget from CAP to FAP, from 40:60
CAP:FAP in 2006 to 37:63 CAP:FAP in 2011. Note that the split reported by companies involved in the 2006
survey itself was 45:55 FAP:CAP. The question was not asked in earlier surveys.
Figure 11: Changes in proportionate R&D spend by USA AH companies 2006-2011
One company noted: “There are more senior pets, which have no reliable lab models. Lab dogs are young and
healthy and not necessarily reflective of the senior pet population.”
40.1%
39.3%
-0.8%
59.9%
60.7%
0.8%
CAP spend 2006
CAP % 2011
shift in CAP spend
FAP % 2006
FAP % 2011
shift in FAP spend
relative % R&D spend
GBS 2011
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In carrying-out R&D, there can be a range of priorities, from new production processes to new products.
Companies identified their top priorities, up to 3, and Figure 12 shows the targets that companies are seeking,
expressed as a percentage of companies. New products were a target for 79% of companies, new
APIs/antigens for 71% and improved products for 64%, confirming that innovation is still a focus of the
industry.
Figure 12: R&D priorities for US companies 2011
79%
71%
64%
21%
14%
14%
new products
new APIs/antigens
improved products
new delivery methods
new production processes
new development tools
% of companies
In interviews, companies discussed their current R&D priorities and whether they saw these as changing over
the next period. Companies will largely maintain their existing focus in the USA, but it depends on whether
they are large-portfolio companies or niche-market players at the moment. Pfizer’s AH business and similar
large companies are expected to maintain course, in Pfizer’s case whether it is divested or not: “For a large
company it takes a lot to change course so there is lots of planning and strategizing.” Those companies active in
specific sectors such as CAP or biologic FAP see that the market is not yet saturated and there is an advantage
in maintaining focus but being responsive to market needs, for example in oncology or sheep and goat
vaccines. Despite an overall view that the biologics market has good growth prospects, there are concerns
about timelines and predictability within USDA that lead some mixed portfolio companies to favor FDA CVM-
regulated products.
Companies are acutely conscious of the costs of meeting FDA and USDA demands compared with market size
and competitiveness: “The company will place a higher priority on [treatment] products that don’t require
regulatory approval” and “The company will move away from small innovative products in the US because of the
costly CVM process. The EU is a more accepting market – not such a complicated, demanding process.”
Table 83 compares these results with those obtained in the 2006 survey, showing percentage of companies
selecting a priority. The top five priorities have remained the same, though a higher percentage of companies
favors improving existing products, and a lower percentage favors new product development, than five years
ago. In addition, new drug development tools (such as genomics, rapid screening, analytical methodology) are
receiving attention in 2011, compared with no mention in 2006.
3 Note that, for all tables where priorities, impacts or criteria are compared, data from 2011 is reported as total percentage of
companies ranking the choice as 1, 2, 3 or 4, and for earlier dates as total percentage of companies ranking the choice as
‘important’ or ‘very important’.
GBS 2011
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Table 8: Most important R&D priorities of AH companies in USA 2006-2011
% of companies R&D priority
2011 2006
Develop new products 79% 93%
Develop new APIs/antigens 71% 57%
Improve existing products 64% 57%
Develop new drug/antigen delivery
methods
21% 36%
Develop new drug development tools 14% 0%
Develop new production processes 14% 21%
R&D spend in USA
The majority of companies spent more than 50% of their R&D spend in USA (Figure 13); 21% spent over 90%
of their R&D in the USA. The estimated annual R&D spend in USA can be calculated by taking the estimated
R&D spend and factoring by reported percentages spent in USA, taking the mid-point of each band for
calculating the average. The total estimated US spend of about $600M is 61% of the total estimated global
R&D spend of just under $1B, for the companies involved in this survey.
Figure 13: Percentage of global R&D spent in USA by US companies 2011
0%
14%
7%
36%
14%
29%
<10% 10-30% 31-50% 51-60% 61-80% >80%
% of global R&D spent in USA
% o
f co
mp
an
ies
Figure 14 shows the distribution of estimated R&D spend in the USA, using the categories reported in earlier
surveys. The majority of companies spend less than $50M a year on R&D, most of them much less, but a
substantial percentage spend between $60M and $250M a year.
Figure 14: Estimated value of global R&D spent in USA by US companies 2011
% of companies
58%25%
17%
<$50M
$50M-$100M
>$100M
GBS 2011
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Table 9 compares 2011 with previous surveys, for average percentage spend of R&D in USA.
Table 9: R&D expenditure in USA 1996-2011
R&D spend in USA as a % of total R&D spend
2011 2006 2001 1996
61% 50% 60% 50%
Since 2006, 43% of companies reported a slight increase and 36% of companies little change in the USA’s
share of new product development (NPD) spend. 14% of companies reported a larger increase in share and 7%
a slight decrease. Figure 15 summarizes the pattern of change – the substantial minority reporting a large
increase were not companies with their headquarters in the US.
Figure 15: Change in the USA’s share of global R&D spend 2006-2011
0%
7%
36%
43%
14%
decreased a lot
slight decrease
little change
slight increase
increased a lot
% of companies
The main drivers for change in the USA’s share of R&D were an increased base cost of doing R&D and
acquisition of companies with development programs (Figure 16), ranked as very important by 50% of
companies and as the single most important reason by 17% each. However, 25% of companies regarded
deterioration in the regulatory environment as the single most important reason for change.
Figure 16: Factors effecting the change in the USA’s share of R&D 2006-2011
17%
8%
25%
17%
17%
8%
17%
17%
17%
17%
8%
33%
33%
Divestment of companies with development programs
Decreased base cost of conducting R&D in the USA
Less availability of CROs/research organisations
Moved R&D elsewhere
Improved regulatory environment
Greater availability of CROs/research organisations
Deterioration in regulatory environment
Acquisition of companies with development programs
Increased base cost of conducting R&D in the USA
% of companies
% ranking 1
% ranking 2-4
GBS 2011
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51
Those who noted a large increase in the US’s share pointed to acquisition of companies with development
programs and greater availability of CROs in the USA as the reason. Acquisition, increased base-cost of R&D
and regulatory environment deterioration were mentioned as the single most important factor by 63% of
companies in total.
Contracting-out R&D in the USA
Figure 17: Contracting out R&D in the USA 2011
27%
13%
33%
27%
<25% 26-50% 51-75% >75%
contracting-out percentage bands
% o
f co
mp
an
ies
In the USA, the majority (60%) of companies contracted out more than 50% of their R&D to universities or
contract research organizations; 27% contracted out 76-100% of their R&D work (Figure 17). Table 10
compares the responses in 2011 with those in 2006 and 2001. The average of 53% in 2011 is calculated by using
the mid-point of each band. The picture seems consistent with 5 years ago.
Table 10: Contracting out R&D in the USA 2001-2011
% of US R&D contracted-out
2011 2006 2001
53% 55% 25%
Although the percentage has not changed, most interviewees noted that their companies were tending to
involve more outside resources for R&D, partly through a recognition that they neither had nor could afford all
expertise in-house, or because they focused more on development and less on the originating research. This
situation is also important for how the industry innovates.
GBS 2011
USA
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52
The AH Industry in the USA and innovation
In interviews, companies identified a number of areas for innovation that they would be pursuing in the near-
to mid-term (Table 11).
Table 11: Targets for innovation in US AH industry 2006-2011
area target
New
technologies
- Biologics for disease prevention in place of antimicrobials for
disease treatment
- Biopharmaceuticals including monoclonal antibody therapies
- Extending the uses and life-spans of existing actives through
new delivery and controlled release methods
- Formulation technology and nanotechnology for increasing
safety of products, half-lives, shelf-life and room-temperature
stability for biologics
- Use of knowledge from genetics and the molecular basis for
disease for developing new products and approaches
New market
focus
- Aquaculture as a market sector
- Companion animal products for dental conditions, non-surgical
sterilization, ophthalmology, cancers, atopic conditions and
diseases of aging
- Diagnostics for targeted intervention and for demonstrating
metabolic affects from new products
- International collaboration on trans-geographic diseases
These feed strongly into the most important drivers for competitive success.
Drivers for competitive success
AHI members spent almost $690M on R&D in 2010, according to AHI, about 5% higher than in 2009. The
figure includes spend on innovation and on maintaining existing products, with an 86%:14% split between the
two categories, respectively.
Figure 18 shows the percentage of companies in the survey regarding each driver as very important (total of
ranks 1-4). In the short-term, functional efficiencies are very important - exploiting existing products more
profitably, reducing production and distribution costs and improving sales and marketing were regarded as
overall very important by 79% of companies each, and as the single most important driver by 29%, 21% and
7% of companies respectively. Providing new services and developing major new products were very
important for 57% and 50% of companies respectively, and were the single most important driver for 7% and
21% of companies respectively.
GBS 2011
USA
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53
Figure 18: Drivers of long-term and short-term competitive success in the USA 2011
7%
29%
93%
64%
71%
64%
64%
21%
50%
57%
79%
79%
79%
Reduce competition by M&As
Enter new geographic markets
Develop major new products
Provide new services
Improve sales and marketing efficiency
Reduce production & distribution costs
Exploit existing products more profitably
% of companies
% ranking 1-4 ST
% ranking 1-4 LT
For long-term success, new product development was overwhelmingly the most important driver, ranked as
overall very important by 93% of companies and as the single most important by 86%. Functional efficiencies
and new services were however still extremely important, ranked highly by 64%-71% of companies. Achieving
competitiveness by Mergers & Acquisitions was not regarded as an important driver for either short-term or
long-term competitiveness.
Tables 12 and 13 compare results for 2011 with those for previous surveys, for short-term drivers and long-
term drivers respectively. The importance for companies of market pressures is evidenced by the permanence
of the top 3 ranked drivers for short-term success, and increases in efficiency factors for production, sales and
marketing and existing products in one or both time-horizons.
Table 12: Drivers of competitive success in the short term in the USA 1996-2011
% of companies driver
2011 2006 2001 1996
Reducing the costs of production and distribution 79% 100% 69% 58%
Exploiting existing products more profitably 79% 100% 54% 79%
Improving the efficiency of sales and marketing activities 79% 33% 85% 63%
Providing new services to meet customer needs 57% - - -
Developing major new products to meet customer needs 50% 33% - -
Entering new geographic markets 21% 33% - -
Mergers and acquisitions 0% - - -
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USA
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Table 13: Drivers of competitive success in the long term in the USA 1996-2011
% of companies driver
2011 2006 2001 1996
Developing major new products to meet customer needs 93% 100% 92% 95%
Improving the efficiency of sales and marketing activities 71% 14% - -
Reducing the costs of production and distribution 64% 29% - -
Exploiting existing products more profitably 64% 21% - -
Providing new services to meet customer needs 64% - - -
Entering new geographic markets 29% 50% 54% 63%
Mergers and acquisitions 7% 43% - -
Cost increase has a direct impact on competitiveness. Interviewees saw development and regulatory as the
most expensive part of the innovation process, except where products required different manufacturing
technology. In particular, for new antimicrobial products, the suite of studies needed to satisfy all the
regulatory and political demands is a major disincentive to innovation for this type of product. Discovery and
synthesis is also increasing in cost for new pharmaceuticals.
Factors for successful innovation
Innovation is clearly regarded as a vital driver for success, especially in the longer-term. Factors for successful
innovation were ranked by companies in USA. Figure 19 shows the percentages of companies regarding these
as the single most important factors (rank 1) and the others also regarding them as very important (ranks 2-4).
Figure 19: The top 4 factors important in innovation in the USA 2011
7%
7%
29%
50%
14%
7%
43%
50%
50%
43%
50%
43%
Access to other markets
Integrating activity across functions
Access to capital
Minimizing uncertainty
Controlling development costs
Access to critical skills
Minimizing time-to-market
Access to creativity & ideas
% of companies
% ranking 1
% ranking 2-4
The single most important factor for 50% of companies was access to creativity and ideas (including within the
company) and for 29% was minimizing time-to-market; these were overall regarded as very important by 93%
and 79% of companies respectively. Accessing critical skills, access to capital, minimizing uncertainty and
controlling development costs were other important aspects for 43%-50% of companies.
GBS 2011
USA
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55
Table 14 compares the results in 2011 with those from the previous 3 surveys.
Table 14: Important factors for successful innovation in the USA 1996-2011
% of companies factor
2011 2006 2001 1996
Access to creativity & ideas 93% 100% 92% 100%
Minimizing time-to-market 79% 100% 77% 90%
Access to critical skills 50% 93% 69% 64%
Controlling development costs 50% 64% 69% 69%
Minimizing uncertainty 50% 64% 61% 48%
Access to capital 43% 71% 69% 53%
Integrating activity across functions 14% 85% 61% 53%
Access to other markets 14% 50% 69% 74%
Most criteria, with the exception of access to other markets, integrating activity across functions, and access
to capital, were ranked by companies in the same order in 2011 as in previous years, though there is a fall-off in
overall percentage totals in 2011 for all factors. Access to creativity and ideas retains its supreme place (93% of
companies in 2011 compared with 92%-100% previously).
Companies look to external resources for innovation, complementing development activities with licensing-in
from academics or other companies, recognizing that “we can’t build all we want internally to cover all the
technologies that we are interested in.” Companies with human health parents can still transfer technologies in-
house and complete development for the veterinary market – Boehringer-Ingelheim has historically been such
a company and continues this tradition. Pfizer AH has concluded a collaboration in early 2012 with a European
network The Hippolia Foundation, to focus on equine research, for example.
Regulatory impacts and obstacles to innovation
Interactions between Government, regulations and business formed an important part of both surveys and
interviews. 71% of companies were extremely explicit about the impact of the regulatory environment in the
USA on innovation, regarding it as negative or very negative (Figure 20).
Figure 20: Impact of the regulatory environment in the USA on innovation 2011
7%
64%
21%
7%
very negative negative neutral positive
% of companies
GBS 2011
USA
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56
Figure 21 shows the percentages of companies regarding these as the single most important factors (rank 1)
and the others also regarding them as very important (ranks 2-4). The specific obstacle to innovation regarded
as of top-ranking importance was the USA’s regulatory framework; 71% of companies ranked it as the single
most important factor and 86% of companies saw it as very important overall. Although other features
received few or no top-rank scores, those most often ranked in the top 4 were lack of availability of finance,
inadequate intellectual property protection and small size of market segments, regarded as overall very
important by 43%-50% of companies. Two other negative factors were identified by a small number of
companies involved in biologicals: reference requalification and retrospective application of new regulations
to existing vaccines, and restrictions on imported products. The point about reference requalification was
explored in interview. The interviewee noted: “In theory, according to USDA it would reduce use of animals but it
actually increased the number of animals used and also the amount of research money needed for this that could
not be used for innovation. More recently USDA seems to have realized the problem and they have become more
reasonable.”
Negative consumer attitudes were not regarded as a very important factor by many companies (21%), in
contrast to the situation in Europe.
Figure 21: Obstacles to innovation in the USA 2011
7%
7%
7%
71%
14%
14%
7%
21%
21%
21%
36%
50%
50%
14%
Poor technology transfer mechanisms
Lack of access to specialist biotechnology cos
Internal company organisational/cultural barriers
Negative consumer attitudes
Lack of skilled staff
Closure of the US and/or other geographic markets for certain
products
Small size of market segments
Lack of availability of financial resources
Inadequate intellectual property protection
The US regulatory framework
% of companies
% ranking 1
% ranking 2-4
GBS 2011
USA
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57
Comparing 2011 with the responses from previous surveys, the US regulatory framework retains the prime
position it occupied in 2006 and 2001. Many of the other obstacles have declined in perceived importance, but
inadequate IP protection and lack of availability of finance are reported as important by a higher percentage of
companies than previously, overtaking small market segment size (Table 15).
Table 15: The relative importance of obstacles to successful innovation 2006-2011
% of companies obstacle
2011 2006 2001 1996
The US regulatory framework 86% 86% 92% 42%
Inadequate intellectual property protection (for
patents or commercial data) 50% 21% 23% 32%
Lack of availability of financial resources 50% 21% 8% 16%
Small size of market segments 43% 64% 69% 68%
Closure of the US and/or other geographic markets for
certain products 29% 43% 62% 79%
Negative consumer attitudes 21% 36% 54% 26%
Lack of skilled staff 21% 21% 0% 0%
Internal company organizational or cultural barriers 14% 28% 8% 21%
Poor technology transfer mechanisms between
academia and business 14% 21% 23% 16%
Lack of access to specialist biotechnology companies 14% 0% 8% 5%
Impacts of the Regulatory Framework on Innovation, positive and negative
“The FDA innovative product initiative [IVET] to try to find a way for innovative
products through the bureaucracy [is likely to have a positive impact]. They
recognize the problems with their bureaucracy and increase in costs. FDA has an
increasing sensitivity to criticism. They do hear it. They may not admit the
criticisms and complaints but are trying to avoid it happening. They want to give
the perception of having made changes. ADUFA probably had good intentions.
Some of the company’s innovative products have caught FDA’s eye and they
want to be seen as advancing the cause.”
There are positive impacts of activities in the regulatory authorities. Interviewees report that CVM has
increased its willingness to work with industry, and the IVET initiative, the CVM ONADE’s InnoVation
Exploration Team, is an important part of this. They are open to considering how new technologies, for
example, stem cells, might fit into the process. The process of talking through ADUFA and ADUFA II is
thought to have helped, as have additional resources: “The energy and enthusiasm is different now in CVM with
all the new staff. They are more forward thinking which will hopefully have an effect and benefit. CVM has
upgraded their staff, IT systems and infrastructure.”
Negatives are however in evidence: “Why are we having problems getting products approved for canine
oncology? The reason is that FDA wants every possible indication proven, and it’s impossible to recruit cases for
some of these. Yet, it’s likely that if it works for one cancer, there are others it will work for.”; and “There is a
problem with their regulatory checklist [approach]. The agencies can’t adapt it to things that are different.”
GBS 2011
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58
The possibility of conditional licenses from USDA is seen as a positive: “When you have a new technology in
vaccine-related issues, you have the opportunity at the USDA level to gain conditional licensing that helps you get
to the market a bit faster, with some restrictions of course in how you apply that. [Especially] in disease areas that
aren’t well controlled, [this is] a very positive thing from a regulatory agency … this facility has always been in
place but now it is being used more and more.” Another company noted that they are not looking into
innovative areas that involve USDA CVB because “there are higher hurdles or uncertainly because there is lack of
clarity on standards required”. CVB also needs to boost expertise if it is to deal adequately with innovative
products.
EPA’s approach to combination products is seen to have a positive impact on the willingness to bring to the
market new pesticide-based products, especially in comparison with Europe, where excessive justification of
combinations is demanded.
Figure 22 shows the most important adverse impacts of regulation, as the percentages of US AH companies
regarding these as the single most important factors (rank 1) and the others also regarding them as very
important (ranks 2-4). The increase of development costs was overwhelmingly the most important outcome,
ranked overall very important by 93% of companies and as single most important factor by 50%. Other
undesirable impacts, including re-direction of resources into defensive R&D, increased development time, and
creation of uncertainty/unpredictability were regarded as very important by 85%, 78% and 43% of companies
respectively, and as single most important factor by 14%, 21% and 7% respectively.
Figure 22: The most important regulatory factors impacting AH innovation in the USA 2011
21%
14%
50%
7%
14%
14%
21%
36%
57%
71%
43%
7%
0%
0%
7%
Reduce access to new ideas, particularly in biotechnology
Restrict collaborative R&D ventures
Close markets for specific products
Reduce cash flows from existing products
Divert management time
Limit the use of innovative marketing methods
Create significant uncertainty or unpredictability
Increase development time
Re-direct resources into defensive R&D
Increase costs of development
% of companies
% ranking 1
% ranking 2-4
Regulations were regarded by relatively few companies (14%-21%) as diverting management time, income
from existing products, innovative marketing methods or market access. No company regarded regulations as
having important impacts on the possibilities of collaborative R&D or access to new biotechnology.
GBS 2011
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Table 16 compares results from 2011 with previous surveys since 1996. The top 4 concerns remain the same.
Adverse impact on the costs of development is confirmed as the long-standing major undesirable impact (93%
of companies in 2011 compared with 84%-100% previously). The perception of regulations as causing
significant uncertainty and unpredictability has continued to increase (from 26% in 1996 to 69%-71% in 2001-
2006 to 86% in 2011). An increase in development time is seen as very high impact by 79% of companies in
2011 compared with 89%-100% previously. Together, these suggest that the regulatory environment has not
improved substantially in the past 5 years. Redirection of resources into defensive R&D, whilst remaining a
substantial concern, seems less of a problem than previously (43% of companies in 2011 and 64%-77% in 2001-
2006).
Table 16: The impacts of regulatory factors on innovation 2006-2011
% of companies impact
2011 2006 2001 1996
Increase costs of development 93% 100% 100% 84%
Create significant uncertainty or unpredictability 86% 71% 69% 26%
Increase development time 79% 93% 100% 89%
Re-direct resources into defensive R&D 43% 64% 77% 21%
Restrict collaborative R&D ventures 21% - - -
Reduce access to new ideas, particularly in
biotechnology 14% 14%
0% 11%
Limit the use of innovative marketing methods 14% 7% 15% 11%
Close markets for specific products 14% 7% 31% 37%
Divert management time 0% 36% 54% 37%
Reduce cash flows from existing products 0% 0% 23% 16%
Other (Barrier to import due to USDA/FDA non-tariff
barriers to trade)` 7% - - -
GBS 2011
USA
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The AH Industry in the USA and maintenance of existing products
Obstacles to exploitation of existing products
Figure 23 presents the responses on this question, showing total percentages of companies regarding these as
the single most important obstacle (rank 1) and the others regarding them as very important (ranks 2-4). The
US’s regulatory framework, small size of market segments and legal restrictions on advertising were ranked as
the single most important obstacles by 23%, 15% and 15% of companies, and overall as very important by
54%, 54% and 46% of companies, respectively. However, competition, including parallel imports and generics,
was regarded as the most overall important by 85% of companies, also reflecting concerns about
compounding of imported actives. Other obstacles mentioned included the length of time taken for review of
changes to generic products (“years to implement seemingly minor changes”), and individual concerns about
marketing and distribution of illegally-compounded products, distribution constraints in general, and
application of new requirements to existing vaccines.
Figure 23: Obstacles to exploitation of existing products in the USA 2011
8%
15%
8%
15%
23%
8%
8%
8%
8%
23%
15%
23%
38%
38%
31%
77%
Demand volatility in certain segments
Closure of the USA market and/or other
geographic markets for certain products
Lack of skilled staff
Lack of availability of financial resources
Negative consumer attitudes
Legal restrictions on advertising, labels,
trademarks and communication
Inadequate intellectual property protection
(commercial data and patents)
Small size of market segments
The USA's regulatory framework for
maintenance/extension of licenses
Pressure from competitors (including
parallel imports and generics)
% of companies
% ranking 1
% ranking 2-4
Possible obstacles such as demand volatility in certain segments, lack of skilled staff and closure of markets
were not regarded as at all important (2% of total rankings 1-4 each) and are omitted from Figure 23.
GBS 2011
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Results from surveys since 2001 are summarized in Table 17. Pressure from competition appears to be
increasing in importance (85% of companies ranking as very important compared with 36%-54% in previous
years). Closure of markets to certain products is regarded as less important (8% of companies compared with
36%-62% in previous years) as is negative consumer attitudes, showing a steady decline from 54% in 2001 to
23% in 2011.
Table 17: Obstacles to the exploitation of existing products in the USA 2001-2011
% of companies obstacle
2011 2006 2001
Pressure from competitors (including parallel imports and generics) 85% 36% 54%
USA’s regulatory framework for maintenance/extension of licenses 54% 57% 69%
Small size of market segments 54% 50% 54%
Inadequate intellectual property protection (commercial data & patents) 46% 36% 15%
Legal restrictions on advertising, labels, trademarks and communication 38% 36% 38%
Negative consumer attitudes 23% 36% 54%
Lack of availability of financial resources 23% 21% 8%
Closure of the US market and/or other geographic markets for certain
products 8% 36% 62%
Demand volatility in certain segments 8% 7% 31%
Lack of skilled staff 8% 0% 0%
Impacts of regulation on the exploitation of existing products
In looking more closely at the impacts of regulatory aspects on maintaining existing products, although, on
aggregate, disproportionate costs of maintaining products were regarded as the most important negative
effect, by 64% of companies, increased cost of production, removal of profitable products from the market
and diversion of resources away from innovation and new product development were regarded as the single
most important impacts by 29%, 29% and 21% of companies respectively (Figure 24 and Table 18). Of other
factors, one company regarded restrictions on imports as the most important negative effect.
Figure 24: Negative effects of government regulations on exploitation of existing products in USA 2011
29%
7%
14%
14%
21%
21%
36%
7%
43%
36%
29%
57%
7%
29%
21%
Fail to protect intellectual property (patents
and commercial data) adequately
Limit the use of innovative marketing methods
Increase the cost of distribution and marketing
Restrict the extension of existing technologies
to additional species/indications
Create significant uncertainty
Remove profitable products from the market
Divert management time
Divert financial resources away from from the
development of new, innovative products
Increase the cost of production
Create disproportionate costs of maintaining
or extending marketing authorisations
% of companies
% ranking 1
% ranking 2-4
GBS 2011
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Table 18: Impacts of government regulations in the USA on existing products 2001-2011
% of companies impact
2011 2006 2001
Create disproportionate costs for maintaining/extending marketing
authorizations 64% 50% 46%
Increase the cost of production 57% 57% 62%
Divert financial resources away from the development of new, innovative
products 57% 64% 85%
Divert management time 43% 7% 69%
Remove profitable products from the market 36% 29% 77%
Create significant uncertainty 36% 57% 54%
Restrict the extension of existing technologies to additional
species/indications 29% 50% 46%
Increase the cost of distribution and marketing 21% 14% 8%
Limit the use of innovative marketing methods 14% 29% 0%
Fail to protect intellectual property (patents & commercial data)
adequately 14% 21% 0%
Other (restrictions on imports of biologicals) 7% - -
Creation of disproportionate costs, removal of profitable products from the market and diversion of
management time are noted in 2011 as increased in importance, by 64%, 36% and 43% of companies
respectively, possibly an outcome of the spate of recent company and product-portfolio acquisitions,
compared with 50%, 29% and 7% of companies in 2006, respectively. Most other aspects are static or have
slightly decreased in importance, though diversion of funds away from innovation remains a highly-important
undesirable impact (57% of companies in 2011 compared with 64%-85% previously).
GBS 2011
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The AH Industry and the Regulatory Environment in the USA
“CVB needs to realize that their job is to license and make available a range of
products for the end user. This is a change in philosophy from their current
understanding of the job, which is to protect the end user. They should be
working with industry to develop good products that sell at a reasonable price.”
Interviewees were asked if there were fundamental deficiencies in the activities and/or attitudes of the US
regulatory authorities. Interviewees again stressed insufficient expertise and knowledge amongst reviewers.
They confirmed problems with inconsistency and unpredictability. EPA is regarded as under-resourced and
unclear in itself about how to regulate animal health products, leading to an over-challenging approach to the
industry, sometimes divorced from reality: an example given was their response to pharmacovigilance, taking
into account absolute numbers of adverse reactions and not the relationship to total doses sold.
Companies pointed out that they have to choose where to spend their R&D and regulatory funds; several
comments in interviews indicated that companies were already thinking seriously about going outside USA to
do this.
Interviewees were asked to identify the top 3 regulatory factors that were having an adverse impact on the
animal health industry in the USA. Of 42 individual responses, 29% concerned factors that can be called
political or business considerations, 52% concerned aspects of the overall regulatory frameworks and 19%
concerned specific regulatory processes (Figure 25).
Figure 25: The types of regulatory factors having an adverse impact on the US animal health industry 2011
29%
52%
19%
political issues framework issues process issues
% o
f re
spo
nse
s
Table 19 shows this in more detail. Excessive time and costs were regarded as the most important and onerous
factors, with a risk that the system was getting to the point of diminishing returns, especially for smaller
companies and niche products. CMC requirements also had a role to play in this, in the context of MUMS and
over-application of human standards. A lack of correlation between demands and the effect on safety and
efficacy was pointed out, i.e. no resulting increase. Interviewees pointed out: “More consistency in response
and quicker responses [are needed] … It used to be 90-120 days to get a response, now it is 9-12 months” and “At
CVM, with all the resources that they have now, why do they still always take 180 days for a review. They always
take this, even for tiny submissions: 10,000 pages or 3 pages take the same length of time.”
GBS 2011
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Table 19: Regulatory processes and policies with an adverse impact on the US AH industry 2011
factor type factor % of overall
responses
political and
business
political pressures leading to zero-risk
budget and resource issues
no clear agency remit laid down for innovations, CVM vs. CVB
17%
10%
2%
regulatory
framework
time, costs and hurdles too high
insufficient predictability and consistency at agency and reviewer levels
inability to handle, plan for or understand innovation
lack of knowledge and understanding of product use/context
24%
12%
10%
7%
regulatory
process
CMC burden inappropriate for AH products and niche products
pharmacovigilance system too onerous
CVB reference requalification for existing products
fast-track possibility at CVM seems to have disappeared
too many submissions classified as ‘H’ by CVM, increasing timelines
10%
2%
2%
2%
2%
For biologics, the revised guidelines for Master Seed reference requalification are regarded as overall an
improvement, because of the potential to achieve a 15-year period, but have impacted one company’s existing
products and new developments severely, because of the costs of necessary tests in relation to the likely
market size and returns.
Political pressures and hypersensitivity are regarded as leading to a culture of over-cautiousness which,
coupled with lack of knowledge about the science and use of products in the field, favors inflexibility, lack of
confidence in making decisions. Innovation will likely suffer, not only because there is neither clear
demarcation not cooperation between CVB and CVM over biotech products but because there is reluctance to
plan for innovation in advance.
Mandatory defensive R&D
In the USA, a total of 43% of companies ranked diversion of spend into mandatory defensive R&D (MDR&D) as
one of the top 4 impacts of the overall regulatory environment in the USA (Table 16). The mean spend on
MDR&D in the USA was 16% of total global R&D costs in 2011. This disguises a wide range from <1% to 40%
(see Figure 26). The average for Europe is 35% of total R&D costs, which aligns with MDR&D being the single
most complained-about negative aspect of Europe’s regulatory framework.
Figure 26: Mandatory Defensive R&D in the USA 2011
57%
7%
33%
7%
<1%-10% 11%-20% 21%-30% >30%
% of total R&D spend
% o
f co
mp
an
ies
GBS 2011
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Although 64% of US AH companies are spending less than 20% of their R&D budgets on defensive R&D, over
30% are spending as much as 30-40%.
There has been very little relative change in the percentage of R&D budget devoted to mandatory defensive
R&D since 1996, at between 15% and 17% (Table 20). As this is not related to the total R&D budget, this does
not mean that the absolute amount of spend is unchanged.
Table 20: MDR&D as a % of total R&D costs in the USA 1996-2011
2011 2006 2001 1996
16% 15% 16-17% 17%
Defensive R&D was defined for the purposes of the survey as having two components: Business defensive
expenditure companies decide to undertake in order to defend their products against competition in the
market, and mandatory defensive R&D (MDR&D) undertaken as a direct result of legal requirements by the
regulatory authorities if the companies wish to maintain existing products in the market, including compliance
with requirements for license renewals. Companies were asked to include defensive R&D in responses
concerning total R&D but specify MDR&D when requested. Indeed, the majority of companies, almost 80%,
report some or a large increase in MDR&D spend over the past 5 years (Figure 27).
Figure 27: Change in MDR&D spend 2006-2011
14%
64%
22%
0% 0%
increased a lot increased
slightly
little change decreased
slightly
decreased a lot
% o
f co
mp
an
ies
Compared with the responses since 1996 (Table 21), the trend to increased MDR&D is clear, with 78% of
companies reporting an overall increase compared with 57%-61% in previous surveys, though the percentage
of companies reporting a large increase has fallen.
Table 21: Change in expenditure on MDR&D in USA 1996-2011
% of companies change
2011 2006 2001 1996
Decreased a lot 0% 0% 8% 5%
Decreased slightly 0% 7% 8% 11%
No change 22% 36% 23% 26%
Increased slightly 64% 21% 38% 26%
Increased a lot 14% 36% 23% 32%
Total increased 78% 57% 61% 58%
GBS 2011
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Figure 28 shows companies’ views of the most important factors causing the changes they have experienced
in MDR&D over the past 5 years.
Overwhelmingly, the most important factor was that regulator product review activities have increased (93%
companies overall, but 79% identifying this as the single most important factor). Deterioration in the overall
regulatory environment was regarded as overall very important by 71% of companies, and the effects of
acquisitions were also felt to be important (50% companies overall and 7% as the single most important
factor). This suggests that some of those reporting ‘little change’ had seen an increase in expenditure. A
substantial percentage of companies regarded an improvement in the regulatory environment and a decrease
in review activities as causing the changes they had experienced (identified by 43% and 29% of companies
respectively).
Figure 28: Factors leading to increased spend on MDR&D in the USA 2006-2011
7%
7%
79%
7%
29%
36%
43%
71%
14%
Divestment of companies
Regulator product review activities have
decreased
Improved regulatory environment
Acquisition of companies with products on the
market
Deterioration in regulatory environment
Regulator product review activities have
increased
% of companies
% ranking 1
% ranking 2-4
Development and regulatory timescales
The second and third most important impact of the regulatory framework on innovation, after increasing costs
of development, were increased uncertainty and increased development time (Table 16). Interviewees and
survey respondents were certainly concerned about the length of time the agencies take to review
applications and process them through to approval, typified by: “[The FDA CVM is] sometimes so far behind
other approvals that it isn’t worth even going after. The use of anti-inflammatories for pain in livestock is an
example. These are on the market in the EU but one of them is off-patent now and the expiry would have come
before the claim approval in the US. It could be done but takes too long and not worth the effort.”
The length of time it takes to get products to the market consists of two aspects – the time in regulatory
review from submission of the dossier to first-market approval, and the entire development span from initial
research to final market authorization. The time involved in the regulatory process is shown in Figures 29-30,
for biologics and non-biological products respectively, and Table 22. In total, 87 cases were supplied for
analysis, 60 biological, 18 pharmaceuticals and 9 pesticide-based products.
GBS 2011
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Figure 29: Time for new biological product authorizations from submission to approval in USA 2011
3.5
3.0
5.5
6.0
2.9
2.8
4.1
5.0
2.8
3.6
4.3
5.4
Biologic Conditional
License n=16
New Conventional
vaccine - combination of
licensed products n=16
New Conventional
vaccine - new Master
Seed n=15
GMO products requiring
NEPA RA/FONSI n=13
years
FAP n=30
CAP n=21
MS n=9
Figure 30: Time for new pharmaceuticals and pesticidal product authorizations from submission to
approval in USA 2011
6.0
3.5
6.4
6.0
9.4
Pesticide-based
product n=9
Pharmaceuticals n=18
years
FAP n=10
CAP n=16
MS n=1
There is a gradation in time of regulatory process for biologicals using biotechnology/GM at 5-6 years down to
conditional licenses at 2.8-3.5 years, average. Review periods for pesticide-based products bracket this spread,
Pharmaceutical product review is however rather long, at 6.0-9.5 years. Because of phased submission in USA,
some of these times seem longer than in other regions where only complete and final dossiers are accepted
into the regulatory process. It seems from the results reported above that minor species do not enjoy a quicker
passage through regulatory review, though this may reflect fewer responses in this category than in the major
species FAP and CAP (10 data-points compared with 40 and 37 respectively), or phased submission.
Table 22 summarises the range of review times stated by each company. The average and spread for FAP
disguise a biphasic distribution with averages of 7.5 years and 12 years. Although this difference is intriguing, it
is not possible to analyse it further (it may possibly reflect longer times for new antimicrobials, for example).
GBS 2011
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Table 22: Length of time for regulatory review of products in the USA
Product type and years
Species category Pharmaceuticals
Pesticide-
based
GMO
products
requiring
NEPA RA
Biologicals
new Master
Seed
Biologicals
new
combinations
Biologicals
conditional
license
Mean 9.4 6.0 5.4 4.3 3.6 2.8 FAP
Range 7.0-13.0 4.0-9.0 4.0-7.0 3.0-7.0 2.0-7.0 0.5-5.0
Mean 6.4 3.5 5.0 4.1 2.8 2.9 CAP
Range 3.5-9.0 2.0-5.5 4.0-6.0 3.0-5.0 2.0-4.0 1.5-4.0
Mean 6.0 - 6.0 5.5 3.0 3.5 Minor
species Range - - 6.0-6.0 5.0-6.0 2.0-4.0 3.0-4.0 Note: FAP = Farm Animal Product for major livestock species; CAP = Companion Animal Product; GMO = Genetically-modified
[vaccine] organism; NEPA RA = Environmental Risk Assessment or Finding of No Significant Impact
Figures 31-33 summarize the experiences of companies with regard to time change in development and
regulatory process 2006-2011. The majority of companies working with pharmaceutical and biologic products
for farm and companion animals had experienced increases in time over the past 5 years, 70-100%. No
company reported that the time for biologics development and review had undergone little change. About
40% of companies had experienced increases in development and review times for pesticide-based products
indicating that, for this category, the situation was a little more stabilized than the other categories. The
picture for minor species is mixed, but there is less data for this category. However, it seems a substantial
percentage of companies (50-100%) had experienced lengthened time with MS products. Only for a minority
of companies, and for biologic FAP and pesticide-based CAP, were decreases in time reported.
Figure 31: Company experience of changes in time for full NPD cycle in the USA 2006-2011 – pharmaceuticals
50%
70%
75%
50%
30%
25%
MS n=2
CAP n=10
FAP n=8
% of companies
little change
increased
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Figure 32: Company experience of changes in time for full NPD cycle in the USA 2006-2011 – biologicals
1.5
1.2
1.7
MS n=2
CAP n=6
FAP n=8
years
Figure 33: Company experience of changes in time for full NPD cycle in the USA 2006-2011 – pesticide-based
products
67%
43%
40%
33%
43%
60%
14%
MS n=3
CAP n=7
FAP n=5
% of companies
decreased
little change
increased
Figure 34 summarizes the increases in actual total time for development plus regulatory review for 51
examples of new products. The overall increases were 1.0-1.6 years for FAP, 1.0-1.2 years for CAP and 1.0-2.0
years for MS products. No category of product (type or species) experienced a reduction in time.
Figure 34: Changes in the average length of time of full NPD cycle in the USA 2006-2011 – all products
1.0
1.5
2.0
1.0
1.2
1.0
1.0
1.7
1.6
pesticide-based
n=15
biologics n=16
pharmaceuticals
n=20
years
FAP n=21
CAP n=23
MS n=7
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Companies can seek to reduce the total time-span by introducing internal processes related to development
and regulatory activities, such as internal review committees, enhanced quality management procedures for
regulatory process, additional oversight processes for external R&D and other internal procedures that impact
product development and regulatory activity. Table 23 reports the companies’ estimates of how much of the
time-change from 2006-2011 might be accounted for by such internal processes.
Table 23: Development time changes and internal processes USA 2011 – all products
Product category & percentage estimate due
to internal change Product type
FAP CAP MS
mean 30% 34% 38% pharmaceuticals
range 10%-90% 10%-90% 10%-75%
mean 31% 28% 32% biologics
range 0%-90% 10%-65% 10%-65%
mean 33% 22% 5% Pesticide-based products
range 0%-90% 0%-70% 0%-10%
This means that, in nearly all cases, the effective pressures are external to the companies, i.e. those applied by
the regulatory framework and the authorities were regarded as accounting for the changes. A decrease in time
was reported by one company for the development-to-approval period for a farm animal biological product
and this was attributed entirely to the use of in-house processes. The mean for pesticide-based products
disguises a biphasic pattern: one group believed that only 5-7% of the change in time could be attributed to
internal processes and this group had reported that the overall time had increased; the other believed that
90% for FAP and 45% for CAP was attributable to internal processes, and this group had reported ‘little
change’. However, data points were relatively few for this class of product and type of change (3 FAP, 5 CAP
and 2 MS responses). The response from the group experiencing an increase and from the companies
reporting on MS products suggests a more substantial impact of regulatory requirements and process at EPA.
Interviewees discussed some of the internal process changes they had introduced to better manage the time
and cost of development and the regulatory cycle. These fell into three broad classes, business management,
project management and people management (Figure 35). Table 24 gives more detail on the moves taken in
each class.
Figure 35: Changes to industry internal process to improve development & regulatory efficiency USA 2011
26%
35%
39%
business management project management people management
% o
f re
spo
nse
s
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Table 24 shows the individual actions companies have taken to try to improve efficiency and reduce time and
costs to approval. The most popular moves were standardization of project process across sites and enhanced
project management, including use of IT tools (together, 63% of project management actions); and more
interaction with agencies, better personnel deployment and critical path training (almost 80% of people
management actions). Companies seeking more interaction with agencies reported making it a routine to
discuss projects earlier with CVM (“Management has been told not to ‘bean-count’ trips to the agency”);
organizing regular priority-setting meetings with CVB; and increasing the frequency of strategic discussions
with the agencies in which they try to get the agencies to appreciate the industry and company context of
proposed activities.
Table 24: Internal processes introduced by the AH industry USA 2006-2011
process type process/action
business
management
An increased focus on return-on-investment and products that offer a
speedier passage through the regulatory process
Better review of opportunities from human health parent
Investment in facilities and resources internally
Increased willingness to use external resources when needed
Moved R&D into US
Moved R&D and licensing funds out of US to countries with more
favorable regulatory climates
project
management
Standardization of project process across sites
More stringent project management; use of IT-based project
management tools
Stringent respect for timelines
Managing processes in parallel
Internal organization to make use of electronic submissions
people
management
More stringent personnel deployment
More interaction with agencies
Critical path training for identification of weak points and issue
management
Freeing-up time for regulatory people to collaborate with the other
groups in the company
R&D performance expectations built into Key Performance Indicators
Table 25 shows the cumulative increase in the amount of time for the full development and registration
process since 1991. FAP and CAP have experienced much the same increase over the past 20 years; data for
MS products was only collected from the 2006 survey, and the comparable increase for both FAP and CAP in
that period was 3.7 years, slightly less than twice the increase of 2.0 years for MS products.
Table 25: Increase in the average length of time of full NPD cycle in USA 1991-2011
major livestock
species
companion
animals minor species
Cumulative 1991-2011 +4.9 yrs +5.0 yrs +2.0 yrs
2006-2011 + 1.4 yrs +1.1 yrs +1.5 yrs
2001-2006 + 1.2 yrs +1.3 yrs +0.5 yrs
1996-2001 +1.8 yrs +1.3 yrs -
1991-1996 +0.5 yrs +1.3 yrs -
GBS 2011
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Data sources for regulatory submissions
75%-83% of companies, including some with HQs outside the region, created dossiers for USA submission
using data developed mainly or entirely within the US; the remainder have core dossiers created outside USA
which are then finalized with further studies within the US. No companies reported using dossiers entirely
created outside USA; this also applied. This suggests that VICH progress has not led to Figure 36 summarizes
these findings.
Figure 36: Data sources for submissions of dossiers in the USA 2011
78%
83%
75%
22%
17%
25%
MS
CAP
FAP
% of companies
All or most in the USA
Final work in the USA
Interviewees comment that CVM still finds it difficult to accept overseas data. This is in spite of VICH and the
requirement for pre-approval of trial protocols.
Development and regulatory costs
The survey looked at the costs of new product development programs for FAP (farm animal products), CAP
(companion animal products) and MS (minor species) products, the costs of establishing a new species use for
an existing product and whether these costs had changed due to regulatory factors since 2006. The cost
covers all stages from discovery to approval and companies were asked to include all internal and external
direct costs, but were not asked to include apportioned capital expenditure or amortization of failed products.
Some increase is clearly due to regulatory issues, exemplified by: “If CVB doesn’t change the approach to how
they do their reviews, pivotal efficacy and safety will continue to delay us … the statistical staff at USDA will not
share how they are going to do it so the company cannot do the appropriate statistical analysis.” In other cases, it
is commercial, or perhaps mixed. As companies grow, their return-on-investment target may increase to a
level where the costs of development of minor products (and regulatory maintenance of existing products)
cannot be justified: “The company is now much larger … there is more focus on major projects ... the “floor value”
will have to be higher because of the cost of development in a large company. The portfolio is too big and low-
revenue products need to be weeded out. That will probably mean lay offs and plant closures.”
GBS 2011
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The direct costs of new product development and changes since 2006
The results are reported in Figure 37 and Table 26 for new products.
Figure 37: Direct costs of new product development in USA 2011
12.0
3.0
8.0
22.6
11.8
21.6
26.7
14.0
10.8
38.8
New medicinal in-feed product n=4
New pesticide-based product n=8
New biological product n=14
Pharmaceutical product with new API n=16
cost in $M
FAP n=19
CAP n=20
MS n=3
There is a large disparity between FAP and CAP in direct pharmaceutical development costs (av. $38.8M
compared with $21.6M), which reflects residues and environmental studies, but hardly any between FAP and
CAP for biologics. The average cost for pesticide-based CAP is over 50% higher than for FAP, which may
reflect the types and range of parasites covered and increased attention to human (user and owner) safety.
Data for minor species and for medicinal in-feed products is rather too low to make general conclusions.
More detail is provided in Table 26. There was no real difference in costs apparent between developments
where it was likely that most or all data had been developed within the USA and the small number where core
data was likely to have been developed outside the USA, so data has been aggregated. As expected, the range
of costs is wide, reflecting the inclusion of small and large companies and those generating their own APIs and
antigens as well as those basing new products on existing molecules. Although the absolute number of minor
species products mentioned is low, if the costs are representative, then to develop a MS new product costs
about 20%-45% of a comparable major product.
Table 26: Direct costs of New Product Development by species class and product type – USA 2011
Product category & cost estimates $M: new product
development Species category
FAP CAP MS
mean 38.8 21.6 8.0 Pharmaceutical product with
new API range 20.0-100.0 5.0-70.0 -
mean 26.7 - 12.0 Medicinal in-feed product
range 15.0-40.0 - -
mean 10.8 11.8 3.0 Biologic product
range 2.0-30.0 3.0-25.0 -
mean 14.0 22.6 - Pesticide-based product
range 10.0-20.0 5.0-65.0 -
GBS 2011
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The distribution of responses on cost of the total new product development cycle (from discovery to approval)
is shown in Figure 38. New biologics and products containing new Active Pharmaceutical Ingredients (API)
were predominant for farm animals and companion animals (66%-75% of new product types included in the
survey responses). There were few new products for minor species.
Figure 38: Distribution of responses used in analysis of NPD direct costs in USA 2011
25%
0%
7%
6%
0%
63%
43%
56%
75%
38%
50%
38%
new in-feed
medication n=4
new pesticide-based
n=8
new antigen n=14
new API n=16
% of responses
FAP n=19
CAP n=20
MS n=3
Survey respondents reported that the single most important impact on innovation of the US’s regulatory
framework was increasing costs of development (Table 16). Reported cost changes for new pharmaceuticals,
biologics and pesticide-based products have been aggregated in Figure 39 within each species class. This
shows that, while increases have been relatively contained or capped for CAP and MS products, FAP have
shown an uncontained increase. No respondent reported a decrease in NPD costs over the period 2006-2011,
and few reported ‘little change’, mainly for minor species products. For FAP and CAP however, 63% of
responses identified an increase of 10-25% and 28% of responses an increase of 26-50%. One respondent had
experienced an increase of over 50% in total development+regulatory review costs, for biologic FAP, over the
past 5 years. Biologic CAP as a class experienced a slightly lower overall increase than other biologics or
pharmaceuticals. The category appearing least-affected by cost increase was pesticide-based products, where
increases were limited to 10-25%.
Figure 39: Changes in NPD direct costs due to regulatory factors in USA 2006-2011
>5
0%
--
26
-50
%--
10
-25
%--
litt
le c
ha
ng
e
10
-25
%+
26
-50
%+
>5
0%
+
0%
20%
40%
60%
80%
100%
% of responses
within each
species type
FAP
CAP
MS
GBS 2011
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75
Figure 40 shows the distribution of total responses used in this analysis, by product and species type. There
was no overall predominance of one product type and all categories were well-represented; there were slightly
more CAP responses than FAP.
Figure 40: NPD by species and product type USA 2006-2011
14%
22%
15%
50%
33%
50%
36%
44%
35%
pesticide-based n=14
biologic n=18
pharmaceutical n=20
% of responses
FAP n=20
CAP n=23
MS n=9
Cumulative costs of new product development 2001-2011
On a compound basis, the costs for a major FAP, a CAP and a MS product have increased 162%, 171% and
108% respectively since 2001 (Table 27). Table 28 breaks down the increase, as reported by survey
respondents, by product type – pharmaceutical, biologic and pesticide-based, as well as by animal type.
Table 27: Average and accumulated changes in NPD costs in USA 2001-2011
product type and % increase in costs
period major
livestock
species
companion
animals minor species
Compound 2001-2011 +162% +171% +108%
2006-2011 +27% +27% +18%
2001-2006 +32% +37% +28%
1996-2001 +30% +30% +25%
1991-1996 +20% +20% +10%
1991 base 100 100 100 Notes: increases calculated as compound from base 100 in 2001; data for 2006-2011 calculated from band mid-points
The greatest compound increases over 2001-2011 have been in pharmaceuticals of all species types; in the
period 2006-2011 however, the greatest increase was reported in biologic FAP (+30%), followed by
pharmaceutical CAP (+29%) and pharma and biologic MS products (+28%). Although the costs in previous
surveys were based on estimates of apportionment of capital expenditure, establishment costs, and
amortized costs of failed projects, it is reasonable to assume that direct costs also increased in the same or a
closely similar proportion.
GBS 2011
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Table 28: Increases in development costs by type of product USA 2001-2011
Species and % increase
Type of product and period major livestock
species
companion
animals minor species
pharmaceutical
Compound 2001-20114 +73% +82% +68%
2006-20115 +26% +29% +28%
2001-2006 +37% +41% +32%
2001 base 100 100 100
biological
Compound 2001-2011 +59% +57% +51%
2006-2011 +30% +24% +28%
2001-2006 +22% +27% +18%
2001 base 100 100 100
pesticide-based product
Compound 2001-2011 +56% +62% +28%
2006-2011 +18% +18% -
2001-2006 +32% +37% +28%
2001 base 100 100 100
Costs of product extension
Costs of product extension are shown in Figure 41. The cost differential between major and minor species
products is substantial, providing at least some incentive for developing MS extensions to existing products.
Figure 41: Costs of Product Extensions by species class and product type – USA 2011
3.0
2.5
4.0
2.5
4.1
6.7
10.5
4.0
3.4
11.3
Medicinal in-feed
product n=5
Pesticide-based
product n=6
Biological product
n=10
Pharmaceutical
product n=13
cost in $M
FAP n=16
CAP n=15
MS n=3
4 Calculated as a compound increase from a 2001 base of 100
5 Calculated using average of band mid-points
GBS 2011
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The range (Table 29) reflects the inclusion of smaller and larger companies and extensions to products with
relatively new molecules and those likely to contain longer-established molecules. The overall averages hide a
split between companies with rather high costs for extensions ($10M-$25M) and those with low costs ($1M-
$9M). This is the case for all product types except biologics, where the range is tighter (mainly $2.5M-$5M).
Table 29: Costs of Product Extension by species class and product type – USA 2011
Product category & cost estimates $M: product
extension Species category
FAP CAP MS
mean 10.2 6.7 4.0 Pharmaceutical product with
new API range 4.0-25.0 1.4-15.0
mean 3.4 4.1 2.5 Biologic product
range 0.5-5.0 2.5-5.0 2.5
mean 4.0 2.5 - Pesticide-based product
range 1.0-9.0 1.0-5.0 -
mean 10.5 - 3.0 Medicinal in-feed product
range 3.0-25.0 - -
Figure 42 shows costs of extension as a proportion of the costs of the full development (from discovery to
approval) reported by companies.
Figure 42: Costs of production extension compared with new product costs USA 2011
25%
83%
50%
33%
42%
42%
39%
17%
44%
29%
Medicinal in-feed
product
Pesticide-based
product
Biological product
Pharmaceutical product
extension costs as % of new product costs
FAP
CAP
MS
The high percentage for MS biological product is an artifact of the small number of cases reported. In general,
extension costs are between one-fifth and one-half of new product costs.
GBS 2011
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Figure 43: Product extensions by species and product type USA 2011
20%
0%
10%
8%
0%
50%
40%
62%
80%
50%
50%
31%
medicated in-feed
product n=5
pesticide-based
product n=6
biologic n=10
pharmaceutical
product n=13
% of responses
FAP n=16
CAP n=15
MS n=3
The range of product extensions reported in the survey was as wide as for new product development, with the
exception of no representation of minor species for pesticide-based products and CAP for medicated in-feed
products (Figure 43). Pharmaceuticals and biologics accounted for 68% of the cases mentioned. Minor species
formed a small proportion of the data-set.
The regulatory process in the USA and specific impacts on innovation and existing
products
The 2011 survey included questions designed to elicit consensus about the importance and impacts of
individual aspects of the regulatory process in the USA. Figures 44 & 45 analyze these for innovation and the
maintenance of existing products and business, respectively. The relative impact score is the sum of the
positive ranks (‘helpful’ and ‘very helpful’), minus the sum of the negative ranks (‘unhelpful’ and ‘very
unhelpful’), expressed as a percentage of the total companies.
For both innovation and existing products, the same elements of regulatory process scored very highly and
very poorly. These were Protection of IP (commercial data and patents) as positives and Environmental
(ecotox) and Antimicrobial Resistance regulations as negatives. For innovation, ADUFA and MUMS processes
are also regarded as beneficial and MRL regulations were regarded as unhelpful. Since 2006, APHIS-CVB has
been involved in three new initiatives in the biologics area. The introduction of conditional product licenses is
highly-welcomed. The adoption of VICH GCP is regarded as neither positive nor negative. However, the
approach of CVB to biometrics is perceived as having a substantial negative overall impact.
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Figure 44: The impact of regulatory processes in the USA on innovation 2011
For existing products, however, negative aspects far outweighed the benefits of the regulatory process.
Although ADUFA and IP protection systems were seen as helpful, most other processes apart from license
maintenance were regarded as having negative to highly negative impacts. Notably, Packaging and Labeling
changes were regarded as extremely negative and the rules and processes concerning manufacturing changes
were regarded as detrimental. A specific comment concerned the negative impact of possible plans to
introduce user fees for the assessment of biologics dossiers by USDA/APHIS-CVB.
Figure 45: The impact of regulatory processes in the USA on maintaining existing products 2011
Interviewees discussed the issues raised by specific regulation and other areas such as CMC/GMP, safety, and
efficacy.
-57%
-43%
-29%
-14%
-7%
0%
0%
29%
29%
29%
43%
43%
50%
Antimicrobial Resistance Regulations
Environmental Regulations (Ecotox)
USDA/APHIS expanded biometrics standards
Maximum Residue Limits
Good Laboratory Practice
USDA/APHIS adoption of VICH GCP regulations
Biotechnology Regulations
Animal Drug User Fee rules (ADUFA)
Minor Use Minor Species rules (MUMS)
Marketing Authorization
USDA/APHIS Conditional Product Licenses
Protection of Intellectual Property-patents
Protection of Intellectual Property-commercial data
relative impact score
-71%
-64%
-57%
-43%
-36%
-36%
-21%
-7%
0%
14%
29%
43%
Packaging/Labeling Changes
Environmental Regulations (Ecotox)
Antimicrobial Resistance Regulations (e.g. Antimicrobials)
Manufacturing Changes Rules
Maximum Residue Limits (Tolerances)
Pharmacovigilance
Regulations regarding Combination Products
Good Manufacturing Practice
License Maintenance
Animal Drug User Fee rules (ADUFA)
Protection of Intellectual Property-patents
Protection of Intellectual Property-commercial data
relative impact score
GBS 2011
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CMC/GMP
Interviewees confirmed the widespread concern about requirements to conform with USP residual solvent
requirements. This and other compliance requirements were imposed at an inappropriate level of strictness
for animal health products, eg dissolution, batch qualification requirements (often disproportionately
expensive for AH products). Site inspections are carried out to too much level of detail; the inexperience of
new compliance/inspection staff means they are concerned about points that do not have a direct bearing on
product quality in use. It was noted that some problems such as excessive GMP demands may have arisen over
time because the AH industry tolerated “poor-quality firms”. The question of animal numbers for and cost of
reference requalification still needs addressing.
Safety
Demands have risen because reviewers no longer accept that the traditional ‘1x, 3x, 5x’ for Target Animal
Safety provides sufficient information, though CVM has shown some flexibility, according to one interviewee,
in allowing a small TAS followed by larger field studies. Another proposed that TAS data should not be
required to the same level for additional product claims as for the original approval.
The CVM recently mandated that TAS protocols in future will need to define success or failure; this may cause
problems if it is not clear where the limits should be set. Target animal safety for biologics is also a concern,
because of variability in different national requirements: “Some countries want a 2-x dose, other countries want
a 10-x dose. Some require back passage data, which can be a problem because it is sometimes very difficult to
recover the bugs.”
Many companies found environmental safety to be a concern. Comments include “What triggers Phase II under
VICH? – the threshold is so low that we are always forced through the process even if there is virtually no potential
for a problem. They keep asking questions and each takes 180 days to review. Harmonization in these
requirements has taken a step back by 30-40 years in the US. It used to be that most products were categorically
excluded, now many more need an environmental assessment.”
Human food safety is also raising concerns, often because of reviewer inexperience or regional differences:
“[The] different way in the US and EU of calculating residues is frustrating.”
Industry is also concerned about increasing requirements for label revisions as a result of post-marketing and
pharmacovigilance assessments. In any case, label wording is seen as too much and not benefiting the user.
Efficacy
Non-acceptability of international data is one issue, which is part of harmonization or globalization. At
domestic level, CVM seems to “lose sight of the practical aspects in running trials; the level of paperwork required
– maybe they are not exposed to reality.”; and “how to get away from submitting all raw data. It is a time drain
and provides little benefit.” An important point is how to measure efficacy – comments have been made that
demanding subjective end-points (owner or veterinarian observations) for CAP rather than scientifically-
verifiable endpoints or indicators of efficacy is unacceptable. There is “difficulty in developing tools for
measuring efficacy that are acceptable to CVM – to get agreement on the metrics. CVM needs to work with
industry on this.”, which suggests a role for AHI.
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Tables 30 and 31 summarize how the impact scores for the specific regulations included in the survey have
changed since 2001, for new products and maintaining existing products respectively. Several questions are
new in 2011. The perception of the marketing authorization as a positive force has improved continuously
since 2001 and this is now ranked highly by a substantial percentage of companies. Since 2006, Minor Use
Minor Species rules have improved in perceived impact, but other important areas including Antimicrobial
Resistance, Environmental Regulations and MRL regulations have become more negatively-perceived.
Table 30: The impact of Government Regulations in USA on the industry’s ability to innovate successfully 2001-2011
relative impact score % of
companies regulations
2011 2006 2001
Antimicrobial Resistance Regulations -57% -43% -
Environmental Regulations (Ecotox) -43% -36% -46%
USDA/APHIS expanded biometrics standards -29% - -
Maximum Residue Limits -14% 0% -
Good Laboratory Practice -7% - -
USDA/APHIS adoption of VICH GCP regulations 0% - -
Biotechnology Regulations 0% -28% -
Animal Drug User Fee rules (ADUFA) +29% +29% -
Minor Use Minor Species rules (MUMS) +29% +14% -
Marketing Authorization +29% -22% -38%
USDA/APHIS Conditional Product Licenses +43% - -
Protection of Intellectual Property-patents +43% +51% +46%
Protection of Intellectual Property-commercial data +50% +43% +46%
For existing products (Table 31), all parameters with the exception of IP protection systems are regarded as
increasingly unhelpful.
Table 31: The impact of Government Regulations in USA on the industry’s ability to exploit existing products
successfully
relative impact score % of
companies regulations
2011 2006 2001
Packaging/Labeling Changes -71% -57% -
Environmental Regulations (Ecotox) -64% -36% -23%
Antimicrobial Resistance Regulations -57% -51% -
Manufacturing Changes Rules -43% -28% -
Maximum Residue Limits (Tolerances) -36% -15% -
Pharmacovigilance -36% +7% -
Regulations regarding Combination Products -21% - -
Good Manufacturing Practice -7% -7% -8%
License Maintenance 0% -15% -
Animal Drug User Fee rules (ADUFA) +14% +22% -
Protection of Intellectual Property-patents +29% +22% +47%
Protection of Intellectual Property-commercial data +43% +22% +46%
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The USA’s regulatory environment and interactions with the AH business
Despite concerns about the timelines of approvals in the USA, survey respondents and interviewees recognize
that there are positive impacts of regulation.
Government regulations and improvements to business competitiveness
There are possible positive impacts of regulation on the competitiveness of companies’ business. Figure 46
shows those improvements regarded as very important, with the percentage of companies regarding them as
the single most important improvement (rank 1) and the balance (2-4). Impacts on protecting investment (the
single most important factor for 21%) and providing confidence to invest (single most important for 14% and
overall very important for 50%) were ranked more highly than in Europe, but the highest ranking was given to
public reassurance in USA (compared with providing a stable business environment in the European GBS). This
was the single most important factor for 21% and overall very important for 71% of companies. The other
most-mentioned factors were safety- and quality-related, as in Europe.
Figure 46: Improvements associated with government regulations in the USA 2011
7%
7%
21%
7%
14%
14%
21%
21%
14%
29%
21%
14%
36%
29%
36%
50%
0%
0%
Helped redirect resources to innovation
Triggered innovation in new production processes
Created new market segments
Speeded up time-to-market
Improved access to other geographic markets
Improved product quality
Protected investments in innovation
Prevented dangerous products entering the market
Provided a stable business environment
Provided confidence to invest (added to certainty and predictability)
Reassured the public about the safety of animal health products
% of companies
% ranking 1
% ranking 2-4
Table 32 shows responses in 2011 compared with previous periods back to 1996, as percentage of companies
ranking a particular effect as very important or high-impact (ranked 1-4). Apart from the potential for
triggering innovation in new production processes, the rankings have generally increased compared with 2006
and very often in the long-term too: in addition to the increasing trend for public reassurance of product
safety, commercially-oriented aspects such as opening market access, creating new market segments and
protecting investments in innovation have also increased in perceived impact.
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Table 32: Ways in which Government Regulations have improved competitiveness in the USA 1996-2011
% of companies effect
2011 2006 2001 1996
Reassured the public about the safety of animal health
products 71% 64% 54% 42%
Provided confidence to invest (added to certainty and
predictability) 50% - - -
Prevented dangerous products entering the market 43% 29% 46% 37%
Provided a stable business environment 43% - - -
Protected investments in innovation 36% 29% 38% 42%
Improved product quality 29% 21% 23% 26%
Improved access to other geographic markets 29% 21% 0% 5%
Created new market segments 21% 14% 0% 0%
Speeded up time-to-market 21% 7% 0% 0%
Triggered innovation in new production processes 0% 14% 0% 0%
Helped redirect resources to innovation 0% - - -
Interviewees discussed other regulations, not connected with product regulation, that have had an impact on
business, mentioning Anti-trust and Competition regulators as failing to understand the differences between
the human health and animal health environments when putting obstacles in the way of the Merck-Sanofi
merger; difficulties in corporation regulations that do not allow income to be off-set against necessary costs of
development and manufacture in calculating taxation; regulations dissociating veterinary prescription from
veterinarian supply of prescription products; legislative interference into the use of antimicrobials in animals.
Influence of regulations on major business decisions
There is also the question of whether the regulatory environment in the USA had ever influenced business
decisions made by respondents’ companies. Figure 47 shows the responses from US companies, including only
those decisions that had been made and where regulations played some part in making the decision.
Consideration of the regulatory climate played a part in about 35% of decisions, significantly so in almost one-
third of these. Figure 47 allows visualization of how many companies made a particular decision and, when
regulations did play a part in the decision, how significant regulatory considerations were in making it. The
Relative Decision Score is percentage of companies making a ‘positive’ decision minus the percentage making
a ‘negative’ decision. The Regulatory Impact Score is the percentage in which regulatory influences played
some or a significant role, for the predominant decision, positive or negative. For almost all decisions, the
‘positive’ aspect was predominant. For switching R&D budgets, 17% switched inside USA and 25% of
companies switched outside, and both RDS and RIS are low.
Some decisions where regulatory influences played a large part were in fact not taken by a large number of
companies – reducing species coverage, introducing fewer breakthrough products or reducing product range
in the USA. Of those decisions made by a greater number of companies, rather fewer appear ‘negative’ (such
as avoiding certain product technologies, focusing on existing or older technologies) than ‘positive’ (increasing
coverage, introducing more breakthrough products, increasing product range etc.). In almost all these cases,
regulations in fact played little part in the decision. Regulations always played a part, however, in decisions to
favor or avoid certain product technologies – 67% of companies had developed certain technologies in USA
and 58% had avoided certain technologies, and regulations had played a role in all of the decisions to avoid
technologies. For investing in production, 67% of companies had invested outside and 67% had invested
inside; the RIS is therefore the average of the two RIS’s, which gives it a large magnitude of 29%.
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Figure 47: Influence of regulations on major business decisions in the USA 2006-2011
Closer scrutiny of the interactions between decisions and regulatory influence since the 2001 survey, given in
Appendix 1, suggests that the industry has become more robust since that time, or the regulatory climate has
become less of a factor in many decisions, or both. Indeed there are no decisions where regulations are
making a more decisive impact in 2011 than in 2006 or 2001.
Political involvement in regulation and the impact on business
Political involvement in regulatory decision-making is an important topic, overwhelmingly in the context of
moves that affect the development, regulatory acceptance and prospects of antimicrobial products, where
industry sees legislators as putting too much pressure on CVM to take a stance that is not based on science,
but notes and appreciates that they have tried hard to keep politics out of their reviews. Other aspects were
mentioned, however – the affect of ADUFA on small companies, which might struggle to find and/or justify
both development costs and ADUFA fees; a decline in state funding of farm animal research because of a
belief that if it’s of value to the AH industry, the industry should fund it; collateral damage from EPA’s actions
against permethrin-based products that effected products containing other actives.
In interviews, the positive aspects of politics were also explored. Interviewees agreed that ADUFA was an
outcome of positive politics. The possibility to lobby in the USA, and the close links between representatives
or senators and economic situations in their states, were positives, provided that you could gain access to the
best driver for change: “There are some politicians with background in agriculture who are useful allies.”
Coalitions with other interest groups, such as producers and veterinarians, were important.
The ability to lobby was important in solving the situation with USDA and manufacture and labeling of
biologics for export, for example, and AHI was also instrumental in securing a realistic piece of legislation.
8%
29%
8%
8%
17%
8%
8%
8%
17%
8%
-8%
0%
8%
8%
8%
25%
33%
33%
42%
50%
R&D budgets - switch into USA or out
Production - invest in USA or outside
Product technologies - develop or avoid
R&D Facilities - locate in USA or out
Technologies - focus on new or existing/
older
Businesses - buy or sell/close
Product range - increase or reduce
Breakthrough products - more or fewer
Species/indications coverage - increase or
reduce
Geographic market focus - increase or
restrict
relative % of companies
relative decision score
regulatory impact score
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Also, because USDA is by institution pro-agriculture, there are opportunities, if a company’s products could
help solve an agricultural problem, to use this to accelerate product acceptance – rabies vaccine baits for
wildlife was given as an example. The institution of the Kansas Animal Health Corridor and siting the Federal
bio-defense facility there had also raised the political profile of AH industry activities.
91% of survey respondents reported that political involvement in regulatory processes had had an impact on
their USA business environment (Figure 48) and identified the most important outcomes of political
involvement, summarized in Figure 49.
Figure 48: The impact of political involvement in regulatory processes in the USA 2011
91%
9%
yes no
% o
f co
mp
an
ies
Figure 49 shows the percentage of companies regarding each factor as the single most important (rank 1) and
the balance ranking them very important (2-4). Creation of uncertainty was the top problem, with 62% of
companies overall regarding this as very important and 31% as the single most important factor. Increase in
costs of developing new products was regarded as overall very important by 54% of companies and as the
single most important factor by 23%. Increase in time was overall very important for 46% of companies and
increasing the costs of maintaining existing products for 38% of companies, 15% as the single most important
factor.
Table 33 compares the results for 2011 with those recorded in the previous IFAH GBS survey in 2006.
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Figure 49: Outcomes of political involvement in the regulatory process 2011
8%
8%
15%
0%
23%
31%
8%
8%
23%
23%
23%
23%
46%
31%
31%
Allows products to be placed on the market without scientific
evidence
Restricts the species or indications covered by certain products
Restricts the use of certain product or process technologies
Prevents approval of new products that are available in other
geographic markets
Reduces investment in the development of new technologies
Requires products to be removed from markets without scientific
evidence
Increases the cost of maintaining existing products
Increases the time needed to develop new products
Increases the cost of developing new products
Creates uncertainty for future product development
% of companies
% ranking 1
% ranking 2-4
Table 33: Problems created by political involvement in USA’s regulatory process 2006-2011
% of companies problem
2011 2006
Creates uncertainty for future product development 62% 64%
Increases the cost of developing new products 54% 79%
Increases the time needed to develop new products 46% 86%
Increases the cost of maintaining existing products 38% 21%
Prevents approval of new products that are available in other geographic
markets 23% 43%
Reduces investment in the development of new technologies 23% 29%
Requires products to be removed from markets without scientific evidence 23% 21%
Restricts the use of certain product or process technologies 15% 43%
Allows products to be placed on the market without scientific evidence 8% 0%
Restricts the species or indications covered by certain products 8% 14%
Although the top 3 perceived problems have remained the same since 2006, a smaller percentage of
companies appears concerned in 2011 about increasing costs or time as a result of political involvement
(though they are concerned highly about these as a result of regulatory factors). Other factors vary upwards or
downwards; the ones showing greatest variance are restriction on product or process technologies and
preventing approval of products available elsewhere.
Other negative impacts were mentioned in interviews: the removal of product claims from in-feed antibiotic
products; moves to adopt an extra-label drug use provision and the accompanying pressure on CVM; and the
possible emergence of hormones in the environment as the next political issue and uncertainty about how this
will affect the AH industry.
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Regulatory predictability and quality of regulatory assessment
The regulatory process in the USA includes three routes to reach the market for the AH products under
consideration, depending on the product type. The survey asked about each of these (FDA CVM for
pharmaceuticals and medicated in-feed products, USDA/APHIS-CVB for vaccines and EPA for pesticide-based
products). We asked that Regional Heads of Regulatory Affairs or their direct delegates provided input on the
reliability, predictability and efficiency of the process, the quality of assessment and decision-making and the
overall service, to assure robustness and reliability of response as much as possible, given that the outputs are
likely to be of direct interest to the regulatory authorities themselves.
Figure 50: Involvement of companies with different USA regulatory agencies 2011
31%
15%
8%
15%
31%
CVM only
CVB only
CVM+CVB
CVM+EPA
CVM+CVB+EPA
% of companies
Figure 50 shows the interactions companies have with the different agencies. Almost half the companies were
involved with only one agency (FDA-CVM or APHIS-CVB). Almost one-third had significant dealings with all
three agencies. The survey asked respondents to answer questions concerning all the agencies that they had
significant dealings with. This also allowed discrimination of companies’ views on agency efficiencies and
quality between new products and existing products.
New products – regulatory predictability and quality of FDA CVM
“We are in the marriage counseling discussion. FDA needs to have an open mind
in what needs to be done for approval. Nothing has changed as of now but I am
optimistic because there is a potential for change of philosophy at CVM regarding
submission and approval of biotechnology products. This is a “must have”.
For 62% of companies, the FDA mostly or always satisfied needs for predictable, reliable and efficient process
for new products (Figure 51). These results are shown in more detail in Table 34. There is perhaps room for
improvement in the criteria of greater application of risk assessment principles, consistency in guideline
interpretation and transparency.
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Figure 51: The FDA and new products: overall achievement of regulatory predictability 2011
4%
58%
38%
0%
always mostly sometimes never
% o
f re
spo
nse
s
For CVM, interviewees comment that there have been “issues negotiating protocols where the reviewer doesn’t
know the species.”; “Statistical models are a moving target; various reviewers keep requesting changes to models
that have been previously approved.”; and “Type B or C labels that are sent to 2 different reviewers with different
outcomes – not consistent. Also with manufacturing the requirements vary by reviewer.” Others feel “it would be
nice to have predictable consistency but they are human beings.”
Table 34: The FDA and approval of new products: meeting criteria for regulatory predictability 2011
% of companies and achievement of
criteria criterion
always mostly sometimes never
1 Final approval of new products by CVM/FDA is based on the
expert assessment of safety, quality, and efficacy 18% 64% 18% 0%
2 Expert assessment of applications to approve new products
by CVM/FDA is based on best available science 0% 73% 27% 0%
3 Expert assessment of applications to approve new products
by CVM/FDA is based on a consistent application and
interpretation of Regulatory Guidelines
0% 55% 45% 0%
4 The process of approving new products is transparent and
predictable 0% 55% 45% 0%
5 Expert assessment of applications to approve new products
by CVM/FDA is firmly rooted in the principles of Risk
Assessment
0% 45% 55% 0%
For regulatory predictability of FDA-CVM, comparisons with the results of the 2006 IFAH GBS survey are
shown in Table 35.
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The high level of satisfaction with the final approval process in terms of its basis on expert assessment has
been maintained, though fewer companies see it as being based on best available science. Scoring for
consistency, transparency and basis in Risk Assessment has not improved over the past five years.
Table 35: The current CVM/FDA process for new products – regulatory predictability 2006-2011
% companies answering
‘always’ or ‘mostly’ criterion
2011 2006
Final approval of new products by CVM/FDA is based on the expert assessment
of safety, quality, and efficacy 82% 85%
Expert assessment of applications to approve new products by CVM/FDA is
based on best available science 73% 92%
Expert assessment of applications to approve new products by CVM/FDA is
based on a consistent application and interpretation of Regulatory Guidelines 55% 54%
The process of approving new products is transparent and predictable 55% 46%
Expert assessment of applications to approve new products by CVM/FDA is
firmly rooted in the principles of Risk Assessment 45% 46%
Companies also provided input on perceptions of quality of assessment, decision-making and overall service of
FDA’s performance when dealing with new products. Levels of satisfaction were high, reaching 65%, as shown
in Figure 52, where scores are aggregated across all criteria.
Figure 52: The FDA and new products: overall achievement of regulatory quality 2011
2%
63%
33%
2%
always mostly sometimes never
% o
f re
spo
nse
s
The results of the 2011 IFAH GBS survey are shown in Table 36.
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There is widespread satisfaction with the handling of the period from pre-submission to further interactions,
including submission itself. Satisfaction with the caliber of efficacy assessors is high, but for other aspects of
the process it is medium to low. Clarity of assessment and international respect, and transparency of the
approval process score lowest, with 18% scoring this ‘never’, suggesting that there is room for improvement.
Table 36: The FDA and approval of new products: meeting criteria for regulatory quality 2011
% of companies and achievement of
criteria criterion
always mostly sometimes never
The regulatory authorities deal with further interactions promptly 18% 73% 9% 0%
The regulatory authorities deal with submission helpfully and
promptly 0% 91% 9% 0%
The regulatory authorities deal with pre-submission stages
helpfully and promptly 0% 82% 18% 0%
The caliber of scientific assessors for efficacy is of the highest
possible competence 0% 82% 18% 0%
The caliber of scientific assessors for safety is of the highest
possible competence 0% 64% 36% 0%
The caliber of scientific assessors for quality is of the highest
possible competence 0% 55% 45% 0%
Safety, quality and efficacy guidelines are applied on the basis of
practical and rigorous assessment of risks and benefits 0% 45% 55% 0%
Overall, scientific assessment of risks and benefits is clear and
respected by other regulators internationally 0% 36% 64% 0%
The process of approving new products is transparent, efficient
and predictable 0% 36% 46% 18%
Table 37 compares the results of the 2011 IFAH GBS survey with 2006. Satisfaction with the caliber of efficacy
assessors has increased slightly but has declined for others, markedly so for quality assessors. The criterion of
clarity of assessment and international respect is regarded as being achieved substantially less well.
Table 37: The current CVM/FDA process for new products – regulatory quality 2006-2011
% companies answering
‘always’ or ‘mostly’ criterion
2011 2006
The regulatory authorities deal with submission helpfully and promptly 91% -
The regulatory authorities deal with further interactions promptly 91% -
The regulatory authorities deal with pre-submission stages helpfully and
promptly 82% -
The caliber of scientific assessors for efficacy is of the highest possible
competence 82% 77%
The caliber of scientific assessors for safety is of the highest possible
competence 64% 69%
The caliber of scientific assessors for quality is of the highest possible
competence 55% 85%
Safety, quality and efficacy guidelines are applied on the basis of practical and
rigorous assessment of risks and benefits 45% 39%
Overall, scientific assessment of risks and benefits is clear and respected by
other regulators internationally 36% 62%
The process of approving new products is transparent, efficient and predictable 36% -
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New products – regulatory predictability and quality of USDA APHIS CVB
Figure 53: USDA/APHIS-CVB and new products: overall achievement of regulatory predictability 2011
11%
57%
32%
0%
always mostly sometimes never
% o
f co
mp
an
ies
Almost 70% of companies were mostly or always satisfied with the overall performance of APHIS’s CVB, see
Figure 53. Table 38 gives more detail, showing a very high degree of satisfaction with the final approval
process but, like the responses for FDA CVM, suggests that improvements could be useful in some criteria
dealing with application of risk assessment principles, consistency in guideline interpretation and
transparency.
Table 38: USDA/APHIS-CVB and new products: meeting criteria for regulatory predictability 2011
% companies criterion
always mostly sometimes never
Final approval of new products by USDA/APHIS is based on the expert
assessment of safety, quality, and efficacy 43% 57% 0% 0%
Expert assessment of applications to approve new products by
USDA/APHIS is firmly rooted in the principles of Risk Assessment 14% 43% 43% 0%
Expert assessment of applications to approve new products by
USDA/APHIS is based on best available science 0% 86% 14% 0%
Expert assessment of applications to approve new products by
USDA/APHIS is based on a consistent application and interpretation
of Regulatory Guidelines
0% 57% 43% 0%
The process of approving new products is transparent and predictable 0% 43% 57% 0%
Comparison with the results of the previous survey (Table 39) shows that a satisfactory achievement level of
all criteria is regarded as having been reached by more companies in 2011 than in 2006. Transparency and
predictability of the process of approval was however rated as having been satisfactorily achieved by fewer
than 50% of companies.
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Table 39: The current USDA/APHIS process for new products – regulatory predictability 2006-2011
% companies answering
‘always’ or ‘mostly’ criterion
2011 2006
Final approval of new products by USDA/APHIS is based on the expert
assessment of safety, quality, and efficacy 100% 75%
Expert assessment of applications to approve new products by
USDA/APHIS is based on best available science 86% 75%
Expert assessment of applications to approve new products by
USDA/APHIS is firmly rooted in the principles of Risk Assessment 57% 38%
Expert assessment of applications to approve new products by
USDA/APHIS is based on a consistent application and interpretation of
Regulatory Guidelines
57% 25%
The process of approving new products is transparent and predictable 43% 25%
For CVB, interviewees commented: “There is more statistics with the section leader stepping in to fill a lack of
expertise and knowledge. He says it is still up to reviewers to make the decision but this isn’t what we experience.
It is up to the management of CVB to recognize this but they are unwilling to admit it is a problem.”
Figure 54 and Table 40 summarize perceptions of quality of assessment, decision-making and overall service
of the CVB’s performance when dealing with new products. CVB is rated as achieving a high level in overall
criteria (‘always’ and ‘mostly’) by 64% of companies.
Figure 54: The USDA/APHIS-CVB and new products: overall achievement of regulatory quality 2011
8%
56%
36%
0%
always mostly sometimes never
% o
f co
mp
an
ies
The CVB is highly regarded on a number of criteria, as shown in Table 40.
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A high-quality management of interactions with applicants from pre-submission to follow-up is mostly or
always achieved, according to companies. Perception of the caliber of assessors is variable, with safety
assessors regarded more highly than efficacy and quality assessors. For quality (purity/potency) assessors,
some improvement is indicated. An aspect for definite improvement is the transparency, efficiency and
predictability of the whole process.
Table 40: The USDA/APHIS-CVB and new products: meeting criteria for regulatory quality 2011
% companies criterion
always mostly sometimes never
The regulatory authorities deal with pre-submission stages helpfully
and promptly 29% 72% 0% 0%
The regulatory authorities deal with further interactions promptly 14% 72% 14% 0%
The caliber of scientific assessors for safety is of the highest possible
competence 14% 57% 29% 0%
The regulatory authorities deal with submission helpfully and promptly 14% 29% 57% 0%
Safety, purity/potency and efficacy guidelines are applied on the basis
of practical and rigorous assessment of risks and benefits 0% 86% 14% 0%
The caliber of scientific assessors for efficacy is of the highest possible
competence 0% 71% 29% 0%
The caliber of scientific assessors for purity/potency is of the highest
possible competence 0% 43% 57% 0%
Overall, scientific assessment of risks and benefits is clear and
respected by other regulators internationally 0% 43% 57% 0%
The process of approving new products is transparent efficient and
predictable 0% 29% 71% 0%
Comparison with results from the 2006 survey (Table 41) show that satisfaction with the caliber of
quality/potency assessors has fallen since 2006. Other aspects have improved, some such as risk:benefit
application of guidelines improving markedly.
Table 41: The current USDA/APHIS process for new products – regulatory quality USA 2006-2011
% companies answering
‘always’ or ‘mostly’ criterion
2011 2006
The regulatory authorities deal with pre-submission stages helpfully
and promptly 100% -
The regulatory authorities deal with further interactions promptly 86% -
Safety, quality and efficacy guidelines are applied on the basis of
practical and rigorous assessment of risks and benefits 86% 29%
The caliber of scientific assessors for safety is of the highest possible
competence 71% 75%
The caliber of scientific assessors for efficacy is of the highest possible
competence 71% 38%
The caliber of scientific assessors for purity/potency is of the highest
possible competence 43% 63%
Overall, scientific assessment of risks and benefits is clear and
respected by other regulators internationally 43% 25%
The regulatory authorities deal with submission helpfully and promptly 43% -
The process of approving new products is transparent, efficient and
predictable 29% -
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New products – regulatory predictability and quality of EPA
Figure 55: EPA and new products: overall achievement of regulatory predictability
0%
33%
64%
3%
always mostly sometimes never
% o
f co
mp
an
ies
In general, there is less satisfaction that EPA’s processes reach a consistently-high level of performance
quality. Figure 55 gives the aggregated scores for criteria of performance quality, and it provides a different
picture from the general scores of the other agencies, with a greater proportion of never or sometimes
compared with CVB and CVM.
Table 42 breaks this down and shows general dissatisfaction with achievement of consistency in application
and interpretation of guidelines and transparency and predictability of process.
Table 42: EPA and new products: meeting criteria for regulatory predictability 2011
% companies criterion
always mostly sometimes never
Expert assessment of applications to approve new products by the EPA
is based on best available science 0% 50% 50% 0%
Expert assessment of applications to approve new products by the EPA
is firmly rooted in the principles of Risk Assessment 0% 50% 50% 0%
Final approval of new products by the EPA is based on the expert
assessment of safety, quality, and efficacy 0% 50% 50% 0%
Expert assessment of applications to approve new products by the EPA
is based on a consistent application and interpretation of Regulatory
Guidelines
0% 17% 66% 17%
The process of approving new products is transparent and predictable 0% 0% 100% 0%
Comparison with the previous survey (Table 43) shows that levels of satisfaction with the achievement of all
criteria have fallen substantially. This is a mark of serious lack of progress or a challenging change.
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Table 43: The current EPA process for new products – regulatory predictability 2006-2011
% companies answering
‘always’ or ‘mostly’ criterion
2011 2006
Expert assessment of applications to approve new products by the EPA
is firmly rooted in the principles of Risk Assessment 50% 100%
Expert assessment of applications to approve new products by the EPA
is based on best available science 50% 83%
Final approval of new products by the EPA is based on the expert
assessment of safety, quality, and efficacy 50% 83%
Expert assessment of applications to approve new products by the EPA
is based on a consistent application and interpretation of Regulatory
Guidelines
17% 83%
The process of approving new products is transparent and predictable 0% 67%
Figure 56: The EPA and new products: overall achievement of regulatory quality 2011
2%
39%
57%
2%
always mostly sometimes never
% o
f co
mp
an
ies
The EPA is clearly regarded less well than other agencies by the companies in this survey, with the perception
of achievement shifted away from ‘mostly’+’always’ towards ‘sometimes’+‘never’ compared with CVM and
CVB. Even when respondents believed that EPA’s performance could be good, as in the case of post-
submission interactions, the majority of responses fell into the third rank of ‘sometimes’ rather than ‘mostly’.
Table 44 gives more detail.
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Most criteria were scored rather middle-of-the-road except for the caliber of safety assessors and interactions
during submission, and, in common with the responses for CVM and CVB but rather more pronounced,
companies did not feel that EPA reached good levels of transparency, efficiency and predictability.
Table 44: The EPA and new products: meeting criteria for regulatory quality 2011
% companies criterion
always mostly sometimes never
The regulatory authorities deal with further interactions promptly 17% 17% 66% 0%
Overall, scientific assessment of risks and benefits is clear and
respected by other regulators internationally 0% 50% 50% 0%
Safety, quality and efficacy guidelines are applied on the basis of
practical and rigorous assessment of risks and benefits 0% 50% 50% 0%
The caliber of scientific assessors for efficacy is of the highest possible
competence 0% 50% 50% 0%
The caliber of scientific assessors for quality is of the highest possible
competence 0% 50% 50% 0%
The regulatory authorities deal with pre-submission stages helpfully
and promptly 0% 50% 50% 0%
The caliber of scientific assessors for safety is of the highest possible
competence 0% 33% 67% 0%
The regulatory authorities deal with submission helpfully and promptly 0% 33% 67% 0%
The process of approving new products is transparent, efficient and
predictable 0% 17% 66% 17%
The same picture of low perceptions of achievement is seen for regulatory quality at EPA (Table 45) as for
regulatory predictability.
Table 45: The current EPA process for new products – regulatory quality 2006-2011
% companies answering
‘always’ or ‘mostly’ criterion
2011 2006
The caliber of scientific assessors for quality is of the highest possible
competence 33% 50%
The caliber of scientific assessors for efficacy is of the highest possible
competence 33% 50%
Safety, quality and efficacy guidelines are applied on the basis of
practical and rigorous assessment of risks and benefits 33% 50%
Overall, scientific assessment of risks and benefits is clear and
respected by other regulators internationally 33% 50%
The regulatory authorities deal with pre-submission stages helpfully
and promptly 33% -
The caliber of scientific assessors for safety is of the highest possible
competence 22% 67%
The regulatory authorities deal with submission helpfully and promptly 22% -
The regulatory authorities deal with further interactions promptly 22% -
The process of approving new products is transparent, efficient and
predictable 11% -
No criterion is regarded as having improved over the past 5 years in achievement level, judging by the scores.
Regard for the caliber of safety assessors seems to have dropped substantially.
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Existing products – regulatory predictability
Figure 57 summarizes companies’ views on achievement of criteria for regulatory predictability by the three
agencies. No agency was judged always to have met criteria. Fewer than 50% of companies believed that
agencies mostly met criteria. This suggests some room for improvement.
Figure 57: The agencies and existing products: overall achievement of regulatory predictability
7%
52%
60%
39%
48%
33%
61%EPA
USDA/APHIS-CVB
FDA CVM
% of companies
mostly
sometimes
never
Table 46 looks at this in more detail. It is clear that the application of new tests or reviews to existing products
poses the most concerns, and companies on the whole see none of the agencies as using best available science
or a rigorous scientific approach to risks most of the time when they do this. On the other criteria, CVB
appears to be slightly better-regarded than CVM or EPA.
Table 46: The agencies and existing products: meeting criteria for regulatory predictability – USA 2011
% companies agency criterion
always mostly sometimes never
Assessment is based on best available science and risk
assessment 0% 40% 60% 0%
A clear and transparent division exists between risk
assessment and risk management decisions 0% 40% 60% 0%
FDA
CVM New tests or reviews are based only on a rigorous
science-based analysis of pharmacovigilance data OR
relevant advances in knowledge of risks based on best
available science
0% 20% 60% 20%
Assessment is based on best available science and risk
assessment 0% 71% 29% 0%
A clear and transparent division exists between risk
assessment and risk management decisions 0% 57% 43% 0% USDA/A
PHIS-
CVB New tests or data requirements are based only on a
rigorous science-based analysis of existing data OR
relevant advances in knowledge of risks based on best
available science
0% 14% 86% 0%
Assessment is based on best available science and risk
assessment 0% 33% 67% 0%
A clear and transparent division exists between risk
assessment and risk management decisions 0% 67% 33% 0%
EPA
New tests or reviews are based only on a rigorous
science-based analysis of pharmacovigilance data OR
relevant advances in knowledge of risks based on best
0% 17% 83% 0%
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available science
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Table 47 compares the responses in 2011 with those in the previous IFAH GBS of 2006. Although perceptions
of high achievement in 2011 were not held by a large percentage of companies (and no agency was regarded
as always achieving criteria), nevertheless some aspects have improved since 2006, especially the basis for
approval and transparency of risk assessment and management. EPA’s assessment process is less well
thought of. The rating of all agencies fell, for their approach to new tests and reviews.
Table 47: The agencies and existing products - meeting criteria for regulatory predictability USA 2006-2011
FDA CVM CVB EPA criterion
2011 2006 2011 2006 2011 2006
Assessment is based on best available science and risk
assessment 40% 31% 71% 38% 33% 83%
A clear and transparent division exists between risk
assessment and risk management decisions 40% 15% 57% 25% 67% 50%
New tests or reviews are based only on a rigorous
science-based analysis of pharmacovigilance data OR
relevant advances in knowledge of risks based on best
available science
20% 39% 14% 25% 17% 83%
Regional questions
The main features characterizing the USA as a region are the CVM’s staged submission approach, shorter
periods of innovator/originator data protection than in Europe (5 years for major product and 3 years for
extension, compared with 10 years, soon to be considered for change), continued difficulty with acceptance of
overseas data and products, especially by USDA; and conflicts with pharmacopeia acceptance and application.
Interviewees discussed the differences and similarities they had experienced between regions. They noted
that, 2-3 years ago, the FDA seemed to become more open to dialogue and things have become easier, and
the exchange of knowledge is freer than in the EU, although companies can still get the science advice.
However, the EMA has emerged as a consistent reliable regulatory agency with regard to timelines. This may
result in fewer first registrations in the US and possibly a decrease in manufacture of global products in the US
because manufacture tends to be in the market of first approval. To reinforce the message about comparative
speed, one company put forward the example of a product to immunize pigs against ‘boar-taint’, which was
approved in Australia 6 years ago, Brazil 5 years ago, EU 3 years ago, and the US in 2011. Canada said they
would not do anything until the US made a decision.
The USA has an over-stringent approach to post-marketing events and product risk. In one case given as an
example, other major regulatory authorities worked with the company around the compliance and
specification issues and the product remained on the market. In the USA, the CVM forced the product to be
withdrawn: “The US didn’t think about what it would do to animals to not have the product on the market. CVM
says that they are coordinating with other agencies but they didn’t in reality.”
For harmonization, it is still true that regional requirements don’t ‘mix and match’; a great deal of work has to
be re-done at very high cost, so if there is uncertainty about the size and character of the market, it inhibits
R&D expenditure. “It is hard to come up with a set of global studies. There can be substantial differences. It could
be due to [the regulators’] inability to understand, our ability to write or their interpretation of the requirements.
For example the risk/benefit that is required in the EU is not done in the USA.”
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In addition, political influence varies in different regions: In the US, politics has mainly crystallized around
antibiotics “but the CVM has done a pretty good job in keeping politics out of it”. The EU on the other hand “has
some strong positions that are political not scientific such as their position on growth promotants”. In China the
political process and the regulatory process were seen one and the same thing. In Brazil and Mexico there is
political awareness of assessors as they look at dossiers.
For innovation, the US has initiated IVET to deal with new products. Latin America is seen as copying the US
and Europe without a lot of thought. Interviewees perceived geographic differences in the capabilities of
regulatory agencies to evaluate new technologies. “Developed regulatory agencies such as EU, US, Japan,
Canada, Australia, NZ are typically quite open to discussing new technology. Other places such as the Asian
region are still developing their regulatory systems and don’t have the technical horsepower. There is no
framework in place to even look at it.” Australia and New Zealand, particularly Australia, are seen as very open.
The fact that different regions have different types of product regulated by different agencies is regarded by
some as “just the way that you have to operate to get things done.” It is a disadvantage in the USA in that there
are three rules for the data required, the quality of the data and the CMC requirements, requiring increased
resources to manage. A comparative advantage of the EU is that one set of rules can be applied, EMA is much
clearer on requirements and there are good checks and balances. Nevertheless, it is possible to develop a
good and productive relationship with an agency and biologics-involved companies report that this can be
achieved with USDA.
The philosophies of USDA and FDA seem different: “USDA has a mandate to support agriculture. It is better for
them to make things happen. Their turnaround is quicker, they offer conditional licenses and also have a system
that recognizes the priority of certain type of products. FDA has a mandate to protect public health so for them it
is better to stop things. USDA also allows “fall out” products such as a 2-way from a registered 3-way product.
For FDA, a 2-way from a 3-way is a new product.”
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Industry suggestions to mitigate difficulties in regulatory predictability and quality
Interviewees put forward at least 30 suggestions for consideration in four general areas, summarized in Table
48. Some are rather detailed, as is the case for introducing a risk factor for antimicrobial resistance based on
science; others are more general, including adopting the clear statement that the regulation of animal health
products should be carried out in the context of the animal health industry and product use, not the human
health industry. These suggestions can be considered more widely by the AHI and regulators.
Table 48: Industry suggestions to mitigate regulatory concerns USA 2011
Type of
suggestion
Suggestions % of
responses
Regulatory
processes
The statistical staff at USDA will not share how they are going to analyze data, yet companies
have statisticians on staff that could do the analysis if they knew what USDA wanted done.
A CVM fast track system would promote innovation - CVM says that they still have it but no
one meets the criteria.
Institute conditional registration at CVM, where the technical section is marked as complete,
but contingent on doing particular things over the next 2 years.
The assessment of antibiotic resistance data would be improved if there were a ‘bright line’
rule as in toxicity studies, where 1 in 106 [risk] is acceptable; as there is no risk limit set the
antibiotic resistance issue can’t be overcome.
Introduce manufacturing review flexibility so not every minor change needs submission.
Have consulting companies hired to assist with efficiency improvements.
The laboratory testing could be turned over to private industry.
Companies need to be willing to escalate earlier in the process.
CVB could shuttle off activities that aren’t essential for them to do and are resource-utilizing -
industry could store samples from every serial manufactured rather than USDA
35%
Regulatory
policies
Acceptance of International data, eg if there is 10 years of data in one market the agency
should allow it to support safety in a new market
Replace 50-70 page-long protocols by an investigator/user-friendly protocol and a separate
full supporting document – NB CVM reviewers have already said that they will not accept this.
Agencies should identify processes from outside the US that are working and import them for
use within the US.
As part of ADUFA III introduce incentives to streamline processes to become more efficient.
By the same token, build in penalties for non-performance – not meeting timelines.
CVM and CDER should cooperate to eliminate compounding. Institute cross-agency reviews
between regions - if the EU has already reviewed CMC, CVM should give a pass if a section is
reviewed by a reputable agency; maybe set up a list of acceptable agencies.
Keep the concept that animal health is different from human health and the context of the
practice of veterinary medicine and use of products.
31%
Advice and
interactions
USDA to tell companies how they will review a section - this would be much better.
CVM needs to be decisive on submitted data instead of requesting additional data.
Agencies should feel more confident not to need to recalculate data or to require all the raw
data in all circumstances.
For EPA, improvement in communication and risk-based tools.
More communication and more focus on the science with less political influence.
19%
People and
resources
Hire vets on staff of EPA to increase understanding
Increase technical expertise in USDA CVB’s reviewing group
Focus effort to recruit, train and retain reviewers especially ones with background in newer
technologies
Hire CMC reviewer experts with greater experience in animal health products
15%
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Progress since 2006 and hopes for the future
The next part of the survey sought to elicit a view now about progress in the 5 years since the previous Survey,
and hopes and expectation for the next 5 years. This was the main part of the survey where respondents could
contribute their own thoughts and comments extensively, via text boxes, if they wished. This section was also
helpful in guiding interviews towards strategic areas and those where the industry might make additional
efforts to help progress in the area.
Progress since 2006 – expected reforms, their achievement and impacts on innovation
Some desired reforms were identified in 2006. Companies were asked to confirm which, from their point of
view, had occurred and what degree of impact they had had, or might have, on their ability to innovate. Figure
58 summarizes this, showing the reforms recognized as having been achieved and the impact rankings – the
percentage of companies regarding a reform as the single most important (rank 1) and the balance of those
regarding them, as very important (ranks 2-4). 73% of companies recognized that international harmonization
of requirements and incentives for small-market products had taken place, 43% regarded it as high-impact
and 9% as the single most important reform. 27% of companies recognized that removal of redundant and
overlapping guidelines had been achieved, 45% overall regarded this as very important and 18% as the single
most important reform. 46% of companies stated that provision of specific incentives for small markets had
been achieved and 27% regarded this as highly important. Other reforms were regarded as important by
smaller percentages of companies . The reform regarded by all companies as not having been achieved was
basing quality standards entirely on animal health industry needs not on human health requirements.
Figure 58: Reforms expected for innovation in USA 2006 and achievement 2006-2011
9%
18%
18%
9%
9%
9%
9%
9%
9%
18%
18%
27%
27%
36%
9%
9%
9%
18%
Basing quality standards solely on animal health
industry requirements
Removal of political involvement in
testing and approval
Changing test requirements only with
scientific justification
Basing test requirements only on best available
science and risk assessment
Implementation of an effective dispute
resolution procedure for scientific issues
Adaptation of test requirements to reflect
small size of markets
Use of consultation impact assessment
when developing new guidelines
Tailoring of test requirements to specific risks
posed by each product
Acceptance of relevant high quality test results
from other sectors, species or regions
Provision of specific incentives to develop
new products for small markets
Removal of redundant and overlapping guidelines
Harmonisation of test requirements internationally
(incl. VICH)
% of companies
% ranking 1
% ranking 2-4
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4 reforms besides using animal health industry quality standards did not receive any top ranking: removal of
political involvement in testing and approval; adaptation of test requirements to reflect small size of markets;
tailoring of test requirements to specific risks posed by each product; and provision of specific incentives to
develop new products for small markets. These were however regarded as being very important by 9%-46% of
companies.
Table 49: Reforms and their possible impact on innovation in USA 2006-2011
% of companies
reform rated high-
impact in
2011
achieved by
2011
mentions in
2006
Harmonization of test requirements internationally (incl. VICH) 45% 73% 71%
Provision of specific incentives to develop new products for small
markets 27% 46% 21%
Removal of redundant and overlapping guidelines 45% 27% 14%
Acceptance of relevant high quality test results from other sectors,
species or regions 27% 27% 50%
Use of consultation & impact assessment when developing new
guidelines 18% 27% 36%
Adaptation of test requirements to reflect small size of markets 18% 27% 36%
Tailoring of test requirements to specific risks posed by each
product 18% 27% 50%
Implementation of an effective dispute resolution procedure for
scientific issues 18% 18% 43%
Changing test requirements only with scientific justification 18% 9% 43%
Basing test requirements only on best available science and risk
assessment 18% 9% 57%
Removal of political involvement in testing and approval 9% 9% 43%
Basing quality standards solely on animal health industry
requirements rather than human health requirements 9% 0% 50%
Table 49 compares achievement and impact in 2011 with expectation in 2006. The single reform that was
most desired in 2006, most recognized as having been achieved during 2006-2011, and is regarded as having
high impact by a substantial percentage of companies, is harmonization of test requirements internationally.
The two other ‘top-three’ reforms rated as high-impact were not so much on companies’ minds in 2006
(expectation mentioned by 14%-21%), or recognized by so many as having been achieved. Other reforms,
including some that scored highly in 2006, are still to transpire and have an impact.
Progress since 2006 - Minor use, minor species products
Interviews point to the importance of carrying through the potential positive of a favorable regulatory
framework into realistic regulatory actions. Some companies do not have much problem with the Office of
Minor Use and Minor Species or the overall system. Others pointed out that it is very difficult to justify a
MUMS product when regulatory demands are extremely high, especially for the CMC aspects of applications.
Obtaining a realistic determination of the threshold number of animals and getting this in a timely fashion
seems to be a challenge as well, with negative commercial outcomes: “In an actual example the company went
to CVM about a potential emerging disease in the USA. CVM said that you can’t develop a product for a disease
that doesn’t exist today but if the disease does develop it will not be minor use” and “It would be a lot more useful
if the minimum numbers for minor use were increased. Currently the numbers are so low that it is difficult to pass
the ‘red face’ test. This leads to compounding because there are no approved products.” (The ‘red face’ is the box
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on a decision matrix that can be used to determine whether a disease and a product-use are MUMS or not, in
relation to number of animals affected or in the treatment population).
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In addition, one company found it was difficult to get reviewers to have as much confidence in the publications
submitted as part of the application as in studies where protocols had been reviewed and approved; others
have had problems establishing efficacy claims, even when research was carried out by a government agency.
Interviewees suggested two possible ways forward: amend the guidelines to allow a conditional license
approach as used by CVB; amend the guidelines to eliminate the requirement for ‘substantial evidence’. In
general, the threshold numbers should be re-evaluated and increased.
Progress since 2006 – expected reforms, their achievement and impacts on existing products
Figure 59 shows the percentage of companies ranking reforms they recognized as having been achieved in the
period 2006-2010, as the single most important reforms (rank 1) and the balance of those regarded as very
important (ranks 2-4). Employment of additional staff to speed up review times, and requiring all animal
health companies to pay user fees (for FDA-approvable applications) were recognized as having been
achieved by 60%-80% of companies. These were regarded as overall very important by 80% and 50% of
companies respectively and as the single most important reform by 30% and 10% respectively. In addition,
reduction of restrictions on minor formulation and manufacturing changes was regarded as the single most
important change by 20% of companies.
Only one reform that received an impact score, ensuring that all types of product receive full regulatory
approval, was not recognized as having occurred by any company. Two reforms, changing the minor-use
minor species definition to allow more animals to be treated, and adapting packaging and labeling to small
market sizes, were recognized as occurring by a minority of companies but received no score for impact. Two
further reforms were not recognized as having been achieved, adapting test requirements to small market
sizes and basing antimicrobial resistance rules on best available science.
Figure 59: Reforms expected in USA 2006 and impact on maintaining existing products 2006-2011
10%
20%
10%
10%
30%
10%
10%
20%
30%
40%
50%
Ensuring that all types of products are subject
to full regulatory approval requirements
Providing additional legal protection for data
for new indications or species
Basing need for dossier reviews solely on
pharmacovigilance or relevant scientific advances
Reduction of restrictions on minor formulation
and manufacturing changes
Basing test requirements only on best available
science and risk assessment
Ensuring equitable reviews through staff training
Requiring all animal health companies to pay user fees
Speeding up the review time by increasing
the number of review/support staff
% of companies
% ranking 1
% ranking 2-4
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Table 50: Reforms and their possible impact on ability to exploit existing products
% of companies
reform rated high-
impact in
2011
achieved
by 2011
mentions
in 2006
Speeding up the review time by increasing the number of
review/support staff 80% 80% 50%
Requiring all animal health companies to pay user fees 50% 60% 7%
Reduction of restrictions on minor formulation and
manufacturing changes 20% 50% 79%
Ensuring equitable reviews through staff training 30% 30% 57%
Basing test requirements only on best available science and risk
assessment 30% 20% 64%
Basing need for dossier reviews solely on pharmacovigilance or
relevant scientific advances 10% 20% 21%
Providing additional legal protection for data for new indications
or species 10% 10% 71%
Adaptation of packaging and labeling requirements to small size
of markets 0% 10% 14%
Changing the definition of “minor use” in MUMS to allow an
increase in the number of animals treated 0% 10% 21%
Basing Antimicrobial Resistance rules only on best available
science 0% 0% 21%
Ensuring that all types of products are subject to full regulatory
approval requirements 10% 0% 21%
Adapting test requirements to small size of markets 0% 0% 21%
Progress since 2006 – other positive changes
The 2006 IFAH GBS survey was thought to have a positive impact in general, providing a reference point for
discussions with the FDA CVM, for example on future portfolio discussions and the development of the IVET
innovation initiative, which is seen as a positive by industry. One comment is that the IVET team should be
given freer rein in their activities and approach.
A recent change at FDA CVM is in connection with post-approval comparability protocols for production:
“CVM is going in the right direction … they are very open and say come and talk to us. Recently they have agreed
to using methods that will allow quicker approval for post-approval comparability protocols which are simpler …
before you make the first batch you put together a protocol with a risk analysis of the chance of impact on the
product [of any changes] and how you will mitigate this. CVM has agreed that these protocols will warrant the
statutory protocol review time of 60 days instead of 180 days. We need to see if it does work but it should save
time.”
Lack of progress since 2006 – expected Reforms that did not occur
Some of these topics were further teased out by asking companies what expected changes had not occurred,
in spite of expectations of change, what changes had occurred and produced problems and what they hoped
to see in the following 5 years, using free-text boxes in the on-line survey. 43% of companies offered their
views on changes that had not occurred. Half reinforced the view that most of the possible reforms had not
occurred. Table 51 summarizes comments received about specific topics.
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Table 51: Specific regulatory improvements that failed to materialize 2006-2011
Topic Concerns
Harmonization of
regulatory
approaches
Potency assay harmonization between USA and EU
Standardization of pharmacopoeia compendia
Simplification of
regulatory
approaches
Practical/cost effective changes to Reference Requalification requirements for
existing vaccines have not been established.
Categorical exclusions provisions for veterinary biologicals were not
implemented.
No reduction of animals (no implementation of the 3 Rs).
Benefit-Risk assessments not the norm.
Political regulatory
issues
Regulating unapproved animal drugs
Increased control of illegally compounded pharmaceutical products
Wrong progress since 2006 – changes that have produced problems
64% of companies also commented on the changes that had taken place and which gave them the most
problems (Table 52). This allowed more specificity about the impacts of regulatory evolution in the USA 2006-
2011. Most concerns have arisen as a result of changes in quality requirements within both FDA-CVM and
CVB: residual solvent standards and potency and stability requirements respectively. The biometrics approach
at CVB has also given cause for concern. Taken together, these represent almost 60% of comments made.
Table 52: Regulatory changes causing the most problems 2006-2011
Topic Concerns % of
responses
FDA –
antimicrobials
and
pharmaceuticals
FDA actions against continued marketing of growth promotants.
The application of GFI 152 ("Evaluating the Safety of Antimicrobial New Animal Drugs") to
antimicrobials has not considered the importance of antimicrobials use in animals to human
health.
The threshold for melamine is problematic.
Residue Method Transfer Trials pose problems. End Review Amendments produce difficulties.
23%
FDA – residual
solvents
Inappropriate application of USP standards, exemplified by: “Implementation of USP residual
solvent standards with requirements exceeding those implemented by FDA for human products is
resulting in a significant number of incomplete letters”
18%
USDA/APHIS –
potency,
stability. quality
USDA/CVB Potency assay changes, including stability profiles, resulting in increased release titers
for new and existing products (with a potential impact on ability to meet EU upper specification
limits). Stability and potency requirements at USDA.
Lack of policy for reference requalification.
13.5%
USDA/APHIS –
Biometrics
Biometrics driven submission review at USDA APHIS CVB skews the overall process by not
allowing a balance between clinical assessments and overall risk assessment.
Increased biometric evaluation beyond practical limits.
Biometrics slow response time at USDA/CVB.
13.5%
General points
There is a failure to recognize precedents moving forward.
Increased requirements based on human drug regulations have led to additional costs for
maintaining and developing animal drugs.
Increased requirements based on pharmacopeial changes have led to additional costs for
maintaining and developing animal drugs.
13.5%
EPA-specific EPA change to conditional registrations only.
Environmental Assessment. 9%
VICH
VICH meetings and requirements for veterinary biologicals benefit only the large international
companies and distract CVB from its mission.
VICH guidelines have been adopted but the interpretation is still disparate
9%
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In interviews, the establishment by FDA of the Center for Food Safety and Applied Nutrition was mentioned as
a potential threat to the AH industry; FDA is beginning to legislate around this, and CVM is inevitably getting
involved. The involvement of human health regulatory authorities is seen as mixed in impact. Some
companies think it would be advantageous if CDER (FDA’s Center for Drug Evaluation and Research) were
more closely involved, specifically in two regions – the introduction of greater expertise in scientific areas such
as oncology, diabetes and in the manufacturing technical section, where CDER were seen to be less stringent.
In other cases, there is coordination, eg on antimicrobial resistance. Interviewees also noted that CVM makes
use of human guidelines for some questions if CVM lacks the resource in that area. There were some negative
aspects: “The current new electronic submissions were never tailored to animal health but CVM says “that is what
we have so too bad”.”; and there are examples of products licensed for human use where there are difficulties
getting CVM approval for animal use.
The outcome of increased pharmacovigilance and post-marketing surveillance was questioned: “Are good
decisions made when politics enters pharmacovigilance review? There is an increase in Black Box warning use,
which probably adds no benefit for the consumer.” One interviewee noted that part of the time-extension at
CVB was due to slowness in the Policy & Licensing Group responsible for issuing the licenses. The issue of
residual solvents may be in progress, according to the company that received 40 ‘incomplete’ letters as a
result of the situation: “CVM seems to have learned from this. For USP heavy metals and particulate matter in
injections, they have asked USP to modify the section, excluding animal health, because of the residual solvent
process and how much [time and resources] it took for industry and CVM.”
Although harmonization through VICH is on the whole thought to be positive, biologics-involved companies
saw harmonization through this route as not useful for biologics.
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Hopes for the future
“We are seeing the sunset of molecules and the sunrise of macromolecules,
biologics, generic approaches and so on. We are not there yet but will see
increasing reliance in the next 10 years.”
Companies were asked to assess how helpful or unhelpful certain regulatory trends might be for their business
over the next 5 years. The list chosen was based on current trends and initiatives, and will serve as a
benchmark for outcomes in the next IFAH GBS. Figure 60 shows a relative impact score derived by
subtracting the sum of ‘unhelpful’ and ‘very unhelpful’ responses from the sum of ‘helpful’ and ‘very helpful’
responses, expressed as a percentage of companies taking part in the survey.
Benefit:risk assessment, common technical documents, electronic submissions and the CVB Initiative on
performance-based requirements for vaccines are all expected to have a strong positive impact. An increasing
acceptance of JECFA decisions on non-contentious molecules, and innovation groups within FDA for
veterinary medicines are also expected to have a positive impact. Negative and strongly negative impacts are
expected from post-marketing surveillance and pharmacovigilance requirements and international
information-sharing between regulatory agencies. These are pointers to AHI and industry action in the future.
Figure 60: The expected impacts 2011-2016 of current regulatory trends and changes in the USA
Companies responded to the possibilities of the CTD and a Common Global Dossier in interviews. There was
some support for CTD (two-thirds of those responding). The target would be a standard, easy-to-use
electronic format that would be acceptable to all agencies. Some interviewees did not support it because it
would stop phased filing in the USA, or perhaps be difficult for small companies.
-92%
-67%
-8%
-8%
+25%
+25%
+67%
+67%
+75%
+83%
Increasing requirements for post-marketing surveillance &
pharmacovigilance
Increasing globalization of post-marketing surveillance outcomes
Increasing transparency with respect to data disclosure
Trend to wider participation in regulatory process, including
public comment
Acceptance of JECFA agreements for residues of non-contentious molecules
The FDA CVM initiatives within ONADE on innovation groups and technology teams
Moves towards electronic submission
The USDA CVB initiative on performance-based requirements for vaccines
Moves towards common technical documents
Increasing trend to move from zero-risk approach to a benefit:risk assessment
relative impact score
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Most thought that a Common Global Dossier was unachievable or undesirable, partly because of the difficulty
of gaining a global acceptable dossier rather than having to submit to the highest demands, partly because
different countries and regions would likely be unwilling to give up what they saw as their special interests and
needs: “It would be a train wreck if tried to hybridize that current systems because it would end up harmonized to
the highest common denominator.” It might be achievable in some way by establishing a single global agency,
or building on IFAH-VICH.
Other beneficial changes
Comments were welcomed on other changes that might have had a positive impact, and on changes that
companies would still like to see. Tables 53 and 54 summarize these. Just over 40% of survey respondents
provided comments on changes with a positive impact.
Table 53: Beneficial impacts of regulatory trends and changes 2006-2011
Topic Beneficial impacts and comments
Access to the
regulatory
authorities
Openness of FDA/CVM toward creative solutions and an attempt to understand business
drivers has resulted in a more customer-friendly environment
The transparency of CVB has increased and has made the dialog between the agency and
firms possible to a level not seen before
FDA increasingly interested in meeting with sponsors, providing an opportunity for a more
collaborative regulatory environment
Changes in
process
Recent decision to accept labeling changes if approved by foreign regulatory agency
FDA: End Review Amendment process
USDA: Recent decision to allow 15-year dating on biologics references; the master
reference re-qualification initiative at USDA reduces diversion of R&D time and cost for
existing products.
The critical path initiative at USDA
General topics
Electronic Submissions
Too early to determine if the FDA CVM initiatives on innovation and technology teams will
have an impact
Most interviewees commended FDA CVM for increased accessibility, openness and indeed helpfulness. For
biologics-involved companies, CVB is also regarded as being helpful in some cases - one interviewee noted
that CVB had “put in major effort to rework their labels to show a single claim on the label and to provide a
separate summary efficacy report that will be available to requesters – users.”
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Changes companies still want to see
“The agencies should take a step back and look at what they are trying to
accomplish - what are the core fundamental requirements. Build these into what
is required and take out what isn’t. Look at things afresh – ask the question is this
required and for what? Don’t end up eg as in Japan, where toxicology studies are
demanded for dog products even though they are not a food species.”
64% of respondents commented on future changes they would still like to see. The most desired changes are
in speed of reaching market, ease of getting there in terms of process and data requirements, and greater
confidence in the validity and acceptability of data generated outside USA. Incomplete predictability is an
important and continuing concern.
Table 54: The regulatory changes companies still want to see in the USA
Topic Comments % of
responses
Process speed and
flexibility
Reduce the time to Market
More expedited or fast track reviews
Shorter review times
More provisional/conditional approval opportunities
More MUMS opportunities
26%
Process
components
Move to more use of Question Based Review (QbR) - improve the consistency
of data and documentation from R&D and Product Supply
A move away from a zero-risk approach to a risk:benefit approach would be
helpful
Ability to only submit final reports and not all raw data
A move toward more concrete and uniform requirements based on solid
science – “some requirements seem to come out of nowhere with little or no
scientific explanation. We hear the phrase, we would feel more comfortable if...
used quite often”
21%
Harmonization
Wider acceptance of overseas data
Better acceptance of safety and efficacy data generated outside the USA for
non production animals.
Increased and more timely implementation of international harmonization
initiatives.
16%
Predictability
Improved predictability.
More predictability of the regulatory positions of the Agency.
Move to a single agency for animal health products to improve consistency
and predictability of the development and maintenance requirements
16%
Other possibilities
Consistency in labeling across all sponsors for similar products
Electronic release of serials by CVB has been pending for over 10 years. This
change would help firms provide better customer service
10.5%
Political Tougher standards on generic approvals of medicated feed additives
Greater market/data protection for pioneer products 10.5%
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Regulatory Reform
Interviewees were asked whether the US regulatory framework was ‘fit for the 21st Century’, what kind of
Regulatory Reform might be needed if it was not, and what changes would they like to see to improve the
regulatory systems, if that was necessary.
Fit for the 21st Century
60% of interviewees said ‘No’, 30% gave a qualified ‘OK but improvements needed’ and 10% responded ‘OK’.
The comments varied according to specific experiences – some felt CVM was good, that the eSubmitter was a
positive; others had concerns.
In the context of review response times, but in a comment relevant to all aspects of CVM’s activities, one
interviewee noted: “CVM can’t justify all reviews taking 180 days when they have 2 times the staff and 50% less
submissions.”
Regulatory Reform
33% believed that a renewal was needed, typified by the quotation at the start of this section and: “an AHI
working group should sit down and look at the situation starting from zero. It can bring it bits from the existing
process if they work but only if they do. Not by changing existing rules but by looking at it anew. Some
requirements will be the same but others will not - the way that products get developed has changed so much
from the way on which the regulatory process was built”.
33% believed that existing processes could be improved, using ADUFA III as a chance to get more things right;
22% wanted to completely rethink the system: “It is a broken system that can’t be band-aided.”, and the
remaining 11% were rather gloomy and couldn’t see much difference between either approach.
Changes needed
A new unified agency did not receive much support. VICH as a tool for harmonization received less support
from biologics-involved companies than others, in interviews.
Interviewees were asked what the single most important change would be to improve the regulatory process
in the USA. Table 55 summarizes the 23 responses from interviewees, who extended discussion beyond just
one topic each.
Table 55: The single most important changes desired by AH industry in USA 2011
change % of
responses
Increase the consistency, predictability and clarity of agencies and
reviewers 30%
Reduce the process time 17%
Ensure the framework and the individual processes are appropriate
for animal health 13%
Increase reviewer knowledge and understanding of product science
and product use 13%
Harmonize with other regions so the same data can be used 13%
Political – eliminate compounding; ensure ADUFA III is right 9%
Adopt a willingness to consult industry before actions 4%
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Inconsistency is seen as a real problem: “Some reviewers don’t follow the ERA (End Review Amendment) process
but just send an incomplete letter when they could have used an ERA.”
Reducing process time would make an excellent target: “Basic safety and efficacy standards haven’t changed so
how come we have gone from 3 page protocols to 50-70 page protocols? Agencies should focus on what is
important and also not insist on “my way or the highway”. If what the sponsor proposes will get to the same
outcome, the agency should meet half-way with the sponsor.” This leads into a feeling that sometimes CVM
does not give companies the opportunity to address issues before the agency acts. The case reported here
also raised another issue that is important in the context of harmonization and also the globalization of post-
marketing surveillance and pharmacovigilance information:
“The black box warning label on an anti-inflammatory product for cats was based
on a flawed statistical analysis done by CVM, [using] a proportional reporting
ratio, which looks at species, condition and signs compared to all other products
in that species for that use. But [the fact that] 98% of anti-inflammatory use in
cats in the US is with this product, [because] there are no other products for cats
in the US, skewed the reporting. The rest of the world has the product approved
for cats and it is no issue - US regulators don’t look outside of the US for
experience.”
One interviewee suggested that CVM and CVB should review their processes and amalgamate certain aspects:
“The company … would not want biologicals slowed down by the CVM approach but believe that many of the
“back office” processes could be from CVM, for example the electronic submissions. CVM and CVB should look at
what is working globally and bring in the successful parts of it. They could share the common processes but keep
the science separate.” Another interviewee wanted to ensure that review was completed in one cycle rather
than multiple ‘incomplete’ responses and clock-stopping at CVM.
A lack of understanding of science, diseases and product use in the field is seen to need change at CVB: “USDA
has taken a more numerical approach to biologics expiration dates, [and to] efficacy - they don’t apply clinical
common sense“ and “USDA seems to have issues with new and developing diseases, for example, canine
influenza. They didn’t see it as a significant disease and didn’t want to license a product. Industry had to get
experts to convince them that it was a problem disease and by then it had spread to many more states.”
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Communication and advocacy
Industry is certainly concerned and perhaps taken aback by the continuing inconsistencies and difficulties in
how regulatory authorities manage approvals and interpret guidelines: “There needs to be a rationalization of
requirements. Why things are being done – what is the use of the data. The questions needs to be asked - what
are you looking for? Okay, these are the ways of doing it. What makes practical sense? Safety and Compliance
and ONADE have vastly different stances on what the label is for. To S&C it needs to contain anything that was
ever seen even if it is immaterial. But for ONADE, it is ‘here is what to look out for’. S&C will not let companies
put the statement “the relationship to product use has not been proven” on the label. They don’t have a sense of
how to write a good label that is useful to the vet and owner. IFAH could help standardize the process e.g. what is
the likely overdose and what is likely to happen.”
AHI’s role in maintaining a progressive relationship between the AH Industry and regulators is seen as vital:
“FDA is working on a group focusing on new technology, but there will be a flood of applications in future that will
probably overwhelm the agency – FDA really needs to ramp up to allow companies to get these through. AHI
could help pick up on trying to raise the general knowledge of staff in such innovations.”
AHI’s actions with USDA to improve aspects of biologics regulatory process are highly appreciated. Further
work, with IFAH, could look at which aspects of VICH should be embedded in USDA to aid and speed up
appropriate harmonization.
With agencies in general, AHI could assist in involving industry earlier in guidelines drafting, in pressing for
consistency between reviewers and in seeing how academic questions could be minimized or eliminated. One
comment saw a role for AHI in funneling agency feedback so that it helps benchmark the industry: “for
example, [typical] manufacturing deficiencies being communicated would be useful to other companies. Perhaps
workshops or checklists would be useful as well.”
“The use of antibiotics has been a global debate. This is where politicians are not
well informed. IFAH has played a good and just role in presenting a fair position
on using antibiotics. They educate politicians. They have made good progress
and incorporated good examples of the consequences of decisions.”
Lobbying at House level on matters that can lead to positive pressure on CVM and CVB is a critical component
of this, and reference requalification for biologics was mentioned as one generally-positive outcome. This is
clearly not a healthy situation but it implies that some progress may be obtainable only by pressure applied in
the right way to the right place.
AHI is also valued for its role in general communication and information. One interviewee noted that: “There is
a lot more awareness in the investment community, Wall Street, business, of the opportunities in animal health.”
This is partly a result of the string of top-level M&As that have taken place, but certainly partly due to AHI’s
activities.
Finally, a word for greater cohesion: “IFAH, ironically, still behaves a lot like a European industry group rather
than a global group. They need to figure out a way for IFAH to get closer to other agencies. Maybe have the IFAH
meeting outside of the EU sometimes.”
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6 The Global Benchmarking Survey 2011 – Regional Comparisons
Appendix 3 shows the average data reported from each region in the IFAH GBS 2011.
Many aspects of the industry are common to all regions included in the 2011 survey but there are some
differences that reflect the local market conditions, degree of communication between industry and
regulators, external factors impacting the AH industry including economics and social factors, or the approach
to harmonization from the regulators themselves.
Company focus and profiles
Each regional survey included a number of local companies; local and regional business is the main focus
for 12% of companies in Australia, 21% in Canada, 29% in USA, 31% in Europe and 50% in Japan.
The majority of companies (33%-80% according to region) have their headquarters in Europe, reflecting
the recent acquisitions and changes in global multinationals (GMNs).
Companies are either mainly smaller local companies or very large GMNs, in terms of total employment –
22%-55% of companies with fewer than 250 employees and 55%-78% with more than 500; a minority (6%
in Europe and 8% in Japan) have 250-500 employees
However, in Australia, Canada and Japan, 82%-100% of companies employ fewer than 250 at regional
level; in Europe and USA the picture is skewed by GMN headquarters headcounts, so that 60% and 47%
respectively of companies reported more than 500 employees at regional level.
Turnover follows a similar pattern – 33%-47% of companies report total turnovers of more than US$1B; in
Australia, the majority of companies (55%) report total sales of US$500M-$1B. At regional level, 64%-
91% of companies in Australia, Canada and Japan have estimated sales of less than US$100M; in Europe
40% have estimated sales of $100M-$500M and in USA 50% have estimated sales of more than $1B
Most companies in all regions (33%-64%) have a comprehensive product line, with the next most
substantial group focusing on selected species (31% in Canada) or specific product types (27% in USA)
The primary product focus of most companies (36%-50%) is on veterinary medicinal products (VMPs,
pharmaceuticals), or a product mix (in Japan and USA). Australia is notable for a focus on pesticide-
containing products (31% of companies) and Japan for a substantial percentage focusing on biologicals
only (28% of companies).
Competitiveness in the Animal Health Industry in 2011
For short-term success, the majority of companies in every region, 50%-100%, regard the same drivers as
very important: exploiting existing products more effectively, improving the efficiency of sales and
marketing activities, reducing the costs of production and distribution, and providing new services to
meet customers’ needs. For Japan, developing new products is important for 55% of companies in
addition to the ‘top four’; in Canada developing major new products is more favored than providing new
services (64% versus 36%); and in Europe, reducing competition by merger and acquisition activity is
favored over improving sales and marketing efficiency (59% versus 35%)
For long-term success, three core drivers are shared by 55%-100% of companies in Australia, Japan and
USA: developing major new products (89%-100%), improving sales and marketing efficiency and
reducing the costs of production and distribution. Canada sees the exploitation of existing products as the
prime driver for long-term success; and 47%-67% of companies in Europe, USA and Australia also see this
as an important component of long-term success. Providing new services is regarded in Europe as the
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second most important driver (77% of companies), and is also important for 55%-64% of companies in the
other regions.
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Government regulations are seen as having a positive effect on competitiveness of the AH industry by
reassuring the public about product safety, preventing dangerous products entering the market and
improving product quality. The pattern of responses is somewhat different, though. For public
reassurance, 63%-90% of companies in Japan, Australia and USA consider this a benefit compared with
31%-37% of companies in Canada and Europe. 80% of Japanese companies rank prevention of dangerous
products as a high-impact benefit compared with 38%-43% in Australia, Europe and USA and only 8% in
Canada. 70% of Japanese companies rank improvement of product quality as a high-impact benefit
compared with 29%-54% in the other regions. 50%-62% of North America-based companies gain
confidence to invest, compared with 19%-25% of companies in the other regions. 62% of Canadian
companies regard regulations as speeding up time-to-market, rated highly by only 0%-25% of companies
elsewhere.
Innovation in the Animal Health Industry in 2011
Virtually all regions class the same four factors as highly important for successful innovation: access to
creativity and ideas (77%-93%; minimizing time-to-market (44%-88%); access to critical skills (41%-82%);
and minimizing uncertainty (47%-62%). For Australia and Canada, access to capital is in the top four (56%
and 62% respectively). In addition, controlling development costs is rated highly by 35%-50% of
companies in Canada, Europe and USA, though by only 22% and 9% in Australia and Japan respectively.
45% of companies in Japan see integrating activity across functions as very important, compared with
14%-24% in other regions.
The impact of the regulatory environment is regarded as negative by companies in Australia and USA
(60%-64%) and by 87% in Europe. 54% of Japanese companies see regulations as negative or very
negative, but 28% see them as positive. In Canada, 36% of companies see the environment as negative or
very negative, 45% as neutral and 18% as positive.
The obstacles that companies identify as being the most important are somewhat different from region
to region. The only obstacles that all regions agree are in their top five are the regulatory framework itself
(62%-89% of companies) and the small size of market segments (38%-89%). Negative consumer
attitudes are a priority concern in Europe (76% of companies), less so in Australia and Japan (44% and
36%) and even less in Canada and USA (21%-23%). Closure of the home or other geographic markets to
certain types of product is important in Australia, Europe and Japan (44%-57% of companies) but not at
all in Canada, and for 29% of US companies. Poor technology transfer mechanisms between academia
and industry are a special concern for some companies in Canada and Japan (36%-38%) but much less
(0%-19%) elsewhere. Lack of skilled staff is also more of a concern in Canada and Japan (46%, 36%) than
elsewhere (11%-21%).
All regions are agreed on the top four negative effects of government regulations on innovation:
increasing the costs of development (59%-100%); creating significant uncertainty or unpredictability
(53%-89%); increasing development time (59%-79%) and re-directing resources into defensive R&D (87%
in Europe and 33%-55% elsewhere). Closure of specific markets is a high concern for 33%-47% of
companies in Australia, Canada and Europe, but 14%-18% in Japan and USA; and diversion of
management time is a substantial concern only in Australia and Canada (33%, 52%) and less so elsewhere
(27% in Japan, 13% in Europe, 0% in USA).
R&D in the AH Industry
The average reported spend on R&D as a percentage of turnover is less than 8%: Canada 5.5%; USA 6.1%;
Japan 6.3%; Europe 7.7%; Australia 7.7%. Most of this (65%-78%) is spent on VMPs (including pesticide-
based products and medicinal in-feed products); a slightly higher percentage is spent in Japan and USA
on biologicals (32%-35%) than elsewhere (22%-28%). More is spent on farm animal products (FAP) in
Australia, Europe and USA (56%-60%) and more on companion animal products (CAP) in Japan (53%). In
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Canada there is a 50:50 split. The pattern of shift in R&D spend between CAP and FAP over the past 5
years is not the same across regions: in USA, Europe and Australia there has been a shift from CAP
spending to FAP spending of altogether 1.6%, 3.0% and 14.0% respectively. In Japan and Canada, there
has been a shift from FAP to CAP spending of altogether 7.0% and 16.0%.
The top R%D priority for all regions is development of new products (79%-100%); the second and third
are new active ingredients and antigens (44%-78%) and improved products (56%-80%) but the order is
not always the same (improved products ranked higher than new APIs/antigens in Canada and Europe).
The percentage of total R&D carried out in the region varies widely: in Australia, <10% and in Canada,
24%, reflecting the ability to use foreign data; compared with 61%-64% for Europe and USA, reflecting a
combination of R&D headquartering and needs for local data generation (especially in USA) and 59% in
Japan, mainly reflecting the split of local and GMN respondents in this region – for local companies, all
spent more than 91% (and probably 100%) of their R&D locally whereas for all GMNs it is <10%.
Nevertheless, the percentage of local R&D contracted-out is relatively tightly balanced around 50% -
Europe and Japan at 40% and 47%, Canada and USA at 52% and 53% and Australia at 57%. The average
of course disguises a range within which some companies carry out most of their research in-house and
others contract-out most of it.
The majority of companies in most regions agree there has been little change in the regional share of
R&D spend over the past 5 years (60%-89%); 11% -22% report a slight or large increase, except in the
USA, where 43% record a slight increase and 14% a large increase. 18% of Canadian-region companies
report a slight or large decrease; 27% of Europe-region companies a slight decrease. The two factors
agreed across all regions to be causes of an increase are an increased base-cost of doing R&D in the
region (30%-83%, the latter in Japan) and acquisition of companies with existing R&D programs (20%-
50%). A deterioration in the regulatory environment is rated very important by 18%-63% of companies
except in Canada, where no companies regarded this as very important. Increased availability of local
contract research resources is a factor for increase across the regions for 20%-50% of companies). 17%-
38% of companies in USA, Canada and Australia had experienced an improved regulatory environment.
Mandatory Defensive R&D
There is a distinct split into two camps for MDR&D – Australia, Japan and USA, with 14%-16% of R&D
budget being spent on MDR&D; compared with Canada, with 26%, and Europe, where 27% of total R&D
budget was expended by GMNs and, in the case of local companies, 51% on average.
Over the past 5 years, MDR&D spend has increased a lot for 6%-11% of companies in Europe and
Australia, 14%-18% of companies in USA and Japan and 55% of companies in Canada. 44%-64% of
companies in all regions except Canada had experienced a slight increase. For 22%-50% of companies
across all regions there had been little change. No company reported a decrease in MDR&D.
Companies in all 5 regions are agreed on the top 3 reasons for this: regulator product reviews have
increased (80%-100% in most regions and 38% in Japan); there has been a deterioration in the regulatory
environment (71%-86% in most regions and 38% in Japan); and there has been acquisition of companies
with products on the market (43%-80% and 38% in Japan). 43%-60% of companies in USA, Australia and
Canada reported an improved regulatory environment, and 20%-31% a reduced regulator review activity
in Canada, USA and Japan.
Impacts of regulatory factors on regulatory and development time
The regions fall quite definitely into two groups in terms of time-to-approval: Australia, Canada, Europe
and Japan; and the USA. The USA, partly because of phased submission and the need to discuss and
approve protocols, has by far the longest time to approval from first submission
- 6.0-9.4 years for pharmaceutical products, versus 1.5-3.2 years elsewhere;
- 2.8-6.0 years for different types of biological products versus 1.2-2.3 years elsewhere; and
- 3.5-6.0 years for pesticide-based products versus 1.4-3.0 years elsewhere.
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In USA, the time for gaining a biologic conditional license exceeds the longest periods for full approval of
biological products elsewhere.
In general, the approval times for Europe are the shortest, for all product and species types; the average
times-to-approval for biological FAP and CAP in Canada are however marginally shorter than those in
Europe (1.4 years and 1.2 years versus 1.5 years and 1.5 years respectively); approval times in Japan tend
to be the longest (2.0-3.0 years on average)
Over the past 5 years, Canada stands out as the country where regulatory approval times have improved
tremendously – FAP experienced an average increase of only 0.1 years and CAP a decrease of 0.3 years. In
all other regions, the approval time has lengthened, FP by 1.4-2.0 years, CAP by 1.0-1.2 years and MS
(minor species) products by 0.5-1.7 years.
Companies regard the majority of the factors producing those changes as external, estimating that the
contribution of processes put in place internally to the changes experienced in time as 19%-31% for FAP,
24%-29% for CAP and 24%-50% for MS products.
Impacts of regulatory factors on costs
In providing estimates of costs, companies were asked to include all direct costs from research to final
approval, but not apportion establishment costs or capital expenditure, or amortize the costs of failed
projects. This is different from previous surveys.
The actual costs of establishing new products in the different regions vary very widely, reflecting how
much work is required to be done locally to satisfy regulatory requirements, whether the company R&D
function is headquartered in the region and whether known actives or antigens are being used in the new
products rather than completely new APIs/antigens, as well as the pattern of types of products and
species focus a company might have.
In some cases, such as Canada and Japan, average costs range from the submission fee to US$1.23M or
US$1.7M respectively because little or no high-cost development work is carried out.
In regions where all or the majority of the development program is carried out, costs may reach US$50M.
In Europe, the average reported costs for biological or pharmaceutical products are US$20M-29M for
FAP, US$16M-18.4M for CAP and US$8.0M-11.7M for MS products. For pesticide-based products,
reported costs averaged US$47M for FAP, YUS$33M for CAP and US$20M for MS.
Australia is a special case because of additional needs for local environmental toxicity, especially of
pesticide-based products, safety-in-use studies, additional requirements imposed on biologicals by the
import service and residue studies aimed at Australia’s Export Slaughter Interval system for FAP-treated
livestock, which is more stringent than standard MRL. Average costs of US$30M-77M are reported for
FAP and US$24M-34M for CAP.
Overall, the US companies reported the lowest ranges of costs for complete new product development
and registration - $10.8M-38.8M for FAP, $11.8M-22.6M for CAP and $3.0M-12M for MS.
On balance, establishing a new pharmaceutical or biological product in Australia is most expensive: for
pharmaceutical FAP, 66% higher than Europe and 23% higher than USA; for biological FAP, almost 4
times higher than Europe and almost 7 times higher than USA; for pharmaceutical CAP twice Europe and
57% higher than USA; for biological CAP 30% higher than Europe and twice USA.
Establishing a new pesticide-containing product is more expensive in Europe than elsewhere.
For establishing a new species use for an existing product, costs on the whole are much lower, sometimes
ten-fold or more. Reported costs in Canada and Japan represent only the add-ons needed locally, from
submission fees to US$1.7M when local work is required (as for biologicals in Japan); for extensions, USA
is on the whole more expensive - costs for FAP range from $3.4M-11.3M in USA compared with US$0.8M-
5.0M in Australia and US$2.0M-6.8M in Europe; for CAP they range from $2.5M-6.7M in USA, versus
US$2.7M-6.2M in Australia and US$1.3M-5.3M in Europe; and for MS product extensions, the range in
USA is $2.5M-4.0M and in Europe is US$0.7M-2.3M.
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Costs have also increased overall over the past 5 years as a result of regulatory factors. Canada has
experienced the least gains (FAP +7% and CAP +13%), Japan the next largest (FAP+19% and CAP +11%).
The other regions have experienced 25%-36% increase in FAP costs, Australia being the highest, and
22%-29% increase in CAP costs, Europe being the highest. For MS products, cost increases have ranged
from 0% in Japan to 12% in USA.
Impacts of specific regulatory factors on innovation
The relative impact scores for different factors and therefore the pattern of importance varies from
region to region. For most regions, intellectual property protection is regarded as very important, with a
RIS of +27% to +64% for patents and +10% to +55% for commercial data. Australia is notable for RISs of -
20% for each of the IP criteria
Marketing authorizations themselves are regarded as high impact – the MRP in the EU with RIS of +13%,
J-MAFF in Japan with +27%, USA with +29% and DCP in the EU with +33% at the bottom of this, and
Canada’s VDD and CFIA and the EU’s CP at the top, with +70%, +60% and +80% respectively. Australia is
again notable for a RIS of -10% for the Marketing Authorization system of the APVMA.
Maximum Residue Limits regulations and Ecotoxicology rules are regarded as somewhat to highly
detrimental to innovation in all regions, with RISs of -13% to -60% (most extreme in Australia) and -27%
to -90% (most extreme in Europe and Canada) respectively. Disease Resistance/AMR rules were regarded
as highly detrimental to innovation in most regions (RISs -40% to -70%) but not at all in Australia.
In addition, Australia has its own problems, with RISs of -10% to -70%: post-marketing monitoring
requirements, review process inconsistency, clinical trials material import and movement regulations,
biological materials import and movement regulations and the trade regulations relating to additional
residue stringency
Canada finds the pharmaceutical manufacturing and compounding rules and ‘Own-Use’ policies and law
highly detrimental to innovation, with RISs of -70% and -80% respectively
Japanese companies find the product safety and risk assessment processes of the Food Safety
Commission to be substantially detrimental (RIS of -36%)
In USA, the USDA-CVB’s expanded biometric standards score poorly (RIS -36%), whereas other activities
are seen as beneficial: the ADUFA rules, Minor Use species rules and USDA-CVB’s biologic conditional
license approach, with RISs of +29%, +29% and +43% respectively.
Impacts of regulations on exploitation of existing products
Most regions are generally agreed on the top four obstacles to the exploitation of existing products:
pressure from competition including generics (56%-85% of companies); the local regulatory framework
(54%-94%), the small size of market segments (54%-78%) and inadequate IP protection (18%-46%). In
Japan, factors such as restrictions on labeling and advertising and demand volatility are however
regarded as highly important by more companies than is inadequate IP protection (36% versus 18%).
Compared with obstacles for innovation, negative consumer attitudes are not regarded as so important
(8%-36% of companies versus 21%-76% of companies). Demand volatility is of some concern in Australia,
Canada and Japan (23%-36% of companies) but less so in Europe and USA (6%-8%).
Companies in all regions are agreed that creation of disproportionate costs for maintaining existing
products is a very important impact of regulations (58%-94% of companies). Other factors are not ranked
in the top four by all regions. In general, removal of profitable products from the market, creation of
significant uncertainty and restriction of technology/product extension are substantial concerns for four
of the five regions (36%-47%, 36%-86%, 27%-71% respectively). The first is of little concern to companies
in Canada (17%), the second and third of little concern to companies in Europe (18% each). Uncertainty
and restriction of extensions are of concern to the highest percentage of companies in Australia and
indeed are the top concern (86%) and the second-equal (71%).
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Increased production costs and diversion of management time are important in Canada, Japan and the
USA (42%-57% of companies, and 43%-58%, respectively). Diversion of financial resources away from
innovation appears to hit hardest in those regions where R&D is headquartered, Europe (53%) and USA
(57%).
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Impacts of specific regulatory factors on existing products
Overall, Japanese respondents were more favorable about the impacts of specific regulatory factors on
maintenance of existing products than companies in other regions, with RISs of 0% (neutral impact)
recorded in 25% of cases, positive RISs in 43% and negative RISs in 32% of cases, compared with 58%-
66% negatives in other regions; only Australia had the same incidence of positive RISs.
RISs of +27%, +42% and +53% were recorded for Japan’s J-MAFF, Canada’s VDD and the EU’s CP
respectively; for the USA’s systems, Australia’s APVMA and Canada’s CFIA, scores were somewhat less
positive (RISs of 0%, +13% and +17% respectively). Europe’s national procedures were notable for a
negative RIS, -41%, testifying to the perceptions of negative impacts on existing products in Europe. The
protection of IP by patents was regarded as beneficial (RISs +8% to +73%, the highest RIS in Japan).
Companies in Australia, Canada and Europe showed dissatisfaction with the protection of commercial
data (-38%, -8% and -6% RISs resp.) compared with Japan and USA (+73% and +43%).
Uniformly negative impacts were recorded for environmental regulations (-13% to -65%), packaging and
labeling modification rules (-33% to -71% except Japan, 0%), MRL rules (-12% to -64%) and Disease
Resistance/AMR rules (-24% to -64%). Import regulations are a problem in Europe (RIS -41%) and
Australia (-13%). Establishment License requirements are a problem in Canada (-50%). The Safety and
Risk Assessment process of FSC in Japan is regarded as a substantial negative (-45%). In USA, ADUFA is
regarded as modestly positive for existing products (+14%) but regulations regarding combination
products seem, to be negative (-21%).
Regulatory Predictability
Companies rated whether agencies always, mostly, sometimes or never satisfactorily achieved criteria for
regulatory predictability, and the combined percentage of always and mostly has been used to
summarize and compare data.
For new products, 40%-100% companies in most regions regard agencies as addressing regulatory
criteria moderately to very well, in terms of predictability and excellence of process. The agencies scoring
the highest are Europe’s EMA and the CP (67%-87%, with 47% for process of scientific advice) and
Canada’s CFIA (75%-100% with 43% for transparency and efficiency). Also scoring generally well are the
CVM and CVB in USA (45%-82% and 43%-100% resp.), J-MAFF and MHLW/FSC in Japan (50%-83% and
67% resp.) and VDD in Canada (50%-92% with 42% for transparency and efficiency).
A notable exception is Australia’s AVPMA, which was rated as achieving satisfactory performance by only
11%-22% of companies for transparency and efficiency of process, final approval, assessment basis on
benefit:risk assessment and consistent application and interpretation of guidelines. 56% of companies
however regarded APVMA as assessing new products using best available science.
Another exception is the US’s EPA, which was regarded as always or mostly achieving transparency and
efficiency in process by 0% of companies, and consistency of guideline application and interpretation by
only 17%.
For the maintenance of existing products, the EMA’s CP scored highest on criteria for regulatory
predictability (58%-92% of companies), followed by the system in Japan (J-MAFF 41%-83% and
MHLW/FSC 83%). Other agencies were not regarded as uniformly achieving all criteria always or mostly.
The APVMA (11%-56%) and USA’s CVM (20%-40%) and EPA (17%-67%) showed variable results. The CVB
was regarded somewhat more highly (14% for introduction of new tests and their basis on best science or
pharmacovigilance data; but 57%-71% for other criteria).
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Regulatory Quality
Comparisons were made of all the regions on the caliber of assessors, the application of guidelines during
the process, the transparency during process, the quality of interactions between applicants and agencies
before, during and after submission and the clarity and international acceptance of scientific assessments
of risks and benefits. Again, agencies were scored on the basis of percentage of companies rating them as
always or mostly achieving quality performance criteria. The EU’s CP scored the highest (72%-93% of
companies), followed by Canada’s CFIA (43%-86%). Others were variable.
The caliber of assessors is generally regarded as high and always or mostly achieving satisfactory levels by
55%-92% of companies in Australia’s APVMA; Canada’s VDD and CFIA; the EU’s CP, DCP and MRP;
Japan’s J-MAFF, MHLW and FSC; and US’s CVM. Notably fewer companies regard assessors in Europe’s
national agencies, or the US EPA as achieving high standards (33%-40%, 33%-50% resp.). The US CVB’s
assessors for safety and efficacy are regarded by 71% of companies as reaching high standards but quality
(potency and purity) assessors were ranked by only 43% of companies.
Application of guidelines on the basis of practical and rigorous risk:benefit assessment is regarded as
being always or mostly achieved by a variable percentage of companies – 50%-93% for Canada’s VDD and
CFIA, the EU’s CP, DCP and MRP, Japan’s MHLW/FSC, US EPA and CVB. Other agencies scored less well –
Australia’s APVMA 22%, Europe’s national agencies 33%, Japan’s J-MAFF 42% and US CVM 42%.
Transparency, efficiency and predictability of process was adjudged to be achieved mostly or always by
50%-86% of companies for CFIA and EU CP, DCP and MRP quality. All others were regarded as achieving
performance by fewer than 42% of companies, down to 17% for US EPA and 11% for Australia’s APVMA.
Satisfactory management of pre-submission and submission stages and further interactions with industry
were scored as always or mostly achieved by 50-100% of companies for most of the agencies. Notable
exceptions were the US EPA (33%-50%); Europe’s national agencies (13%-40%); Australia’s APVMA (11%-
40%); and Japan’s MHLW/FSC (8%-17%).
Some difficulties can be concluded from the percentage of companies regarding agencies as always or
mostly achieving clarity of their scientific assessments and international respect for these: 72% of
companies ranked the EU EMA as satisfactory for the CP; Australia’s APVMA, Canada’s CFIA and USDA’s
CVB were regarded as satisfactory by 43%-44% of companies; the remainder were regarded as not really
performing adequately (17%-36% of companies).
Regulatory Reform 2006-2011
For new products, the only reform mentioned in 2006 that is widely recognized as having been achieved
by 2011 and regarded as having a very high impact is the harmonization of test requirements
internationally (including VICH). This was recognized as having been achieved by 45%-93% of companies
and as having a high impact by 30%-75% of companies. Acceptance of relevant high-quality test data
from other regions is recognized as having been achieved by 25%-64% of companies and regarded as
very high impact by 10%-38% of companies
Provision of specific incentives to develop products for small markets is recognized as being achieved by
13%-64% of companies and regarded as high-impact by 0%-27%; adapting test requirements to reflect
small market sizes is recognized as achieved by 0%-57% of companies and as high-impact by 0%-21%.
Changing test requirements only with scientific justification is recognized as having been achieved by 9%-
25% of companies in USA, Canada and Australia and rated high-impact by 18%-25%; in Europe and Japan
however, 70-71% of companies recognized it as having been achieved and 10%-29% regarded it as high-
impact; tailoring tests to a product’s specific risks has been achieved according to 0%-27% of companies
plus 71% in Europe, nevertheless ranked as high-impact by only 0%-18%.
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The reforms ranked as highest-impact for innovation in any region are harmonising test requirements
(75%) and basing test requirements only on best available science and risk assessment (65%), both in
Australia.
For existing products, the reforms most widely recognized as having been achieved are reduction of
restrictions on minor formulation and manufacturing changes (43%-90% of companies), regarded as
high-impact by 20%-80% of companies; provision of additional protection for product extension data
(achievement 10%-43%, high-impact 10%-38%); and basing need for dossier reviews solely on
pharmacovigilance or relevant scientific advances (achievement 10%-23%, high-impact 10%-46%)
Several reforms achieved in specific regions are ranked as high-impact by a substantial or high
percentage of companies, notably in the USA requiring all animal health companies to pay user fees
(achieved 60%, high-impact 50%) and speeding up review time by increasing staff numbers (achieved
80%, high-impact 80%); and in Canada establishing a pharmacovigilance process (achieved 50%, high-
impact 38%) and basing Establishment Licensing reviews on relevant risk assessment(achieved 38%,
high-impact 38%).
Other reforms ranked as highest-impact for existing products in any region are providing justification
before applying new guidelines to existing products (60%, in Japan), basing AMR rules on best available
science (50%, Canada), and ensuring all types of product are required to undergo full assessment (43%,
Australia).
The overall impact of politics and the regulatory framework on business
70%-91% of companies in Japan, Europe and USA report political influence on regulations that then had
an impact on their business; in Canada, 55% companies report political involvement and 45% do not
recognize this as having happened. In Australia 100% of companies report political involvement.
The problem regarded across the board as high impact is creation of uncertainty for future product
development, by 78%, 43%, 73%, 56% and 62% of companies in Australia, Canada, Europe, Japan and
USA respectively. Other high-impact problems are increase in the cost of maintaining existing products,
for Japan, USA, Canada and Europe (67%, 38%, 43%, 33% of companies respectively); the increased cost
of new developments, for Japan, USA and Australia (89%, 54%, 67%); increase in new product
development time, for Japan, USA and Australia (78%, 46%, 56%); prevention of approval of products
available elsewhere, for Australia and Europe (78% and 47%); and requirements for products to be
removed from the market without scientific justification, for Canada and Europe (57% and 53% of
companies).
Business decisions which have been influenced in at least 50% of cases to some or a significant extent by
regulations in all regions are:
- avoidance of certain product technologies (40% in Australia and 100% in other regions)
- introduction of fewer breakthrough products (50% in Canada, 75% in Australia and 100% in other
regions)
Reducing the product range was influenced by regulations in 50%-100% of cases in Australia, Europe,
Japan and USA but 0% in Canada. Reducing species coverage or indications was influenced in 50%-100%
of cases in Australia, Canada, Europe and USA but did not occur anyway in Japan.
Decisions taken in all regions where the influence of regulations or the regulatory environment is
somewhat more variable include:
- investment in production inside the region (25%-67%)
- introduction of more breakthrough products (17%-84%)
- focusing on new technologies (20%-67%)
- focusing on older or existing technologies (25%-80%)
- increasing coverage of species or indications (13%-60%)
Some other decisions taken in 4 of 5 regions were influenced variably by regulatory factors. These
include:
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- Purchase of businesses (17%-33%; 0% in Canada)
- locating R&D facilities outside the region (25%-70%; 0% in Japan)
- increasing geographic range (17%-50%; 0% in Japan)
- switching R&D budgets outside region (33%-100%; 0% Canada)
- developing certain product technologies (12%-75%; 0% Australia)
Hopes and expectations
Most regions identified 8-11 hopes and trends for the future; Japan identified 15 – they were assessed
using Relative Impact Score (percentage of companies regarding them as positive minus percentage
regarding as negative)
All regions looked forward to more positive outcomes of current and expected trends than negative, with
60% positive hopes in USA to 93% in Japan; some were however regarded as negative, to a small extent
(7%-13%) in Japan and Australia but rather more in Canada, USA and Europe (37%, 40%, 45%
respectively)
The hopes regarded as uniformly favorable for all regions were:
- moving from zero risk to benefit:risk (RISs +56% to +100%, the latter in Canada)
- moves towards electronic submission (RISs +59% to +83%)
- acceptance of JECFA agreements for non-contentious molecules (RISs +25% in USA to +100% in
Canada)
- moving towards a common technical document (RISs +6% in Europe to +100% in Australia)
The trend regarded as uniformly unfavorable for all regions was increasing requirements for PMS and
pharmacovigilance (RISs -17% in Canada to -92% in USA)
Others, including wider participation in the regulatory process; increasing data disclosure transparency;
and increased globalization of PMS outcomes showed no defined consistency in RISs
In Japan, the additional hopes and trends included
- acceptance of notification of minor changes (+100%)
- conditional approval of new animal pharmaceuticals (+83%)
- pre-submission consultations with NVAL including trial protocol discussions (+83%)
- acceptance of English-language documentation without translation into Japanese (+75%)
- acceptance of orphan drug status similar to MUMS (+42%)
- expanding the classification of quasi-drugs for animals (+42%)
- integrating the evaluation offices of different ministries into NVAL (+17%).
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The team and acknowledgements
The BioBridge team included Dr Johnny Jacobsen and Jane Eagleson for USA, Dr Atsuo Hata and Dr Yuki
Ujimasa for Japan, Dr Bruce Chick for Australia, Dr Earle Nestmann for Canada, & Meredith Lloyd-Evans
(Project Director), Sue Addison and Peter H Jones for Europe. Alex Greenberg of AlcheraBio provided the IT
component, without which the survey would not have taken place so efficiently. Acknowledgements are due
to Dr Gareth Harris who project-managed for IFAH; to the members of IFAH’s Regulatory Strategy and
Leadership Teams, who gave their time to ensure that IFAH’s aims would be fulfilled by the BioBridge
methodology and survey specifications; to the staff of IFAH and the regional associations, who provided
tremendous help; and above all to all the survey respondents and interviewees, who have provided the raw
information in over 150 sessions, from which these IFAH GBS reports are composed.
Disclaimer: The information in this report has been compiled from many sources, nearly all of which cannot be attributed for reasons of
confidentiality. Although Meredith Lloyd-Evans and BioBridge cannot guarantee the accuracy of the statements in this report, which
represents the views of the industry, the findings of surveys and the outcomes of interviews, any inaccuracies are not the responsibility of
IFAH or its member associations. April 2012
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Appendix 1: Summary of 2011 GBS USA
COMPANY PROFILES
Number 2011 Number 2006 Number 2001
14 14 13
Data is expressed as a percentage of companies responding or choosing a specific criterion, except where noted otherwise.
Headquarters of the animal health business [A1] 2011 % 2006 % 2001 %
In Europe 50% 35% 23%
In the USA 50% 65% 77%
Elsewhere 0% 0% 0%
Market focus of the business [A13] 2011 % 2006 % 2001 %
Comprehensive product line 33% 36% 38%
Focused on specific product types 27% 7% 23%
Selected products for specific species/diseases 20% 29% 24%
Focused on selected species 20% 21% 15%
Focused on specific types of disease 0% 7% 0%
Product focus of the business [A14] 2011 % 2006 % 2001 %
A mix of all types 40% 29% 46%
Primarily pharmaceuticals 20% 29% 15%
Primarily medicinal in-feed products 13% 21% 15%
Primarily biologicals 13% 14% 23%
Primarily pesticide-based products 7% - -
Other 7% 7% 0%
Geographic focus of the world-wide animal health
business [A2] 2011 % 2006 % 2001 %
USA 0% 7%
USA plus exports 29% 21%
Global 71% 72%
Number of employees world-wide in animal health [A3] 2011 % 2006 % 2001 %
<250 23% 14% 16%
250-500 0% 14% 15%
>500 77% 72% 69%
Number of employees in USA in animal health [A3] 2011 % 2006 % 2001 %
<250 38%
250-500 15%
>500 47%
This question was new in 2011
Annual gross turnover in animal health world-wide [A4] 2011 % 2006 % 2001 %
<$100M 17% 14% 31%
$100M-500M 25% 36% 31%
$501M-$1B 8%
>$1B 50% 50% >$500M 38% >$500M
Annual gross turnover in animal health in USA [A4] 2011 % 2006 % 2001 %
<100 $M 33%
100-500 $M 17%
>500 $M 50%
This question was new in 2011
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COMPETITIVENESS IN THE ANIMAL HEALTH INDUSTRY
Drivers of competitive success in the short term [B1] 2011 % 2006 % 2001 % 1996 %
Reducing the costs of production and distribution 79% 100% 69% 58%
Exploiting existing products more profitably 79% 100% 54% 79%
Improving the efficiency of sales and marketing activities 79% 33% 85% 63%
Providing new services to meet customer needs 57% - - -
Developing major new products to meet customer needs 50% 33% - -
Entering new geographic markets 21% 33% - -
Mergers and acquisitions 0% - - -
Drivers of competitive success in the long term [B1] 2011 % 2006 % 2001 % 1996 %
Developing major new products to meet customer needs 93% 100% 92% 95%
Improving the efficiency of sales and marketing activities 71% 14% - -
Reducing the costs of production and distribution 64% 29% - -
Exploiting existing products more profitably 64% 21% - -
Providing new services to meet customer needs 64% - - -
Entering new geographic markets 29% 50% 54% 63%
Mergers and acquisitions 7% 43% - -
Ways in which Government Regulations have improved
competitiveness [C4] 2011 % 2006 % 2001 % 1996 %
Reassured the public about the safety of animal health products 71% 64% 54% 42%
Provided confidence to invest (added to certainty and predictability) 50% - - -
Prevented dangerous products entering the market 43% 29% 46% 37%
Provided a stable business environment 43% - - -
Protected investments in innovation 36% 29% 38% 42%
Improved product quality 29% 21% 23% 26%
Improved access to other geographic markets 29% 21% 0% 5%
Created new market segments 21% 14% 0% 0%
Speeded up time-to-market 21% 7% 0% 0%
Triggered innovation in new production processes 0% 14% 0% 0%
Helped redirect resources to innovation 0% - - -
Other (Minor Use-Minor Species) 7% - - -
RESEARCH & DEVELOPMENT, INNOVATION AND EXISTING PRODUCTS
R&D costs and priorities
Expenditure on R&D [A5, A6, A7, A9] 2011 % 2006 % 2001 % 1996 %
% of annual world-wide turnover spent on R&D [A5] 6.1% 9-10% 12% 12%
% of world-wide R&D spend undertaken in USA [A9] 61% 50% 60% 50%
% of world-wide R&D spent on Pharmaceutical R&D [A6] 65% - - -
% of world-wide R&D spent on Biologicals R&D [A6] 35% - - -
% of world-wide R&D spent on Companion Animals [A7] 40% 45% - -
% of world-wide R&D spent on Production Animals [A7] 60% 55% - -
Change in USA’s share of world-wide R&D since 2006 [A10] 2011 % 2006 % 2001 % 1996 %
Decreased a lot 0% 0% - -
Decreased slightly 7% 21% - -
Little change 36% 50% - -
Increased slightly 43% 29% - -
Increased a lot 14% 0% - -
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The most important causes of the change in expenditure on
new product R&D [A11] 2011 % 2006 % 2001 % 1996 %
Acquisition of companies with development programs 50%
Increased base cost of conducting R&D in the USA 50%
Deterioration in regulatory environment 33%
Greater availability of CROs/research organizations 25%
Decreased base cost of conducting R&D in the USA 17%
Less availability of CROs/research organizations 17%
Moved R&D elsewhere 17%
Improved regulatory environment 17%
Divestment of companies with development programs 8%
This question was new in 2011
R&D priorities [A8] 2011 % 2006 % 2001 % 1996 %
New products 79% 93% - -
New active ingredients/antigens 71% 57% - -
Improved products 64% 57% - -
New drug or biologicals delivery methods 21% 36% - -
New drug/biologicals development tools 14% 0% - -
New production processes 14% 21% - -
The proportion of R&D carried out in USA that is contracted
out [A12] 2011 % 2006 % 2001 % 1996 %
53% 55% 25% -
Where new product test data is generated for major livestock
species [A15] 2011 % 2006 % 2001 % 1996 %
Completely or mostly in USA 75%
Core data outside USA and additional data in USA 25%
All data outside USA, complying with VICH 0%
This question was new in 2011
Where new product test data is generated for companion
animals [A15] 2011 % 2006 % 2001 % 1996 %
Completely or mostly in USA 83%
Core data outside USA and additional data in USA 17%
All data outside USA, complying with VICH 0%
This question was new in 2011
Where new product test data is generated for minor livestock
species [A15] 2011 % 2006 % 2001 % 1996 %
Completely or mostly in USA 78%
Core data outside USA and additional data in USA 22%
All data outside USA, complying with VICH 0%
This question was new in 2011
Innovation & product development in the animal health industry
Important factors for successful innovation [C1] 2011 % 2006 % 2001 % 1996 %
Access to creativity & ideas 93% 100% 92% 100%
Minimizing time-to-market 79% 100% 77% 90%
Access to critical skills 50% 93% 69% 64%
Minimizing uncertainty 50% 64% 61% 48%
Controlling development costs 50% 64% 69% 69%
Access to capital 43% 71% 69% 53%
Integrating activity across functions 14% 85% 61% 53%
Access to other markets 14% 50% 69% 74%
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The impact of the regulatory environment in USA on the
industry’s ability to innovate [C2] 2011 % 2006 % 2001 % 1996 %
Very positive 0%
Positive 7%
Neutral 21%
Negative 64%
Very negative 7%
This question is new in 2011
Important obstacles to successful innovation [C3] 2011 % 2006 % 2001 % 1996 %
The US regulatory framework 86% 86% 92% 42%
Inadequate intellectual property protection (for patents or
commercial data) 50% 21% 23% 32%
Lack of availability of financial resources 50% 21% 8% 16%
Small size of market segments 43% 64% 69% 68%
Closure of the US and/or other geographic markets for certain
products 29% 43% 62% 79%
Negative consumer attitudes 21% 36% 54% 26%
Lack of skilled staff 21% 21% 0% 0%
Internal company organizational or cultural barriers 14% 28% 8% 21%
Poor technology transfer mechanisms between academia and
business 14% 21% 23% 16%
Lack of access to specialist biotechnology companies 14% 0% 8% 5%
Potentially-negative effects of Government Regulations on
innovation [C5] 2011 % 2006 % 2001 % 1996 %
Increase costs of development 93% 100% 100% 84%
Create significant uncertainty or unpredictability 86% 71% 69% 26%
Increase development time 79% 93% 100% 89%
Re-direct resources into defensive R&D 43% 64% 77% 21%
Restrict collaborative R&D ventures 21% - - -
Reduce access to new ideas, particularly in biotechnology 14% 14% 0% 11%
Limit the use of innovative marketing methods 14% 7% 15% 11%
Close markets for specific products 14% 7% 31% 37%
Divert management time 0% 36% 54% 37%
Reduce cash flows from existing products 0% 0% 23% 16%
Barrier to import due to USDA/FDA non-tariff barriers to trade 7% - - -
Mandatory Defensive R&D as a % of total R&D costs
(average) [C6] 2011 % 2006 % 2001 % 1996 %
16% 15% 16-17% 17%
Change in expenditure on mandatory defensive R&D over
the past 5 years [C7] 2011 % 2006 % 2001 % 1996 %
Decreased a lot 0% 0% 8% 5%
Decreased slightly 0% 7% 8% 11%
No change 22% 36% 23% 26%
Increased slightly 64% 21% 38% 26%
Increased a lot 14% 36% 23% 32%
The most important causes of the change in mandatory
defensive R&D spend [C8] 2011 % 2006 % 2001 % 1996 %
Regulator product review activities have increased 93%
Deterioration in regulatory environment 71%
Acquisition of companies with products on the market 50%
Improved regulatory environment 43%
Regulator product review activities have decreased 29%
Divestment of companies 7%
This question is new in 2011
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Time and costs for product development and registration
The average length of time to gain registration for a
major new product for major livestock species in USA, in
years [C9]
major livestock
species
companion
animals minor species
Pharmaceuticals 9.4 yrs 6.4 yrs 6.0 yrs
New conventional vaccine, new Master Seed 4.3 yrs 4.1 yrs 5.5 yrs
New conventional vaccine, combination of licensed
products 3.6 yrs 2.8 yrs 3.0 yrs
GMO products requiring NEPA RA/FONSI 5.4 yrs 5.0 yrs 6.0 yrs
Biologic Conditional License 2.8 yrs 2.9 yrs 3.5 yrs
Pesticide-based product 6.0 yrs 3.5 yrs -
The average change in time to develop and register a
new product over the previous 5 years, in years [C10]
major livestock
species
companion
animals minor species
Cumulative 1991-2011 +4.9 yrs +5.0 yrs +2.0 yrs
2011 + 1.4 yrs +1.1 yrs +1.5 yrs
2006 + 1.2 yrs +1.3 yrs +0.5 yrs
2001 +1.8 yrs +1.3 yrs -
1996 +0.5 yrs +1.3 yrs -
The role of internal processes in any change in time, as a
% (average) [C13]
major livestock
species
companion
animals minor species
31% 29% 28%
The approximate cost of developing a recent new
product, in USA, in $M [C19]
major livestock
species
companion
animals minor species
Pharmaceutical product with new active ingredient 38.8 21.6 8.0
New biological product 10.8 11.8 3.0
New medicinal in-feed product 26.7 - 12.0
New pesticide-based product 14.0 22.6 -
The approximate cost of establishing a new species use
for an existing product, in USA, in $M [C20]
major livestock
species
companion
animals minor species
Pharmaceutical product 11.3 6.7 4.0
Biological product 3.4 4.1 2.5
Medicinal in-feed product 10.5 - 3.0
Pesticide-based product 4.0 2.5 -
The average change in cost to develop and register a
new product since 1991, as a % [C16] [C17] [C18]
(combined)
major livestock
species
companion
animals minor species
Compound 2001-20116 +157% +161% +97%
2006-20117 +25% +22% +12%
2001-2006 +32% +37% +28%
1996-2001 +30% +30% +25%
1991-1996 +20% +20% +10%
1991 base 100 100 100
6 Calculated as a compound increase from a 2001 base of 100
7 Calculated using average of band mid-points
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The average change in cost to develop and register a
new pharmaceutical product since 2001, as a % [C16]
major livestock
species
companion
animals minor species
Compound 2001-20118 +73% +78% +56%
2006-20119 +26% +26% +18%
2001-2006 +37% +41% +32%
2001 base 100 100 100
The average change in cost to develop and register a
new biologic product over the previous 5 years, as a %
[C17]
major livestock
species
companion
animals minor species
Compound 2001-2011 +59% +57% +35%
2006-2011 +30% +24% +14%
2001-2006 +22% +27% +18%
2001 base 100 100 100
The average change in cost to develop and register a
new pesticide-based product over the previous 5 years,
as a % [C18]
major livestock
species
companion
animals minor species
Compound 2001-2011 +50% +58% +28%
2006-2011 +14% +15% -
2001-2006 +32% +37% +28%
2001 base 100 100 100
Impacts of specific regulations on innovation and existing products
The impact of Government Regulations in USA on the industry’s ABILITY
TO INNOVATE successfully [C21] 2011 % 2006 % 2001 %
Antimicrobial Resistance Regulations -57% -43% -
Environmental Regulations (Ecotox) -43% -36% -46%
USDA/APHIS expanded biometrics standards -29% - -
Maximum Residue Limits -14% 0% -
Good Laboratory Practice -7% - -
USDA/APHIS adoption of VICH GCP regulations 0% - -
Biotechnology Regulations 0% -28% -
Animal Drug User Fee rules (ADUFA) +29% +29% -
Minor Use Minor Species rules (MUMS) +29% +14% -
Marketing Authorization +29% -22% -38%
USDA/APHIS Conditional Product Licenses +43% - -
Protection of Intellectual Property-patents +43% +51% +46%
Protection of Intellectual Property-commercial data +50% +43% +46%
Obstacles to the exploitation of existing products in USA [D1] 2011 % 2006 % 2001 %
Pressure from competitors (including parallel imports and generics) 85% 36% 54%
USA’s regulatory framework for maintenance/extension of licenses 54% 57% 69%
Small size of market segments 54% 50% 54%
Inadequate intellectual property protection (commercial data & patents) 46% 36% 15%
Legal restrictions on advertising, labels, trademarks and communication 38% 36% 38%
Negative consumer attitudes 23% 36% 54%
Lack of availability of financial resources 23% 21% 8%
Closure of the US market and/or other geographic markets for certain
products 8% 36% 62%
Demand volatility in certain segments 8% 7% 31%
Lack of skilled staff 8% 0% 0%
Other (illegal compounding; distribution constraints; and CVB applying new
requirements to existing vaccines) 23% - -
8 Calculated as a compound increase from a 2001 base of 100
9 Calculated using average of band mid-points
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Impacts of government regulations in USA on existing products [D2] 2011 % 2006 % 2001 %
Create disproportionate costs for maintaining/extending marketing
authorizations 64% 50% 46%
Increase the cost of production 57% 57% 62%
Divert financial resources away from the development of new, innovative
products 57% 64% 85%
Divert management time 43% 7% 69%
Remove profitable products from the market 36% 29% 77%
Create significant uncertainty 36% 57% 54%
Restrict the extension of existing technologies to additional species/indications 29% 50% 46%
Increase the cost of distribution and marketing 21% 14% 8%
Limit the use of innovative marketing methods 14% 29% 0%
Fail to protect intellectual property (patents & commercial data) adequately 14% 21% 0%
Other (restrictions on imports of biologicals) 7% - -
The impact of Government Regulations in USA on the industry’s ABILITY
TO EXPLOIT EXISTING PRODUCTS successfully [D3]
2011 % 2006 % 2001 %
Packaging/Labeling Changes -71% -57% -
Environmental Regulations (Ecotox) -64% -36% -23%
Antimicrobial Resistance Regulations -57% -51% -
Manufacturing Changes Rules -43% -28% -
Maximum Residue Limits (Tolerances) -36% -15% -
Pharmacovigilance -36% +7% -
Regulations regarding Combination Products -21% - -
Good Manufacturing Practice -7% -7% -8%
License Maintenance 0% -15% -
Animal Drug User Fee rules (ADUFA) +14% +22% -
Protection of Intellectual Property-patents +29% +22% +47%
Protection of Intellectual Property-commercial data +43% +22% +46%
REGULATORY DECISION-MAKING
Regulatory predictability in USA
The current CVM/FDA process for approving new pharmaceutical products - %
answering ‘always’ or ‘mostly’ [E2] 2011 % 2006 %
Final approval of new products by CVM/FDA is based on the expert assessment of safety,
quality, and efficacy 82% 85%
Expert assessment of applications to approve new products by CVM/FDA is based on best
available science 73% 92%
Expert assessment of applications to approve new products by CVM/FDA is based on a
consistent application and interpretation of Regulatory Guidelines 55% 54%
The process of approving new products is transparent and predictable 55% 46%
Expert assessment of applications to approve new products by CVM/FDA is firmly rooted in
the principles of Risk Assessment 45% 46%
The current CVM/FDA process for maintaining existing pharmaceutical products - %
answering ‘always’ or ‘mostly’ [E3] 2011 % 2006 %
New tests or reviews are based only on a rigorous science-based analysis of
pharmacovigilance data OR relevant advances in knowledge of risks based on best
available science
20% 39%
Assessment is based on best available science and risk assessment 40% 31%
A clear and transparent division exists between risk assessment and risk management
decisions 40% 15%
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The current USDA/APHIS process for approving new biologicals - % answering ‘always’
or ‘mostly’ [E4] 2011 % 2006 %
Expert assessment of applications to approve new products by USDA/APHIS is based on
best available science 86% 75%
Expert assessment of applications to approve new products by USDA/APHIS is firmly
rooted in the principles of Risk Assessment 57% 38%
Expert assessment of applications to approve new products by USDA/APHIS is based on a
consistent application and interpretation of Regulatory Guidelines 57% 25%
Final approval of new products by USDA/APHIS is based on the expert assessment of
safety, quality, and efficacy 100% 75%
The process of approving new products is transparent and predictable 43% 25%
The current USDA/APHIS process for maintaining existing vaccine products on the
market - % answering ‘always’ or ‘mostly’ [E5] 2011 % 2006 %
New tests or reviews are based only on a rigorous science-based analysis of data OR
relevant advances in knowledge of risks based on best available science 14% 25%
Assessment is based on best available science and risk assessment 71% 38%
A clear and transparent division exists between risk assessment and risk management
decisions 57% 25%
The current EPA process for approving new pesticide-based animal health products - %
answering ‘always’ or ‘mostly’ [E6] 2011 % 2006 %
Expert assessment of applications to approve new products by the EPA is based on best
available science 50% 83%
Expert assessment of applications to approve new products by the EPA is firmly rooted in
the principles of Risk Assessment 50% 100%
Expert assessment of applications to approve new products by the EPA is based on a
consistent application and interpretation of Regulatory Guidelines 17% 83%
Final approval of new products by the EPA is based on the expert assessment of safety,
quality, and efficacy 50% 83%
The process of approving new products is transparent and predictable 0% 67%
The current EPA process for maintaining existing pesticide-based animal health
products on the market - % answering ‘always’ or ‘mostly’ [E7] 2011 % 2006 %
New tests or reviews are based only on a rigorous science-based analysis of
pharmacovigilance data OR relevant advances in knowledge of risks based on best
available science
17% 83%
Assessment is based on best available science and risk assessment 33% 83%
A clear and transparent division exists between risk assessment and risk management
decisions 67% 50%
Politics and regulation
Percentage of companies reporting impacts on business environment from political
involvement in USA’s regulatory process [E8] 2011 % 2006 %
91% -
Problems created by political involvement in USA’s regulatory process [E9] 2011 % 2006 %
Creates uncertainty for future product development 62% 64%
Increases the cost of developing new products 54% 79%
Increases the time needed to develop new products 46% 86%
Increases the cost of maintaining existing products 38% 21%
Prevents approval of new products that are available in other geographic markets 23% 43%
Reduces investment in the development of new technologies 23% 29%
Requires products to be removed from markets without scientific evidence 23% 21%
Restricts the use of certain product or process technologies 15% 43%
Restricts the species or indications covered by certain products 8% 14%
Allows products to be placed on the market without scientific evidence 8% 0%
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Quality of the regulatory process in USA
The current CVM/FDA process for approving new pharmaceutical products - %
answering ‘always’ or ‘mostly’ [F1]
2011
%
2006
%
The regulatory authorities deal with submission helpfully and promptly 91% -
The regulatory authorities deal with further interactions promptly 91% -
The regulatory authorities deal with pre-submission stages helpfully and promptly 82% -
The caliber of scientific assessors for efficacy is of the highest possible competence 82% 77%
The caliber of scientific assessors for safety is of the highest possible competence 64% 69%
The caliber of scientific assessors for quality is of the highest possible competence 55% 85%
Safety, quality and efficacy guidelines are applied on the basis of practical and rigorous
assessment of risks and benefits 45% 39%
The process of approving new products is transparent, efficient and predictable 36% -
Overall, scientific assessment of risks and benefits is clear and respected by other
regulators internationally 36% 62%
The current USDA/APHIS process for approving new vaccine products - % answering
‘always’ or ‘mostly’ [F2] 2011 % 2006 %
The regulatory authorities deal with pre-submission stages helpfully and promptly 100% -
Safety, quality and efficacy guidelines are applied on the basis of practical and rigorous
assessment of risks and benefits 86% 29%
The regulatory authorities deal with further interactions promptly 86% -
The caliber of scientific assessors for safety is of the highest possible competence 71% 75%
The caliber of scientific assessors for efficacy is of the highest possible competence 71% 38%
The caliber of scientific assessors for purity/potency is of the highest possible competence 43% 63%
Overall, scientific assessment of risks and benefits is clear and respected by other
regulators internationally 43% 25%
The regulatory authorities deal with submission helpfully and promptly 43% -
The process of approving new products is transparent, efficient and predictable 29% -
The current EPA process for approving new pesticide-based animal health products - %
answering ‘always’ or ‘mostly’ [F3] 2011 % 2006 %
The caliber of scientific assessors for safety is of the highest possible competence 33% 67%
The caliber of scientific assessors for quality is of the highest possible competence 50% 50%
The caliber of scientific assessors for efficacy is of the highest possible competence 50% 50%
Safety, quality and efficacy guidelines are applied on the basis of practical and rigorous
assessment of risks and benefits 50% 50%
The process of approving new products is transparent, efficient and predictable 17% -
Overall, scientific assessment of risks and benefits is clear and respected by other
regulators internationally 50% 50%
The regulatory authorities deal with pre-submission stages helpfully and promptly 50% -
The regulatory authorities deal with submission helpfully and promptly 33% -
The regulatory authorities deal with further interactions promptly 33% -
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Regulatory reform
Reforms and the industry’s ability to innovate. [G1]
rated high-
impact in
2011 %
achieved by
2011 %
mentions in
2006 %
Harmonization of test requirements internationally (incl. VICH) 45% 73% 71%
Removal of redundant and overlapping guidelines 45% 27% 14%
Provision of specific incentives to develop new products for small
markets 27% 46% 21%
Acceptance of relevant high quality test results from other sectors,
species or regions 27% 27% 50%
Tailoring of test requirements to specific risks posed by each product 18% 27% 50%
Use of consultation & impact assessment when developing new
guidelines 18% 27% 36%
Adaptation of test requirements to reflect small size of markets 18% 27% 36%
Implementation of an effective dispute resolution procedure for
scientific issues 18% 18% 43%
Basing test requirements only on best available science and risk
assessment 18% 9% 57%
Changing test requirements only with scientific justification 18% 9% 43%
Removal of political involvement in testing and approval 9% 9% 43%
Basing quality standards solely on animal health industry
requirements rather than human health requirements 9% 0% 50%
Reforms and the industry’s ability to exploit existing products.
[G2]
rated high-
impact in
2011 %
achieved by
2011 %
mentions in
2006 %
Speeding up the review time by increasing the number of
review/support staff 80% 80% 50%
Requiring all animal health companies to pay user fees 50% 60% 7%
Ensuring equitable reviews through staff training 30% 30% 57%
Basing test requirements only on best available science and risk
assessment 30% 20% 64%
Reduction of restrictions on minor formulation and manufacturing
changes 20% 50% 79%
Basing need for dossier reviews solely on pharmacovigilance or
relevant scientific advances 10% 20% 21%
Providing additional legal protection for data for new indications or
species 10% 10% 71%
Ensuring that all types of products are subject to full regulatory
approval requirements 10% 0% 21%
Changing the definition of “minor use” in MUMS to allow an increase
in the number of animals treated 0% 10% 21%
Adaptation of packaging and labeling requirements to small size of
markets 0% 10% 14%
Adapting test requirements to small size of markets 0% 0% 21%
Basing Antimicrobial Resistance rules only on best available science 0% 0% 21%
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The overall impact of the regulatory framework on major business decisions
CAPEX
SALES AND PURCHASES 2011 % 2006 % 2001 %
Buy businesses in USA 42% - -
Influence of Regulations
No influence 80% - -
Some influence 20% - -
Significant influence 0% - -
Sell or close businesses in USA 17% 23% 62%
Influence of Regulations
No influence 100% 0% 60%
Some influence 0% 33% 40%
Significant influence 0% 67% 0%
PRODUCTION 2011 % 2006 % 2001 %
Invest in production inside USA 67% - -
Influence of Regulations
No influence 50% - -
Some influence 50% - -
Significant influence 0% - -
Invest in production outside USA 67% 72% 66%
Influence of Regulations
No influence 63% 30% 50%
Some influence 37% 40% 50%
Significant influence 0% 30% 0%
R&D LOCATION 2011 % 2006 % 2001 %
Locate R&D Facilities inside USA 33% - -
Influence of Regulations
No influence 75% - -
Some influence 25% - -
Significant influence 0% - -
Locate R&D Facilities outside USA 25% 38% 14%
Influence of Regulations
No influence 67% 20% 100%
Some influence 33% 40% 0%
Significant influence 0% 40% 0%
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MARKET FOCUS
MARKET FOCUS 2011 % 2006 % 2001 %
Increase (geographic) market focus in USA 50% - -
Influence of Regulations
No influence 83% - -
Some influence 17% - -
Significant influence 0% - -
Restrict (geographic) market focus in USA 0% 38% 44%
Influence of Regulations
No influence 0% 0% 25%
Some influence 0% 40% 25%
Significant influence 0% 60% 50%
PRODUCT RANGE 2011 % 2006 % 2001 %
Increase product range in USA 67% - -
Influence of Regulations
No influence 88% - -
Some influence 12% - -
Significant influence 0% - -
Reduce product range in USA 33% 50% 50%
Influence of Regulations
No influence 25% 0% 25%
Some influence 25% 29% 50%
Significant influence 50% 71% 25%
SPECIES AND INDICATION 2011 % 2006 % 2001 %
Increase coverage of species or indications in USA 58% - -
Influence of Regulations
No influence 71% - -
Some influence 29% - -
Significant influence 0% - -
Reduce coverage of species or indications in USA 17% 50% 50%
Influence of Regulations
No influence 0% 0% 25%
Some influence 50% 29% 25%
Significant influence 50% 71% 50%
BREAKTHROUGH PRODUCTS 2011 % 2006 % 2001 %
Introduce more ‘breakthrough’ products in USA 50% - -
Influence of Regulations
No influence 83% - -
Some influence 17% - -
Significant influence 0% - -
Introduce fewer ‘breakthrough’ products in USA 17% 64% 55%
Influence of Regulations
No influence 0% 0% 20%
Some influence 50% 56% 60%
Significant influence 50% 44% 20%
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INNOVATION & TECHNOLOGY
R&D BUDGETS 2011 % 2006 % 2001 %
Switch R&D budgets to labs inside USA 17% - -
Influence of Regulations
No influence 100% - -
Some influence 0% - -
Significant influence 0% - -
Switch R&D budgets to labs outside USA 25% 54% 14%
Influence of Regulations
No influence 67% 44% 0%
Some influence 33% 28% 100%
Significant influence 0% 28% 0%
INNOVATION FOCUS 2011 % 2006 % 2001 %
Focus on new technologies in USA 83% - -
Influence of Regulations
No influence 80% - -
Some influence 0% - -
Significant influence 20% - -
Focus on existing/older technologies in USA 75% 62% 25%
Influence of Regulations
No influence 67% 25% 50%
Some influence 22% 37% 50%
Significant influence 11% 38% 0%
TECHNOLOGY AVOIDANCE 2011 % 2006 % 2001 %
Develop certain product technologies in USA 67% - -
Influence of Regulations
No influence 88% - -
Some influence 12% - -
Significant influence 0% - -
Avoid certain product technologies in USA 58% 64% 63%
Influence of Regulations
No influence 0% 0% 0%
Some influence 43% 22% 20%
Significant influence 57% 78% 80%
Hopes and expectations for the next 5 years
The industry’s view on the possible impacts of recent or current trends and changes in
regulatory approach [I1] 2011%
Increasing requirements for post-marketing surveillance & pharmacovigilance -92%
Increasing globalization of post-marketing surveillance outcomes -67%
Increasing transparency with respect to data disclosure -8%
Trend to wider participation in regulatory process, including public comment -8%
Acceptance of JECFA agreements for residues of non-contentious molecules +25%
The FDA CVM initiatives within ONADE on innovation groups and technology teams +25%
The USDA CVB initiative on performance-based requirements for vaccines +67%
Moves towards electronic submission +67%
Moves towards a common technical document +75%
Increasing trend to move from a zero-risk approach to a benefit:risk assessment +83%
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Appendix 2: Global Benchmarking Survey Questionnaire 2011 - USA
Section A: COMPANY DETAILS
A1. Where is the world-wide headquarters of your animal health business?
In Australia � In Canada � In the EU �
In Japan � In the USA � Other [___________________] �
A2. How would you describe the geographic focus of your world-wide animal health business?
Primarily focused on the USA �
Focused on the USA plus some exports/subsidiaries in other countries �
Global multinational �
A3. How many employees do you have in your animal health business (full time equivalents)?
number
world–wide
based in the USA
A4. What was your last annual gross turnover in animal health?
US $ millions
world–wide
the USA
A5. What percentage of your gross annual world-wide turnover in animal health do you spend on research and development each year?
% of turnover
spend on R&D
A6. Thinking about your world-wide R&D expenditure, please indicate the percentage that you spend on Pharmaceutical R&D and the
percentage that you spend on Biologicals R&D.
% of R&D spend
spend on pharmaceutical R&D
spend on biologicals R&D
A7. Thinking about the focus of your world-wide R&D expenditure, please indicate the percentage that you spend on Companion
Animal projects and Production Animal projects. Please show the percentage in 2006 and in 2011.
2006 2011
% of R&D spent on companion animal projects
% of R&D spent on production animal projects
A8. In carrying out your world-wide R&D programs, what are your most important priorities?
New products � New drug/biologicals development tools �
New drug or biologicals delivery methods � New production processes �
New active ingredients/antigens � Improved products �
A9. What percentage of your total world-wide R&D expenditure in animal health is undertaken in the USA?
Less than 10% � 10 - 20% � 21 – 30% � 31 - 40% � 41 - 50% �
51 – 60% � 61 - 70% � 71 – 80% � 81 - 90% � 91 - 100% �
A10. Which of the following statements best indicates how the USA’s share of your world-wide expenditure on R&D for new product
discovery and development has changed since 2006?
Decreased a lot � Decreased slightly � Little change � Increased slightly � Increased a lot �
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A11. What factors have caused the change? (Please rank these from 1 for ‘most important’ to 10 for ‘least important’.)
importance
Improved regulatory environment �
Deterioration in regulatory environment �
Acquisition of companies with development programs �
Divestment of companies with development programs �
Greater availability of CROs/research organizations �
Less availability of CROs/research organizations �
Moved R&D elsewhere �
Increased base cost of conducting R&D in USA �
Decreased base cost of conducting R&D in USA �
Other (Specify_____________________________) �
A12. Thinking about R&D that you carry out in the USA, what proportion is contracted out to third parties (i.e. universities, research
institutes, or companies)?
Less than 25% � 26 - 50% � 51 - 75% � 76 - 100% �
A13. How would you describe the primary market focus of your animal health business in the USA?
Comprehensive product line for most species and most types of diseases �
Product line focused on selected species (such as companion animals or cattle) �
Product line focused on specific types of disease (such as endoparasitics) �
Focused on specific product areas (such as biologicals or medicinal in-feed products) �
A selected product line for specific species and diseases �
A14. What is the primary product focus of your animal health business in the USA?
Primarily pharmaceuticals � Primarily biologicals �
Primarily medicinal in-feed products � Primarily pesticide-based products �
A mix of all types � Other (Specify___________________) �
A15. Thinking about the activity involved in developing a major new product, which of the following best describes the
company’s approach to developing the test data needed to meet US safety, quality and efficacy requirements?
major
livestock
species
companion
animals
minor
livestock
species
All or most test data is generated in the USA � � �
Core test data is generated elsewhere in the world and is
supplemented by additional local tests in the USA � � �
All test data is generated outside the USA and complies with VICH
requirements � � �
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Section B: COMPETITIVENESS
B1. In your opinion, which of the following are the most important DRIVERS OF COMPETITIVE SUCCESS in the animal
health industry in the USA in the SHORT term and in the LONG term? (Please rank each column from 1 for ‘most
important’ to 8 for ‘least important’.)
short-term long-term
Developing major new products to meet customer needs � �
Providing new services to meet customer needs � �
Exploiting existing products more profitably � �
Improving the efficiency of sales and marketing activities � �
Reducing the costs of production and distribution � �
Reducing the number of competitors through mergers and acquisitions � �
Entering new geographic markets � �
Other (Specify____________________________) � �
Section C: INNOVATION
C1. In your opinion, how important are each of the following factors to SUCCESSFUL INNOVATION in the animal health
industry in the USA? (Please rank from 1 for ‘most important’ to 9 for ‘least important’.)
importance
Access to creativity & ideas (including elsewhere in company) �
Access to capital �
Minimizing uncertainty �
Controlling development costs �
Integrating activity across functions �
Minimizing time-to-market �
Access to critical skills �
Access to other markets �
Other (Specify____________________________) �
C2. How does the regulatory environment in USA impact your ability to innovate?
very positively � Positively � neutral � negatively � very negatively �
C3. Below is a list of potential OBSTACLES TO INNOVATION in the animal health industry in the USA. Which of these, if
any, are significant obstacles for innovation in your business? (Please rank from 1 for ‘most important’ to 11 for ‘least
important’.)
importance
Small size of market segments �
Negative consumer attitudes �
The US regulatory framework �
Lack of access to specialist biotechnology companies �
Inadequate intellectual property protection (for patents or commercial data) �
Lack of skilled staff �
Poor technology transfer mechanisms between academia and business �
Internal company organizational or cultural barriers �
Closure of the US and/or other geographic markets for certain products �
Lack of availability of financial resources �
Other (Specify____________________________) �
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C4. Have Government Regulations in the USA HELPED to improve the competitiveness of your business in any of the
following ways? (Please rank from 1 for ‘most important’ to 12 for ‘least important’.)
importance
Provided a stable business environment �
Improved product quality �
Reassured the public about the safety of animal health products �
Prevented dangerous products entering the market �
Provided confidence to invest (added to certainty and predictability) �
Protected investments in innovation �
Triggered innovation in new production processes �
Helped redirect resources to innovation �
Improved access to other geographic markets �
Speeded up time-to-market �
Created new market segments �
Other (Specify________________________________________) �
C5. Do government regulations in the USA have any of the following affects on your business?
importance
Increase costs of development �
Increase development time �
Re-direct resources into defensive R&D �
Create significant uncertainty or unpredictability �
Limit the use of innovative marketing methods �
Reduce access to new ideas, particularly in biotechnology �
Close markets for specific products �
Restrict collaborative R&D ventures �
Reduce cash flows from existing products �
Divert management time �
Other (Specify____________________________) �
C6. Looking at your total annual expenditure on R&D in USA (including any additional expenditure on defensive R&D),
what percentage would you define as MANDATORY DEFENSIVE R&D?
% of total R&D
expenditure in the USA
Spend on mandatory defensive R&D
C7. Which of the following statements best indicates how your expenditure on MANDATORY DEFENSIVE R&D in the
USA has changed since 2006?
Decreased a lot � Decreased
slightly � Little change �
Increased
slightly �
Increased a
lot �
C8. What factors have caused the change? (Please rank from 1 for ‘most important’ to 7 for ‘least important’.)
Regulator product review activities have increased �
Regulator product review activities have decreased �
Improved regulatory environment �
Deterioration in regulatory environment �
Acquisition of companies with products on the market �
Divestment of companies �
Other (Specify_____________________________) �
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C9. Please state the AVERAGE LENGTH OF TIME it takes you to gain registration for a major new product in the USA,
from initial filing of an INAD (or submission of Master Seed data or First Study Protocol and license application) to the
receipt of the approval letter for an administrative or conventional NADA/product license. Please make separate
estimates for major livestock species, companion animals and minor species and for the product types.
major
livestock
species
companion
animals minor species
years years Years
Pharmaceuticals [_____] [_____] [_____]
New Conventional vaccine – new
Master Seed [_____] [_____] [_____]
New Conventional vaccine –
combination of licensed products [_____] [_____] [_____]
GMO products requiring NEPA
RA/FONSI [_____] [_____] [_____]
Biologic Conditional License [_____] [_____] [_____]
Pesticide-based product [_____] [_____] [_____]
C10. Thinking about the AVERAGE LENGTH OF TIME it takes you to develop a major new PHARMACEUTICAL product in
the USA (from initial research to final market authorization), compared to 2006, have REGULATORY FACTORS caused
this time to change? Please make separate estimates for major livestock species, companion animals and minor species.
major livestock
species companion animals
minor
species
years years years
Decreased � [_____] � [_____] � [_____]
Little change � [_____] � [_____] � [_____]
Increased � [_____] � [_____] � [_____]
C11. What proportion of these changes has been caused by internal regulatory processes and what proportion by external
regulatory processes?
major
livestock
species
companion
animals
minor
species
% of change due to internal regulatory processes
% of change due to external regulatory processes
C12. Thinking about the AVERAGE LENGTH OF TIME it takes you to develop a major new BIOLOGICAL product in the
USA (from initial research to final market authorization), compared to 2006, have REGULATORY FACTORS caused this
time to change? Please make separate estimates for major livestock species, companion animals and minor species.
major livestock
species companion animals
minor
species
years years years
Decreased � [_____] � [_____] � [_____]
Little change � [_____] � [_____] � [_____]
Increased � [_____] � [_____] � [_____]
C13. What proportion of these changes has been caused by internal regulatory processes and what proportion by external
regulatory processes?
major
livestock
species
companion
animals
minor
species
% of change due to internal regulatory processes
% of change due to external regulatory processes
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C14. Thinking about the AVERAGE LENGTH OF TIME it takes you to develop a major new PESTICIDE-BASED product in
the USA (from initial research to final market authorization), compared to 2006, have REGULATORY FACTORS caused
this time to change?
major livestock
species companion animals
minor
species
years years years
Decreased � [_____] � [_____] � [_____]
Little change � [_____] � [_____] � [_____]
Increased � [_____] � [_____] � [_____]
C15. What proportion of these changes has been caused by internal regulatory processes and what proportion by external
regulatory processes?
major
livestock
species
companion
animals
minor
species
% of change due to internal regulatory processes
% of change due to external regulatory processes
C16. Thinking about the AVERAGE COST of developing a major new PHARMACEUTICAL product in the USA (from initial
research to final market authorization) for all possible species and indications for that product, compared to 2006, have
REGULATORY FACTORS caused this cost to change in real terms?
major livestock species companion animals minor species
Reduced by more than 50% � � �
Reduced by 26% - 50% � � �
Reduced by 10 - 25% � � �
Little change � � �
Increased by 10 - 25% � � �
Increased by 26% - 50% � � �
Increased by more than 50% � � �
We do not develop this type of
product � � �
C17. Thinking about the AVERAGE COST of developing a major new BIOLOGICAL product in the USA (from initial
research to final market authorization) for all possible species and indications for that product, compared to 2006, have
REGULATORY FACTORS caused this cost to change in real terms?
major livestock species companion animals minor species
Reduced by more than 50% � � �
Reduced by 26% - 50% � � �
Reduced by 10 - 25% � � �
Little change � � �
Increased by 10 - 25% � � �
Increased by 26% - 50% � � �
Increased by more than 50% � � �
We do not develop this type of
product � � �
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C18. Thinking about the AVERAGE COST of developing a major new PESTICIDE-BASED product in the USA (from initial
research to final market authorization) for all possible species and indications for that product, compared to 2006, have
REGULATORY FACTORS caused this cost to change in real terms?
major livestock species companion animals minor species
Reduced by more than 50% � � �
Reduced by 26% - 50% � � �
Reduced by 10 - 25% � � �
Little change � � �
Increased by 10 - 25% � � �
Increased by 26% - 50% � � �
Increased by more than 50% � � �
We do not develop this type of
product � � �
C19. Please provide the approximate cost for developing a recent new product in the categories given below, from your
company’s own experience. (Please fill in the total cost in US $M eg $6.4M.)
major livestock species companion animals minor species
Pharmaceutical product with new
active ingredient
New biological product
New medicinal in-feed product
New pesticide-based product
C20. Please could you also indicate the approximate cost of establishing a new target species use for an existing product?
(Please write in the amount in US $M eg $1.2M.)
major livestock species companion animals minor species
Pharmaceutical product
Biological product
Medicinal in-feed product
Pesticide-based product
C21. Thinking about Government Regulations in the USA, how would you assess the impact of each of the areas of
regulation listed below on your ABILITY TO INNOVATE successfully?
not
applicable
very
helpful
helpfu
l
no
impact
unhelpfu
l
very
unhelpful
Marketing Authorizations � � � � � �
Maximum Residue Limits � � � � � �
Good Laboratory Practice � � � � � �
Biotechnology Regulations � � � � � �
Antimicrobial Resistance Regulations � � � � � �
Environmental Regulations (Ecotox) � � � � � �
Protection of Intellectual Property–
commercial data � � � � � �
Protection of Intellectual Property–
patents � � � � � �
Minor Use Minor Species rules (MUMS) � � � � � �
Animal Drug User Fee rules (ADUFA) � � � � � �
USDA/APHIS adoption of VICH GCP
regulations � � � � � �
USDA/APHIS expanded biometrics
standards � � � � � �
USDA/APHIS Conditional Product
Licenses � � � � � �
Other (specify_________________) � � � � � �
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Section D: EXPLOITATION OF EXISTING PRODUCTS (Product Maintenance)
D1. Below is a list of potential OBSTACLES TO THE EXPLOITATION OF EXISTING PRODUCTS in the animal health
industry in the USA. Which of these, if any, are significant obstacles to the exploitation of your existing products? (Please
rank from 1 for ‘most important’ to 11 for ‘least important’.)
importance
Small size of market segments �
Negative consumer attitudes �
The USA’s regulatory framework for maintenance/extension of licenses �
Demand volatility in certain segments �
Pressure from competitors (including parallel imports and generics) �
Inadequate intellectual property protection (commercial data & patents) �
Legal restrictions on advertising, labels, trademarks and communication �
Lack of skilled staff �
Closure of the US market and/or other geographic markets for certain products �
Lack of availability of financial resources �
Other (Specify____________________________) �
D2. Do government regulations in the USA have any of the following affects on your business? (Please rank from 1 for
‘most important’ to 11 for ‘least important’.)
importance
Remove profitable products from the market �
Create disproportionate costs for maintaining/extending marketing authorizations �
Restrict the extension of existing technologies to additional species/indications �
Divert management time �
Create significant uncertainty �
Divert financial resources away from the development of new, innovative products �
Fail to protect intellectual property (patents & commercial data) adequately �
Limit the use of innovative marketing methods �
Increase the cost of production �
Increase the cost of distribution and marketing �
Other (specify___________________________________________) �
D3. Thinking about Government Regulations in the USA, how would you assess the impact of each of the areas of
regulation listed below on your ABILITY TO EXPLOIT EXISTING PRODUCTS successfully?
very
helpful helpful
no
impact unhelpful
very
unhelpful
License Maintenance � � � � �
Maximum Residue Limits (Tolerances) � � � � �
Good Manufacturing Practice � � � � �
Manufacturing Changes Rules � � � � �
Environmental Regulations (Ecotox) � � � � �
Packaging/Labeling Changes � � � � �
Antimicrobial Resistance Regulations � � � � �
Protection of Intellectual Property–commercial
data � � � � �
Protection of Intellectual Property–patents � � � � �
Pharmacovigilance � � � � �
Animal Drug User Fee rules (ADUFA) � � � � �
Regulations regarding Combination Products � � � � �
Other (specify________________________) � � � � �
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Section E: REGULATORY PREDICTABILITY
This section must be completed by the Regional Head of Regulatory Affairs or a direct delegate.
E1. Which of the following regulatory agencies in the USA does your company have significant dealings with?
CVM/FDA (for Pharmaceuticals) � ANSWER QUESTIONS E2 &E3
USDA/APHIS (for biologicals) � ANSWER QUESTIONS E4 & E5
EPA (for pesticide-based products) � ANSWER QUESTIONS E6 & E7
If more than one please answer all relevant questions.
The USA CVM/FDA
E2. Consider the current USA CVM/FDA process for approving new pharmaceutical products. To what extent does the
process meet the following criteria? (Please decide whether the process ‘always’, ‘mostly’, ‘sometimes’, or ’never’ meets
each criterion. Tick 1 box only in each row.)
Criterion always mostly sometimes never
Expert assessment of applications to approve new products by
CVM/FDA is based on best available science � � � �
Expert assessment of applications to approve new products by
CVM/FDA is firmly rooted in the principles of Risk Assessment � � � �
Expert assessment of applications to approve new products by
CVM/FDA is based on a consistent application and interpretation of
Regulatory Guidelines
� � � �
Final approval of new products by CVM/FDA is based on the expert
assessment of safety, quality, and efficacy � � � �
The process of approving new products is transparent and predictable � � � �
E3. Consider the current USA CVM/FDA process for maintaining existing pharmaceutical products on the market. To what
extent does the process meet the following criteria?
Criterion always mostly sometimes never
New tests or reviews are based only on a rigorous science-based
analysis of pharmacovigilance data OR relevant advances in
knowledge of risks based on best available science
� � � �
Assessment is based on best available science and risk assessment � � � �
A clear and transparent division exists between risk assessment and
risk management decisions � � � �
The USDA/APHIS
E4. Consider the current USDA/APHIS process for approving new biologicals. To what extent does the process meet the
following criteria?
Criterion always mostly sometimes never
Expert assessment of applications to approve new products by
USDA/APHIS is based on best available science � � � �
Expert assessment of applications to approve new products by
USDA/APHIS is firmly rooted in the principles of Risk
Assessment
� � � �
Expert assessment of applications to approve new products by
USDA/APHIS is based on a consistent application and
interpretation of Regulatory Guidelines
� � � �
Final approval of new products by USDA/APHIS is based on the
expert assessment of safety, quality, and efficacy � � � �
The process of approving new products is transparent and
predictable � � � �
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E5. Consider the current USDA/APHIS process for maintaining existing vaccine products on the market. To what extent
does the process meet the following criteria?
Criterion always mostly sometimes never
New tests or data requirements are based only on a rigorous
science-based analysis of existing data OR relevant advances in
knowledge of risks based on best available science
� � � �
Assessment is based on best available science and risk
assessment � � � �
A clear and transparent division exists between risk assessment
and risk management decisions � � � �
The EPA
E6. Consider the current USA EPA process for approving new pesticide-based animal health products. To what extent
does the process meet the following criteria?
criterion always mostly sometimes never
Expert assessment of applications to approve new products by
the EPA is based on best available science � � � �
Expert assessment of applications to approve new products by
the EPA is firmly rooted in the principles of Risk Assessment � � � �
Expert assessment of applications to approve new products by
the EPA is based on a consistent application and interpretation
of Regulatory Guidelines
� � � �
Final approval of new products by the EPA is based on the
expert assessment of safety, quality, and efficacy � � � �
The process of approving new products is transparent and
predictable � � � �
E7. Consider the current USA EPA process for maintaining existing pesticide-based animal health products on the market.
To what extent does the process meet the following criteria?
criterion always mostly sometimes never
New tests or reviews are based only on a rigorous
science-based analysis of pharmacovigilance data OR
relevant advances in knowledge of risks based on best
available science
� � � �
Assessment is based on best available science and risk
assessment � � � �
A clear and transparent division exists between risk
assessment and risk management decisions � � � �
E8. Does political involvement in the USA’s regulatory processes have an impact on your business environment? No � Yes �
E9. If yes, please rank the potential problems below from 1 for ‘most important’ to 11 for ‘least important’.
importance
Requires products to be removed from markets without scientific evidence �
Creates uncertainty for future product development �
Increases the cost of maintaining existing products �
Prevents approval of new products that are available in other geographic markets �
Allows products to be placed on the market without scientific evidence �
Increases the cost of developing new products �
Increases the time needed to develop new products �
Restricts the species or indications covered by certain products �
Reduces investment in the development of new technologies �
Restricts the use of certain product or process technologies �
Other (please specify ______________________________) �
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Section F: QUALITY OF REGULATORY ASSESSMENT This section must be completed by the Regional Head of Regulatory Affairs.
LOOKING BACK AT YOUR ANSWERS TO SECTION E, IF YOU HAVE SIGNIFICANT DEALINGS WITH:
CVM/FDA (for Pharmaceuticals) THEN ANSWER QUESTION F1
USDA/APHIS (for Vaccines) THEN ANSWER QUESTION F2
EPA (for pesticide-based products) THEN ANSWER QUESTION F3
If more than one please answer all relevant questions.
F1. Consider the scientific basis of the current CVM/FDA process for approving new pharmaceutical products. To what
extent does the process meet the following criteria? Criterion always mostly sometimes never
The caliber of scientific assessors for safety is of the highest possible
competence � � � �
The caliber of scientific assessors for quality is of the highest possible
competence � � � �
The caliber of scientific assessors for efficacy is of the highest possible
competence � � � �
Safety, quality and efficacy guidelines are applied on the basis of practical
and rigorous assessment of risks and benefits � � � �
The process of approving new products is transparent, efficient and
predictable � � � �
Overall, scientific assessment of risks and benefits is clear and respected
by other regulators internationally � � � �
The regulatory authorities deal with pre-submission stages helpfully and
promptly � � � �
The regulatory authorities deal with submission helpfully and promptly � � � �
The regulatory authorities deal with further interactions promptly � � � �
F2. Consider the scientific basis of the current USDA/APHIS process for approving new vaccine products. To what extent
does the process meet the following criteria?
criterion always mostly sometimes never
The caliber of scientific assessors for safety is of the highest possible
competence � � � �
The caliber of scientific assessors for purity/potency is of the highest
possible competence � � � �
The caliber of scientific assessors for efficacy is of the highest possible
competence � � � �
Safety, purity/potency and efficacy guidelines are applied on the basis of
practical and rigorous assessment of risks and benefits � � � �
The process of approving new products is transparent, efficient and
predictable � � � �
Overall, scientific assessment of risks and benefits is clear and respected
by other regulators internationally � � � �
The regulatory authorities deal with pre-submission stages helpfully and
promptly � � � �
The regulatory authorities deal with submission helpfully and promptly � � � �
The regulatory authorities deal with further interactions promptly � � � �
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F3. Consider the scientific basis of the current USA EPA process for approving new pesticide-based animal health
products. To what extent does the process meet the following criteria?
Criterion always mostly sometimes never
The caliber of scientific assessors for safety is of the highest possible
competence � � � �
The caliber of scientific assessors for quality is of the highest possible
competence � � � �
The caliber of scientific assessors for efficacy is of the highest possible
competence � � � �
Safety, quality and efficacy guidelines are applied on the basis of
practical and rigorous assessment of risks and benefits � � � �
The process of approving new products is transparent, efficient and
predictable � � � �
Overall, scientific assessment of risks and benefits is clear and
respected by other regulators internationally � � � �
The regulatory authorities deal with pre-submission stages helpfully
and promptly � � � �
The regulatory authorities deal with submission helpfully and
promptly � � � �
The regulatory authorities deal with further interactions promptly � � � �
Section G: REGULATORY REFORM
G1. Thinking about MARKETING APPROVAL REGULATIONS in the USA, the following were identified in 2006 as being
possible reforms that would, if implemented, have impact on the industry’s ability to INNOVATE – which of these have
occurred, and which have had or might still have the greatest positive impact on your ability to INNOVATE?
Reform have
occurred
importance
if so
Removal of political involvement in testing and approval � �
Changing test requirements only with scientific justification � �
Removal of redundant and overlapping guidelines � �
Basing test requirements only on best available science and risk assessment � �
Use of consultation & impact assessment when developing new guidelines � �
Harmonization of test requirements internationally (incl. VICH) � �
Adaptation of test requirements to reflect small size of markets � �
Tailoring of test requirements to specific risks posed by each product � �
Provision of specific incentives to develop new products for small markets � �
Basing quality standards solely on animal health industry requirements rather than human
health requirements � �
Acceptance of relevant high quality test results from other sectors, species or regions � �
Implementation of an effective dispute resolution procedure for scientific issues � �
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G2. The following were identified in 2006 as being possible reforms that would, if implemented, have impact on the
industry’s ability to EXPLOIT EXISTING PRODUCTS – which of these have occurred, and which have had or might still
have the greatest positive impact on your ability to EXPLOIT EXISTING PRODUCTS?
Reform have
occurred
importance
if so
Reduction of restrictions on minor formulation and manufacturing changes � �
Basing Antimicrobial Resistance rules only on best available science � �
Providing additional legal protection for data for new indications or species � �
Adaptation of packaging and labeling requirements to small size of markets � �
Ensuring that all types of products are subject to full regulatory approval requirements � �
Adapting test requirements to small size of markets � �
Basing test requirements only on best available science and risk assessment � �
Basing need for dossier reviews solely on pharmacovigilance or relevant scientific advances � �
Requiring all animal health companies to pay user fees � �
Ensuring equitable reviews through staff training � �
Speeding up the review time by increasing the number of review/support staff � �
Changing the definition of “minor use” in MUMS to allow an increase in the number of animals
treated � �
G3. What expected changes have NOT occurred in regulatory frameworks in the past 5 years in spite of promises of
change?
G4. What regulatory changes over the past 5 years have given you the most problems and why?
Section H: OVERALL IMPACT OF THE REGULATORY FRAMEWORK H1. Have regulations played a major role in influencing you to take any of the following major decisions over the last five years?
major decisions not
done
done but
regulations
no influence
done &
regulations
some
influence
done &
regulations a
significant
influence
Locate R&D Facilities inside the USA � � � �
Locate R&D Facilities outside the USA � � � �
Switch R&D budgets to labs inside the USA � � � �
Switch R&D budgets to labs outside the USA � � � �
Invest in production inside the USA � � � �
Invest in production outside the USA � � � �
Increase product range in the USA � � � �
Reduce product range in the USA � � � �
Increase (geographic) market focus in the USA � � � �
Restrict (geographic) market focus in the USA � � � �
Increase coverage of species or indications in the USA � � � �
Reduce coverage of species or indications in the USA � � � �
Buy businesses in the USA � � � �
Sell or close businesses in the USA � � � �
Focus on new technologies in the USA � � � �
Focus on existing/older technologies in the USA � � � �
Introduce more ‘breakthrough’ products in the USA � � � �
Introduce fewer ‘breakthrough’ products in the USA � � � �
Develop certain product technologies in the USA � � � �
Avoid certain product technologies in the USA � � � �
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Section I: HOPES AND EXPECTATIONS FOR NEXT 5 YEARS
I1. The following trends or changes in regulatory approach have been taking place recently and may well have an impact
in future. What impacts do you expect these to have on your business in the next 5 years?
very
helpful helpful
no
impact unhelpful
very
unhelpful
Increasing transparency with respect to data
disclosure � � � � �
Trend to wider participation in regulatory process,
including public comment � � � � �
Increasing trend to move from a zero-risk approach
to a benefit:risk assessment � � � � �
Increasing requirements for post-marketing
surveillance & pharmacovigilance � � � � �
Increasing globalization of post-marketing
surveillance outcomes � � � � �
Acceptance of JECFA agreements for residues of
non-contentious molecules � � � � �
Moves towards electronic submission � � � � �
Moves towards a common technical document � � � � �
The FDA CVM initiatives within ONADE on
innovation groups and technology teams � � � � �
The USDA CVB initiative on performance-based
requirements for vaccines � � � � �
I2. Are there any other changes that have had a positive impact and why?
I3. What changes do you still want to see and why?
Notes on the Questions In answering the survey, these Explanatory Notes for specific questions may be helpful:
A5: For research and development include all relevant internal costs, such as personnel, apportioned establishment costs, and allocated research costs,
and those for outside resources such as CROs, field trials etc; also include expenditure on defensive R&D. Defensive R&D may be classed in your
business as ‘product defense’ or a similar phrase. Essentially it has two components: Business defensive expenditure you decide to undertake in order to
defend your products against competition in the market, and mandatory defensive expenditure undertaken as a direct result of legal requirements by
the regulatory authorities if you wish to maintain existing products in the market, including compliance with requirements for license renewals.
Question C6 also refers to mandatory defensive R&D.
A6: In the ‘pharmaceuticals’ category, include pharmaceuticals, in-feed therapeutic products and in-water therapeutic products, and
biopharmaceuticals if regulated by the same agency as therapeutics. In the ‘biologicals’ category, include vaccines, antibodies, antitoxins, antisera, and
biopharmaceuticals if regulated by the same agency as biologicals.
A8: Development tools include development of biomarkers, -omics platforms, toxicity tests and other tools for the product development process.
B1: New services could include provision of diagnostics and monitoring, new user training, feed assay services, or other product- or disease-focused
support activities.
C9: In general, please interpret Minor Species according to any definition applied by your appropriate regulatory agency/agencies. Conditional Licenses
are those authorized under 9CFR 102.6 in situations deemed by USDA APHIS to be emergency or special, based on adequate and appropriate quality
and safety data and sufficient data to establish a reasonable presumption of efficacy, conditional on supply of sufficient further information to progress
to a full license after the conditional period. For conventional vaccines, GMO products, products that require a full NEPA risk analysis and FONSI
requirements and Conditional Licenses: define time to approval as the period from date of submission of the Master Seed test results and license
application until receipt of a product license. For conventional vaccines not using a new Master Seed (e.g. a combination of 2 previously licensed
products), define as the period from date of submission of the First Study protocol and license application until receipt of a product license.
C11: By ‘Internal regulatory processes’, we mean internal review committees, enhanced quality management procedures for regulatory process,
additional oversight processes for external R&D and other internal procedures that impact product development and regulatory activity.
C16: To estimate the cost for developing a new product, include all relevant internal costs, such as personnel, apportioned establishment costs, and
allocated research costs, and those for outside resources such as CROs, field trials etc.
E6: Please include new active ingredients, new uses and new products in the category ‘new pesticide-based products’.
F: In considering ‘safety’, please include all aspects (target species, human, consumer, environmental).
F1: Please include all levels of regulatory authorities with which you interact including secretariat when considering your response.
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Appendix 3: Inter-regional key data summary 2011
COMPANY PROFILES
Number of companies in survey in 2011
AUSTRALIA CANADA EUROPE JAPAN USA
9 14 16 12 14
Data is expressed as a % of companies responding or choosing a specific criterion, except where noted otherwise.
Headquarters of the animal health business AUSTRALIA CANADA EUROPE JAPAN USA
In Australia 12% 0% 0% 0% 0%
In Canada 0% 29% 0% 0% 0%
In Europe 63% 50% 80% 33% 50%
In Japan 0% 0% 0% 50% 0%
In the USA 25% 21% 20% 17% 50%
Market focus of the business AUSTRALIA CANADA EUROPE JAPAN USA
Comprehensive product line 55% 38% 50% 64% 33%
Focused on selected species 11% 31% 19% 0% 20%
Focused on specific product types 11% 15% 0% 18% 27%
Focused on specific types of disease 11% 8% 12% 9% 0%
Selected products for specific species/diseases 11% 8% 19% 9% 20%
Product focus of the business AUSTRALIA CANADA EUROPE JAPAN USA
A mix of all types 22% 31% 25% 36% 40%
Primarily pharmaceuticals 22% 46% 50% 36% 20%
Primarily biologicals 11% 0% 6% 28% 13%
Primarily medicinal in-feed products 11% 8% 13% 0% 13%
Primarily pesticide-based products 33% 0% 0% 0% 7%
Other combinations:
C, E, U: pharma+bios.
C: pharma + unregulated products
0% 15% 6% 0% 7%
Geographic focus of the world-wide animal health
business AUSTRALIA CANADA EUROPE JAPAN USA
Global 88% 79% 69% 50% 71%
In the country/region plus some regional
exports/subsidiaries 0% 7% 25% 25% 29%
Mainly in the country/region only 12% 14% 6% 25% 0%
Number of employees world-wide in animal health AUSTRALIA CANADA EUROPE JAPAN USA
>500 78% 55% 69% 58% 77%
250-500 0% 0% 6% 8% 0%
<250 22% 45% 25% 33% 23%
Number of employees in country/region in animal health AUSTRALIA CANADA EUROPE JAPAN USA
>500 0% 0% 60% 9% 47%
250-500 0% 0% 7% 9% 15%
<250 100% 100% 33% 82% 38%
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Total annual gross AH
turnover
A
A$M/B
C
C$M
E
€M
J
YenB
U
US$
<100M 11% <100M 45% <100M 33% <60 50% <100M 17%
100M-500M 0% 100M-500M 9% 100M-500M
27%
60-100 17% 101M-500M
25%
501M-2B 55% >500M 45% 501M-1B 7% >100 33% 501M-1B 8%
>2B 33% >1B 33% >1B 47%
Annual gross AH
turnover in region
A
A$M
C
C$M
E
€M
J
YenB
U
US$M
<100M 89% <100M 91% <100M 40% <100 100% <100 33%
100M-500M
11% 100M-500M 9%
100M-500M
40%
100-500 0% 100-500 17%
>500M 0% >500M 0% >500M 20% >500 0% >500 50%
Total annual gross AH
turnover in US$ 2010
A
A$1.09=US$1
C
C$1.03=US$1
E
€0.75=US$1
J
87.78¥=US$1
U
<100M 11% 45% 33% 27% 17%
100M-500M 0% 9% 13% 27% 25%
501M-1B 55% 0% 20% 0% 8%
>1B 33% 45% 33% 46% 47%
Annual gross AH
turnover in region in
US$
A
A$1.09=US$1
C
C$1.03=US$1
E
€0.75=US$1
J
87.78¥=US$1
U
<100M 89% 91% 40% 64% 33%
100M-500M 11% 9% 40% 36% 17%
>500M 0% 0% 20% 0% 50%
COMPETITIVENESS IN THE ANIMAL HEALTH INDUSTRY IN 2011 Drivers of competitive success in the short term AUSTRALIA CANADA EUROPE JAPAN USA
Reducing the costs of production and distribution 78% 50% 53% 55% 79%
Exploiting existing products more profitably 100% 64% 77% 91% 79%
Improving the efficiency of sales and marketing activities 89% 86% 35% 73% 79%
Providing new services to meet customer needs 67% 36% 77% 91% 57%
Developing major new products to meet customer needs 44% 64% 41% 55% 50%
Entering new geographic markets 11% 29% 35% 27% 21%
Reducing competition through Mergers and acquisitions 0% 36% 59% 0% 0%
Other:
C: GMP harmonization 0% 7% 0% 0% 0%
Drivers of competitive success in the long term AUSTRALIA CANADA EUROPE JAPAN USA
Developing major new products to meet customer needs 100% 64% 89% 100% 93%
Improving the efficiency of sales and marketing activities 67% 64% 24% 55% 71%
Reducing the costs of production and distribution 67% 21% 41% 82% 64%
Exploiting existing products more profitably 67% 71% 47% 36% 64%
Providing new services to meet customer needs 56% 57% 77% 55% 64%
Entering new geographic markets 44% 21% 47% 27% 29%
Reducing competition through Mergers and acquisitions 0% 43% 41% 9% 7%
Other:
C: simultaneous approvals in Europe, US, Canada 0% 7% 0% 0% 0%
GBS 2011
USA
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159
Government Regulations and contribution to
competitiveness of the industry AUSTRALIA CANADA EUROPE JAPAN USA
Reassured the public about the safety of animal health
products 63% 38% 31% 90% 71%
Provided confidence to invest (added to certainty and
predictability) 25% 62% 19% 20% 50%
Prevented dangerous products entering the market 38% 8% 44% 80% 43%
Provided a stable business environment 25% 46% 50% 40% 43%
Protected investments in innovation 38% 15% 19% 20% 36%
Improved product quality 50% 54% 38% 70% 29%
Improved access to other geographic markets 0% 15% 25% 30% 29%
Created new market segments 13% 0% 19% 0% 21%
Speeded up time-to-market 0% 62% 25% 0% 21%
Triggered innovation in new production processes 13% 8% 13% 10% 0%
Helped redirect resources to innovation 25% 23% 13% 30% 0%
Other:
U: Minor Use-Minor Species - - - - 7%
INNOVATION IN THE ANIMAL HEALTH INDUSTRY IN 2011
Innovation – important factors and obstacles Important factors for successful innovation AUSTRALIA CANADA EUROPE JAPAN USA
Access to creativity & ideas 89% 77% 82% 91% 93%
Minimizing time-to-market 44% 77% 88% 73% 79%
Access to critical skills 44% 46% 41% 82% 50%
Minimizing uncertainty 56% 62% 47% 55% 50%
Controlling development costs 22% 38% 35% 9% 50%
Access to capital 56% 62% 41% 18% 43%
Integrating activity across functions 22% 15% 24% 45% 14%
Access to other markets 0% 23% 6% 18% 14%
The impact of the regulatory environment on the AH
industry’s ability to innovate AUSTRALIA CANADA EUROPE JAPAN USA
Very positive 0% 0% 0% 0% 0%
Positive 10% 18% 0% 28% 7%
Neutral 10% 45% 6.5% 18% 21%
Negative 60% 18% 87% 36% 64%
Very negative 20% 18% 6.5% 18% 7%
Important obstacles to successful innovation AUSTRALIA CANADA EUROPE JAPAN USA
The regulatory framework 89% 62% 63% 64% 86%
Inadequate intellectual property protection (for patents or
commercial data) 33% 31% 63% 18% 50%
Lack of availability of financial resources 44% 23% 25% 27% 50%
Small size of market segments 89% 85% 38% 82% 43%
Closure of the home and/or other geographic markets for
certain products 44% 0% 57% 45% 29%
Negative consumer attitudes 44% 23% 76% 36% 21%
Lack of skilled staff 11% 46% 13% 36% 21%
Internal company organizational or cultural barriers 33% 31% 25% 36% 14%
Poor technology transfer mechanisms between academia and
business 0% 38% 19% 36% 14%
Lack of access to specialist biotechnology companies 11% 8% 0% 18% 14%
GBS 2011
USA
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160
Negative effects of Government Regulations on innovation AUSTRALIA CANADA EUROPE JAPAN USA
Increase costs of development 89% 59% 87% 100% 93%
Create significant uncertainty or unpredictability 89% 70% 53% 73% 86%
Increase development time 78% 59% 73% 82% 79%
Re-direct resources into defensive R&D 33% 49% 87% 55% 43%
Restrict collaborative R&D ventures 0% 0% 0% 0% 21%
Reduce access to new ideas, particularly in biotechnology 11% 12% 0% 18% 14%
Limit the use of innovative marketing methods 11% 10% 7% 9% 14%
Close markets for specific products 33% 42% 47% 18% 14%
Divert management time 33% 52% 13% 27% 0%
Reduce cash flows from existing products 11% 12% 27% 18% 0%
Other:
U: Barrier to import due to USDA/FDA non-tariff barriers to
trade
7%
R&D in the Animal Health Industry
R&D priorities AUSTRALIA CANADA EUROPE JAPAN USA
New products 100% 90% 100% 89% 79%
New active ingredients/antigens 75% 60% 44% 78% 71%
Improved products 63% 80% 69% 56% 64%
New drug or biologicals delivery methods 38% 20% 19% 22% 21%
New production processes 13% 0% 19% 22% 14%
New drug/biologicals development tools 0% 0% 6% 11% 14%
Where new product test data is generated for major
livestock species AUSTRALIA CANADA EUROPE JAPAN USA
Completely or mostly in the region 44% 27% 71% 50% 75%
Core data outside the region and final data in the region 56% 55% 29% 50% 25%
All data outside the region, complying with VICH 0% 18% 0% 0% 0%
Where new product test data is generated for companion
animals AUSTRALIA CANADA EUROPE JAPAN USA
Completely or mostly in the region 11% 11% 71% 40% 83%
Core data outside the region and final data in the region 44% 44% 29% 60% 17%
All data outside the region, complying with VICH 44% 44% 0% 0% 0%
Where new product test data is generated for minor
livestock species AUSTRALIA CANADA EUROPE JAPAN USA
Completely or mostly in the region - 11% 75% 55% 78%
Core data outside the region and final data in the region - 56% 17% 45% 22%
All data outside the region, complying with VICH - 33% 8% 0% 0%
The proportion of R&D carried out in the region that is
contracted out AUSTRALIA CANADA EUROPE JAPAN USA
57% 52% 40% 47% 53%
Expenditure on R&D AUSTRALIA CANADA EUROPE JAPAN USA
% of annual world-wide turnover spent on R&D 7.7% 5.5% 7.7% 6.3% 6.1%
% of world-wide R&D spend undertaken in region <10% 24% 64% 59% 61%
% of world-wide R&D spent on Pharmaceutical R&D 77% 78% 76% 68% 65%
% of world-wide R&D spent on Biologicals R&D 23% 22% 24% 32% 35%
% of world-wide R&D spent on Companion Animals 44% 50% 40% 53% 40%
% of world-wide R&D spent on Production Animals 56% 50% 60% 47% 60%
GBS 2011
USA
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161
Change in regional share of new product R&D since 2006 AUSTRALIA CANADA EUROPE JAPAN USA
Decreased a lot 0% 9% 0% 0% 0%
Decreased slightly 0% 9% 27% 0% 7%
Little change 78% 64% 60% 89% 36%
Increased slightly 11% 9% 13% 11% 43%
Increased a lot 11% 9% 0% 0% 14%
The most important causes of the change in regional share
of new product R&D AUSTRALIA CANADA EUROPE JAPAN USA
Acquisition of companies with development programs 50% 20% 45% 33% 50%
Increased base cost of conducting R&D in region 38% 30% 55% 83% 50%
Deterioration in regulatory environment 63% 0% 18% 33% 33%
Greater availability of CROs/research organizations 25% 20% 36% 50% 25%
Decreased base cost of conducting R&D in region 13% 50% 0% 0% 17%
Less availability of CROs/research organizations 13% 10% 9% 17% 17%
Improved regulatory environment 38% 40% 0% 0% 17%
Moved R&D elsewhere 25% 10% 18% 17% 17%
Divestment of companies with development programs 0% 0% 9% 17% 8%
Other:
A: respondents are domestic companies; compatible
research now in USA; less focus on local needs in R&D
program.
C: new R&D centre, corporate HQ, all R&D ex-Canada, poor
economic environment.
E: local competences and activities; local R&D tax regimes.
J: M&As, R&D all elsewhere
38% 50% 27% 33% 0%
Mandatory Defensive R&D
Mandatory Defensive R&D (MDR&D) as a % of total R&D
costs (average) AUSTRALIA CANADA EUROPE JAPAN USA
14% 26%
GMN
27%;
local
51%
15% 16%
Change in expenditure on MDR&D over the past 5 years AUSTRALIA CANADA EUROPE JAPAN USA
Decreased a lot 0% 0% 0% 0% 0%
Decreased slightly 0% 0% 0% 0% 0%
Little or no change 44% 45% 50% 36% 22%
Increased slightly 44% 0% 44% 45% 64%
Increased a lot 11% 55% 6% 18% 14%
The most important causes of the change in MDR&D spend AUSTRALIA CANADA EUROPE JAPAN USA
Regulator product review activities have increased 100% 80% 93% 38% 93%
Deterioration in regulatory environment 86% 80% 79% 38% 71%
Acquisition of companies with products on the market 57% 80% 43% 38% 50%
Improved regulatory environment 43% 60% 29% 15% 43%
Regulator product review activities have decreased 0% 20% 7% 31% 29%
Divestment of companies 14% 40% 36% 15% 7%
Other:
A: global rather than local opportunities leading to little
change; additional approvals leading to increased costs.
C: Application of new GMP rules for Establishment license
(API testing sites)
29% 20% - - -
GBS 2011
USA
final
162
IMPACTS OF REGULATION ON INNOVATION – TIME, COSTS AND SPECIFIC FACTORS
Impact of regulatory factors on time
The average length of time to gain
registration for a major new FAP in years AUSTRALIA CANADA EUROPE JAPAN USA
Pharmaceuticals 2.3 yrs 2.6 yrs 1.7 yrs 3.2yrs 9.4 yrs
Biologics 2.3 yrs 1.4 yrs 1.5 yrs 2.3yrs
BCL 2.8 yrs
GMO 5.4 yrs
NMS 4.3 yrs
Combi 3.6 yrs
Pesticide-based product 2.8 yrs 2.5 yrs 2.0 yrs 3.0 yrs 6.0 yrs
For USA BCL = Biologics Conditional License; GMO = genetically-modified organism requiring risk assessment; NMS = new
master seed; Combi = new combination of approved master seeds
The average length of time to gain
registration for a major new CAP in years AUSTRALIA CANADA EUROPE JAPAN USA
Pharmaceuticals 1.8 yrs 2.3 yrs 1.5 yrs 2.1 yrs 6.4 yrs
Biologics 1.8 yrs 1.2 yrs 1.5 yrs 2.0 yrs
BCL 2.9 yrs
GMO 5.0 yrs
NMS 4.1 yrs
Combi 2.8 yrs
Pesticide-based product 2.1 yrs 1.7 yrs 1.4 yrs 3.0 yrs 3.5 yrs
The average length of time to gain
registration for a major new [MU]MS in
years
AUSTRALIA CANADA EUROPE JAPAN USA
Pharmaceuticals - 2.0 yrs 1.7 yrs 2.4 yrs 6.0 yrs
Biologics - - 1.5 yrs -
BCL 3.5 yrs
GMO 6.0 yrs
NMS 5.5 yrs
Combi 3.0 yrs
Pesticide-based product - - 2.0 yrs - -
Impact of regulatory factors on the average
length of time needed to develop a major
new product – changes over the past 5
years
AUSTRALIA CANADA EUROPE JAPAN USA
Major livestock species +1.7 yrs +0.1 yrs +1.6 yrs +2.0 yrs +1.4 yrs
Companion animals +1.2 yrs -0.3 yrs +1.1 yrs +1.0 yrs +1.1 yrs
Minor livestock species - 0 yrs +1.7 yrs +0.5 yrs +1.5 yrs
The role of internal processes in any change
in time, as a % (average of those reporting a
time increase)
AUSTRALIA CANADA EUROPE JAPAN USA
FAP 30% 19% 28% 24% 31%
CAP 27% 32% 24% 24% 29%
[MU]MS - 50% 24% - 28%
GBS 2011
USA
final
163
Impact of regulatory factors on costs
The approximate cost of developing a recent
new FAP
AUSTRALIA
A$M
CANADA
C$M
EUROPE
€M
JAPAN
¥100M
USA
US$M
Pharmaceutical product with new active
ingredient 52 1.27 21.6 1.4 38.8
New biological product 84 0.003 15.1 1.18 10.8
New medicinal in-feed product 0.2 0.63 3.7 - 26.7
New pesticide-based product 33 - 35.0 - 14.0
The approximate cost of developing a recent
new CAP
AUSTRALIA
A$M
CANADA
C$M
EUROPE
€M
JAPAN
¥100M
USA
US$M
Pharmaceutical product with new active
ingredient 37 0.26 12.0 1.48 21.6
New biological product 26 0.003 13.8 1.03 11.8
New medicinal in-feed product - - - - -
New pesticide-based product 31 - 24.4 - 22.6
The approximate cost of developing a recent
new [MU]MS product
AUSTRALIA
A$M
CANADA
C$M
EUROPE
€M
JAPAN
¥100M
USA
US$M
Pharmaceutical product with new active
ingredient - - 8.8 0.6 8.0
New biological product - - 6.0 - 3.0
New medicinal in-feed product - - - - 12.0
New pesticide-based product - - 15.0 - -
The approximate cost of establishing a new
species use for an existing FAP
AUSTRALIA
A$M
CANADA
C$M
EUROPE
€M
JAPAN
¥100M
USA
US$M
Pharmaceutical product 0.9 0.54 3.2 0.63 11.3
Biological product 5 0.0015 5.1 1.5 3.4
Medicinal in-feed product 1.3 0.23 1.5 - 10.5
Pesticide-based product 5.4 0.8 3.5 - 4.0
The approximate cost of establishing a new
species use for an existing CAP
AUSTRALIA
A$M
CANADA
C$M
EUROPE
€M
JAPAN
¥100M
USA
US$M
Pharmaceutical product 2.9 0.26 2.1 0.37 6.7
Biological product 5 0.0015 4.0 1.0 4.1
Medicinal in-feed product - - 1.0 - -
Pesticide-based product 6.8 0.5 2.0 - 2.5
The approximate cost of establishing a new
species use for an existing [MU]MS product
AUSTRALIA
A$M
CANADA
C$M
EUROPE
€M
JAPAN
¥100M
USA
US$M
Pharmaceutical product - - 1.7 - 4.0
Biological product - - - - 2.5
Medicinal in-feed product - - 0.5 - 3.0
Pesticide-based product - - 1.5 - -
GBS 2011
USA
final
164
The approximate cost of developing a recent
new FAP in US$M (annual average 2010)
AUSTRALIA
A$1.09=
US$1
CANADA
C$1.03=
US$1
EUROPE
0.75€=
US$1
JAPAN
87.78¥=
US$1
USA
Pharmaceutical product with new active
ingredient 48 1.23 29.0 1.6 38.8
New biological product 77 0.003 20.0 1.3 10.8
New medicinal in-feed product 0.18 0.61 4.9 - 26.7
New pesticide-based product 30 - 46.7 - 14.0
The approximate cost of developing a recent
new CAP in US$M AUSTRALIA CANADA EUROPE JAPAN USA
Pharmaceutical product with new active
ingredient 34 0.25 16.0 1.7 21.6
New biological product 24 0.003 18.4 1.2 11.8
New medicinal in-feed product - - - - -
New pesticide-based product 28 - 32.5 - 22.6
The approximate cost of developing a recent
new [MU]MS product in US$M AUSTRALIA CANADA EUROPE JAPAN USA
Pharmaceutical product with new active
ingredient - - 11.7 0.7 8.0
New biological product - - 8.0 - 3.0
New medicinal in-feed product - - - - 12.0
New pesticide-based product - - 20.0 - -
The approximate cost of establishing a new
species use for an existing FAP in US$M AUSTRALIA CANADA EUROPE JAPAN USA
Pharmaceutical product 0.83 0.52 4.3 0.7 11.3
Biological product 4.6 0.0015 6.8 1.7 3.4
Medicinal in-feed product 1.2 0.23 2.0 - 10.5
Pesticide-based product 5.0 0.8 4.7 - 4.0
The approximate cost of establishing a new
species use for an existing CAP in US$M AUSTRALIA CANADA EUROPE JAPAN USA
Pharmaceutical product 2.7 0.26 2.8 0.4 6.7
Biological product 4.6 0.0015 5.3 1.1 4.1
Medicinal in-feed product - - 1.3 - -
Pesticide-based product 6.2 0.48 2.7 - 2.5
The approximate cost of establishing a new
species use for an existing [MU]MS product in
US$M
AUSTRALIA CANADA EUROPE JAPAN USA
Pharmaceutical product - - 2.3 - 4.0
Biological product - - - - 2.5
Medicinal in-feed product - - 0.7 - 3.0
Pesticide-based product - - 2.0 - -
Impact of regulatory factors on the average
cost of developing and registering a major new
product – changes over the past 5 years
AUSTRALIA CANADA EUROPE JAPAN USA
Major livestock species +36% +7% +28% +19% +25%
Companion animals +23% +13% +29% +11% +22%
Minor livestock species - +9% +7% 0% +12%
GBS 2011
USA
final
165
Specific regulatory processes and impacts on successful innovation
The impact of Government Regulations on the industry’s
ABILITY TO INNOVATE successfully AUSTRALIA CANADA EUROPE JAPAN USA
Marketing Authorizations APVMA
-10%
VDD
+70%
CFIA
+60%
MRP
+13%
DCP
+33%
CP +80%
J-MAFF
+27% +29%
Protection of Intellectual Property-patents -20% +50% +27% +64% +43%
Protection of Intellectual Property-commercial data -20% +10% +27% +55% +50%
Good Laboratory Practice +20% +10% -7% +36% -7%
Biotechnology regulations -10% 0% -20% -9% 0%
Maximum Residue Limits -60% -20% -13% -27% -14%
Antimicrobial Resistance Risk Management/Regulations
(e.g. Antimicrobials) 0% -70% -40% -64% -57%
Environmental Regulations (Ecotox) -40% -90% -80% -27% -43%
Good Manufacturing Practice (J: inc. overseas site
inspection) +40% +20% - 0% -
Good Clinical Practice +40% - - +18% -
Access to regulators for advice/discussion +60% - - -
Electronic submission requirements 0% - - -
Post-marketing monitoring and surveillance requirements -10% - - -
Other (A: inconsistency & lack of clarity in review process) -10% -
Clinical trials material import/movement regulations -60% - - -
Biological material import/movement regulations -70% - - -
Trade Regulations -70% - - -
Pharmaceutical manufacturing and compounding rules -70%
‘Own-Use’ policy/laws -80%
Safety and Risk Assessment (Food Safety Commission) - - - -36% -
Animal Drug User Fee (ADUFA) rules - - - - +29%
Minor Use Minor Species rules - - - - +29%
USDA/APHIS adoption of VICH GCP regulations - - - - 0%
USDA/APHIS Conditional Product Licenses - - - - +43%
USDA/APHIS expanded biometrics standards - - - - -29%
GBS 2011
USA
final
166
Exploitation of Existing Products
Obstacles to the exploitation of existing products AUSTRALIA CANADA EUROPE JAPAN USA
Pressure from competitors (including parallel imports and
generics) 56% 77% 65% 73% 85%
The region’s regulatory framework for
maintenance/extension of licenses 67% 54% 94% 55% 54%
Small size of market segments 78% 69% 59% 73% 54%
Inadequate intellectual property protection (commercial
data & patents) 44% 23% 47% 18% 46%
Legal restrictions on advertising, labels, trademarks and
communication 44% 15% 47% 36% 38%
Negative consumer attitudes 33% 8% 18% 36% 23%
Lack of availability of financial resources 11% 23% 6% 18% 23%
Closure of the national or, for Europe, European market
and/or other geographic markets for certain products 22% 15% 12% 18% 8%
Demand volatility in certain segments 33% 23% 6% 36% 8%
Lack of skilled staff 0% 8% 12% 18% 8%
Other:
C: Importation and use of unapproved drugs/OUI and API
E: Regulations on packaging/labeling make small markets
uneconomic
U: illegal compounding; distribution constraints; and CVB
applying new requirements to existing vaccines
62% 6% 23%
Impacts of government regulations in region on
existing products AUSTRALIA CANADA EUROPE JAPAN USA
Create disproportionate costs for maintaining/extending
marketing authorizations 71% 58% 94% 64% 64%
Increase the cost of production 14% 42% 29% 55% 57%
Divert financial resources away from the development of
new, innovative products 0% 17% 53% 0% 57%
Divert management time 29% 58% 29% 55% 43%
Remove profitable products from the market 43% 17% 47% 45% 36%
Create significant uncertainty 86% 50% 18% 45% 36%
Restrict the extension of existing technologies to
additional species/indications 71% 33% 18% 27% 29%
Increase the cost of distribution and marketing 0% 25% 24% 36% 21%
Limit the use of innovative marketing methods 0% 33% 6% 45% 14%
Fail to protect intellectual property (patents & commercial
data) adequately 43% 42% 47% 9% 14%
Other:
U: restrictions on imports of biologicals 7%
GBS 2011
USA
final
167
Specific regulatory processes and impacts on exploiting existing products
The impact of Government Regulations on the
industry’s ability to exploit existing products
successfully
AUSTRALIA CANADA EUROPE JAPAN USA
License Maintenance APVMA
+13%
VDD
+42%
CFIA
+17%
CP +53%
NP -41%
J-MAFF
+27%
0%
Protection of Intellectual Property–patents +13% +8% +18% +73% +29%
Protection of Intellectual Property–commercial data -38% -8% -6% +73% +43%
Good Manufacturing Practice +38% 0% 0% +9% -7%
Pharmacovigilance/AERP +13% -8% -29% +18% -36%
Manufacturing [Licensing Scheme] Variation/Changes
Rules +13% -17% -24% 0% -43%
Environmental Regulations (Ecotox) -13% -42% -65% -36% -64%
Packaging/Labeling Modification Rules -38% -33% -59% 0% -71%
Maximum Residue Limits -50% -17% -12% -64% -36%
Antimicrobial Resistance Regulations (AMR/Antimicrobial
Resistance Risk) -50% -25% -24% -64% -57%
Import Regulations -13% -41% +27% -
Other:
A: the need for excessive data for even modest product
extensions.
-13% - - - -
Establishment Licensing requirements - -50% - -
Harmonization measures within Europe - - +18% - -
Good Laboratory Practice - - - +18%
Good Clinical Practice - - - 0%
Accreditation of Foreign Manufacturer - - - 0%
Post-Marketing Surveillance rules J-MAFF - - - -9%
Safety and Risk Assessment FSC - - - -45%
Animal Drug User Fee (ADUFA) rules - - - - +14%
Regulations regarding Combination Products - - - - -21%
GBS 2011
USA
final
168
REGULATORY PREDICTABILITY
Regulatory predictability and new products
The current procedure for approving new products A
AVPMA
C
VDD
C
CFIA
E
CP
Expert assessment of applications to approve new
products is based on best available science 56% - - 80%
Expert assessment of applications to approve new
products is firmly rooted in the principles of Benefit:Risk
Assessment
22% - - 67%
Expert assessment of applications to approve new
products is based on a consistent application and
interpretation of Regulatory Guidelines
22% - - 87%
Final approval of new products is based on the expert
assessment of safety, quality, and efficacy 11% - - 73%
The process of approving new products is transparent,
efficient and predictable (C: Submission tracking is
transparent to the sponsor)
11% 42% 43% 80%
The process of Scientific Advice is useful and efficient - - - 47%
Questions sent to companies are based on relevant
science - 58%-83% 75%-100% -
Assessors/officials are easy to contact - 67%-92% 80%-100% -
Responses by assessors/officials to submissions by
companies are timely - 50%-83% 75%-86% -
The current procedure for approving new products J
J-MAFF
J
MHLW
& FSC
U
CVM
U
CVB
U EPA
Expert assessment of applications to approve new
products is based on best available science 73% 86% 50%
Expert assessment of applications to approve new
products is firmly rooted in the principles of Benefit:Risk
Assessment
Quality &
Efficacy
50%
Safety
67% 45% 57% 50%
Expert assessment of applications to approve new
products is based on a consistent application and
interpretation of Regulatory Guidelines
- - 55% 57% 17%
Final approval of new products is based on the expert
assessment of safety, quality, and efficacy 83% - 82% 100% 50%
The process of approving new products is transparent,
efficient and predictable 58% - 55% 43% 0%
The process of Scientific Advice is useful and efficient - - - - -
The “hearing process” within J-MAFF is efficient, timely
and predictable 67% - - - -
GBS 2011
USA
final
169
Regulatory predictability and existing products
The current procedure for maintaining existing products on the
market
A
AVPMA
C
VDD
C
CFIA
E
CP
New tests or reviews are based only on a rigorous science-based
analysis of pharmacovigilance data OR relevant advances in
knowledge of risks based on best available science
56% - - 67%
Expert assessment is based on best available science and risk
assessment 56% - - 92%
The process of reviewing existing products is transparent, efficient
and predictable 22% - - 83%
A clear and transparent division exists between risk assessment
and risk management decisions 11% - - 58%
The current procedure for maintaining existing products on
the market
J J-
MAFF
J
MHLW
& FSC
U
CVM
U
CVB
U
EPA
New tests or reviews are based only on a rigorous science-
based analysis of pharmacovigilance data OR relevant
advances in knowledge of risks based on best available
science
83% - 20% 14% 17%
Expert assessment is based on best available science and risk
assessment: Q = quality; E = efficacy; S = safety
Q & E
83%
S
83% 40% 71% 33%
The process of reviewing existing products is transparent,
efficient and predictable - - - - -
A clear and transparent division exists between risk
assessment and risk management decisions 41% - 40% 57% 67%
REGULATORY QUALITY
Regulatory quality and new products
Approval of new products A
AVPMA
C
VDD
C
CFIA
E
CP
E
DCP/
MRP
E
NP
The caliber of scientific assessors for quality
(purity/potency for biologics) is of the highest
possible competence
89% 58% 71% 78% 75% 40%
The caliber of scientific assessors for safety is of the
highest possible competence 78% 75% 71% 86% 75% 33%
The caliber of scientific assessors for efficacy is of the
highest possible competence 78% 92% 86% 78% 75% 33%
Safety, quality and efficacy guidelines are applied on
the basis of practical and rigorous assessment of risks
and benefits
22% 50% 86% 93% 56% 33%
The process of approving new products is
transparent, efficient and predictable 11% 42% 71% 86% 50% 33%
The regulatory authorities deal with pre-submission
stages helpfully and promptly 44% 67% 71% 86% 69% 13%
The regulatory authorities deal with submission
helpfully and promptly 11% 75% 71% 93% 69% 40%
The regulatory authorities deal with further
interactions promptly 11% 83% 71% 93% 31% 40%
Overall, scientific assessment of risks and benefits is
clear and respected by other regulators
internationally
44% 25% 43% 72% 31% 33%
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Approval of new products J
J-MAFF
J MHLW
& FSC
U
CVM
U
CVB
U
EPA
The caliber of scientific assessors for quality/purity-
potency is of the highest possible competence 92% - 55% 43% 50%
The caliber of scientific assessors for safety is of the
highest possible competence 83% 83% 64% 71% 33%
The caliber of scientific assessors for efficacy is of the
highest possible competence 83% - 82% 71% 50%
Safety, quality/purity and efficacy guidelines are
applied on the basis of practical and rigorous
assessment of risks and benefits
42% 50% 45% 86% 50%
The process of approving new products is
transparent, efficient and predictable 42% 33% 36% 29% 17%
The regulatory authorities deal with pre-submission
stages helpfully and promptly 33% 8% 82% 100% 50%
The regulatory authorities deal with submission
helpfully and promptly 58% 17% 91% 43% 33%
The regulatory authorities deal with further
interactions promptly 50% 17% 91% 86% 33%
Overall, scientific assessment of risks and benefits is
clear and respected by other regulators
internationally
17% 25% 36% 43% 50%
Regulatory quality and existing products
Existing products A AVPMA
The caliber of scientific assessors for safety is of the highest possible competence 89%
The caliber of scientific assessors for quality is of the highest possible competence 78%
Safety, quality and efficacy guidelines are applied on the basis of practical and
rigorous assessment of risks and benefits 56%
Overall, scientific assessment of risks and benefits is clear and respected by other
regulators internationally 44%
The regulatory authorities deal with pre-submission stages helpfully and promptly 44%
The regulatory authorities deal with further interactions promptly 11%
The regulatory authorities deal with submission helpfully and promptly 0%
The caliber of scientific assessors for efficacy is of the highest possible competence -
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REGULATORY REFORM 2006-2011
AUSTRALIA CANADA
VDD EUROPE
JAPAN
J-MAFF USA Regulatory reforms anticipated in
2006 and impacts on innovation A I A I A I A I A I
Remove redundant and overlapping
guidelines 25% 0% - - 71% 29% 10% 0% 27% 45%
Harmonize test requirements
internationally (incl. VICH) 50% 75% 45% 45% 93% 50% 90% 30% 73% 45%
Accept relevant high quality test
results from other sectors, species or
regions
25% 38% 64% 18% 64% 21% 60% 10% 27% 27%
Provide specific incentives to develop
new products for small markets 13% 13% 45% 27% 64% 7% 50% 0% 46% 27%
Use consultation & impact assessment
when developing new guidelines 75% 25% - - 86% 50%
100
% 0% 27% 18%
Implementation of an effective
dispute resolution procedure for
scientific issues
0% 13% - - - - - - 18% 18%
Change test requirements only with
scientific justification 25% 25% 18% 18% 71% 29% 70% 10% 9% 18%
Base test requirements only on best
available science and risk assessment 38% 63% 18% 18% 71% 50% 50% 0% 9% 18%
Adapt test requirements to reflect
small size of markets 0% 0% - - 57% 21% 0% 0% 27% 18%
Tailor test requirements to specific
risks posed by each product 0% 0% 9% 9% 71% 14% 20% 0% 27% 18%
Base quality standards solely on
animal health industry requirements 13% 13% 18% 9% 64% 36% 30% 10% 0% 9%
Remove political involvement in
testing and approval 0% 0% 0% 18% 64% 21% 30% 10% 9% 9%
Harmonize test or guideline
interpretation and implementation
within the region
- - - - 71% 43% - - - -
Outsource the initial dossier review to
a dedicated agency (example NVAL in
2011; PMDA in 2006)
- - - - - - 10% 10% - -
Define and enforce compounding and
manufacturing rules - - 0% 36% - - - - - -
Prohibit importation of animal health
products for "own use" - - 0% 36% - - - - - -
Establish and enforce globally
competitive product review
procedures
- - 36% 27% - - - - - -
Introduce phased reviews of new
innovative products - - 45% 18% - - - - - -
Improve accountability and
transparency of decision-making
processes in regulatory agency/ies
13% 25% - - - - - - - -
Note: A = percentage of companies noting reform as having been achieved by 2011; I = percentage of companies regarding the reform as
high impact (ranks 1-4)
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AUSTRALIA CANADA EUROPE JAPAN USA Regulatory reforms anticipated in 2006 and impacts
on exploiting existing products A I A I A I A I A I
Reduction of restrictions on minor formulation and
manufacturing changes 43% 43% 75% 63% 54% 69% 90% 80% 50% 20%
Basing need for dossier reviews solely on
pharmacovigilance or relevant scientific advances 14% 43% 13% 25% 23% 46% 10% 10% 20% 10%
Provision of justification prior to retrospective
application of new guidelines to well-established
products
- - 25% 38% 8% 23% 20% 60% - -
Providing additional legal protection for data for new
indications or species 43% 14% 13% 38% 31% 23% 10% 10% 10% 10%
Adaptation of packaging and labeling requirements to
small size of markets 57% 14% - - 8% 23% 0% 0% 10% 0%
Basing test requirements only on best available
science and risk assessment 0% 29% 25% 25% 8% 23% 20% 50% 20% 30%
Basing Disease/Antibiotic Resistance rules only on
best available science (e.g. Antimicrobials) 0% 0% 38% 50% 8% 15% 10% 10% 0% 0%
Ensuring that all types of products are subject to full
regulatory approval requirements 29% 43% 13% 25% 15% 0% 20% 10% 0% 10%
Adapting test requirements to small size of markets 0% 14% 25% 38% 0% 0% 20% 20% 0% 0%
Limit Post Marketing Surveillance to product safety
issues only - - - - - - 10% 40%
Establishing a scientific and predictable process for
assessing and using pharmacovigilance data - - 50% 38% - - - - - -
Basing Establishment Licensing reviews on
assessment of relevant risks - - 38% 38% - - - - - -
Requiring all animal health companies to pay user fees 29% 14% - - - - - - 60% 50%
Speeding up the review time by increasing the number
of review/support staff 0% 29% - - - - - - 80% 80%
Ensuring equitable reviews through staff training 0% 14% - - - - - - 30% 30%
Changing the definition of "minor use" in MUMS to
allow an increase in the number of animals treated 0% 0% - - - - - - 10% 0%
Remove restrictions on intra-EU trade in animal health
products - - - - 7% 36% - - - -
Note: A = percentage of companies noting reform as having been achieved by 2011; I = percentage of companies regarding the reform as
high impact (ranks 1-4)
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THE OVERALL IMPACT OF POLITICS AND THE REGULATORY FRAMEWORK ON BUSINESS
Politics, regulation and business
Industry’s experience of political involvement in the regulatory
process AUSTRALIA CANADA EUROPE JAPAN USA
No 0% 45% 12.5% 30% 9%
Yes 100% 55% 87.5% 70% 91%
Problems created by political involvement in the region’s regulatory
process [E4] AUSTRALIA CANADA EUROPE JAPAN USA
Increases the cost of developing new products 67% 14% 27% 89% 54%
Increases the time needed to develop new products 56% 14% 6% 78% 46%
Increases the cost of maintaining existing products 11% 43% 33% 67% 38%
Creates uncertainty for future product development 78% 43% 73% 56% 62%
Prevents approval of new products that are available in other geographic
markets 78% 29% 47% 33% 23%
Restricts the species or indications covered by certain products 11% 29% 27% 22% 8%
Requires products to be removed from markets without scientific
evidence 11% 57% 53% 22% 23%
Allows products to be placed on the market without scientific evidence 11% 29% 7% 11% 8%
Restricts the use of certain product or process technologies 33% 14% 13% 11% 15%
Reduces investment in the development of new technologies 11% 0% 13% 0% 23%
Other (C: Importation of APIs and illegal compounding is still continuing
because of political lobbying in favor of this) - 14% - - -
Business decisions and the impact of regulations
CAPEX Sales and purchases AUSTRALIA CANADA EUROPE JAPAN USA
Buy businesses in Region 43% 20% 50% 55% 42%
Influence of Regulations
No influence 67% 100% 75% 83% 80%
Some influence 0% 0% 25% 17% 20%
Significant influence 33% 0% 0% 0% 0%
Sell or close businesses in Region 14% 0% 13% 0% 17%
Influence of Regulations
No influence 100% 0% 0% 0% 100%
Some influence 0% 0% 50% 0% 0%
Significant influence 0% 0% 50% 0% 0%
Production AUSTRALIA CANADA EUROPE JAPAN USA
Invest in production inside Region 38% 40% 75% 45% 67%
Influence of Regulations
No influence 33% 75% 42% 80% 50%
Some influence 67% 25% 33% 0% 50%
Significant influence 0% 0% 25% 20% 0%
Invest in production outside Region 71% 50% 63% 27% 67%
Influence of Regulations
No influence 100% 80% 50% 100% 63%
Some influence 0% 20% 40% 0% 37%
Significant influence 0% 0% 10% 0% 0%
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R&D location AUSTRALIA CANADA EUROPE JAPAN USA
Locate R&D Facilities inside region 14% 40% 13% 0% 33%
Influence of Regulations
No influence 0% 100% 0% 0% 75%
Some influence 100% 0% 50% 0% 25%
Significant influence 0% 0% 50% 0% 0%
Locate R&D Facilities outside region 29% 40% 31% 9% 25%
Influence of Regulations
No influence 50% 75% 60% 100% 67%
Some influence 20% 25% 20% 0% 33%
Significant influence 50% 0% 20% 0% 0%
MARKETS Market focus AUSTRALIA CANADA EUROPE JAPAN USA
Increase (geographic) market focus in Region 43% 50% 38% 36% 50%
Influence of Regulations
No influence 67% 60% 50% 100% 83%
Some influence 33% 40% 17% 0% 17%
Significant influence 0% 0% 33% 0% 0%
Restrict (geographic) market focus in Region 0% 10% 6% 9% 0%
Influence of Regulations
No influence 0% 100% 0% 100% 0%
Some influence 0% 0% 0% 0% 0%
Significant influence 0% 0% 100% 0% 0%
Product range AUSTRALIA CANADA EUROPE JAPAN USA
Increase product range in Region 100% 50% 63% 64% 67%
Influence of Regulations
No influence 50% 20% 70% 86% 88%
Some influence 25% 60% 20% 0% 12%
Significant influence 25% 20% 10% 14% 0%
Reduce product range in Region 29% 10% 31% 18% 33%
Influence of Regulations
No influence 50% 100% 0% 0% 25%
Some influence 50% 0% 60% 50% 25%
Significant influence 0% 0% 40% 50% 50%
Species and indication AUSTRALIA CANADA EUROPE JAPAN USA
Increase coverage of species or indications in Region 71% 70% 50% 73% 58%
Influence of Regulations
No influence 40% 43% 63% 88% 71%
Some influence 60% 57% 38% 13% 29%
Significant influence 0% 0% 0% 0% 0%
Reduce coverage of species or indications in Region 29% 10% 44% 0% 17%
Influence of Regulations
No influence 50% 0% 29% 0% 0%
Some influence 0% 0% 14% 0% 50%
Significant influence 50% 100% 57% 0% 50%
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Breakthrough products AUSTRALIA CANADA EUROPE JAPAN USA
Introduce more ‘breakthrough’ products in Region 57% 60% 44% 45% 50%
Influence of Regulations
No influence 25% 17% 29% 60% 83%
Some influence 25% 67% 57% 20% 17%
Significant influence 50% 17% 14% 20% 0%
Introduce fewer ‘breakthrough’ products in Region 50% 20% 13% 9% 17%
Influence of Regulations
No influence 25% 50% 0% 0% 0%
Some influence 0% 0% 100% 100% 50%
Significant influence 75% 50% 0% 0% 50%
INNOVATION AND TECHNOLOGIES R&D budgets AUSTRALIA CANADA EUROPE JAPAN USA
Switch R&D budgets to labs inside region 14% 30% 44% 9% 17%
Influence of Regulations
No influence 100% 100% 57% 0% 100%
Some influence 0% 0% 29% 0% 0%
Significant influence 0% 0% 14% 100% 0%
Switch R&D budgets to labs outside Region 25% 30% 38% 9% 25%
Influence of Regulations
No influence 0% 100% 67% 0% 67%
Some influence 50% 0% 17% 100% 33%
Significant influence 50% 0% 17% 0% 0%
Innovation focus AUSTRALIA CANADA EUROPE JAPAN USA
Focus on new technologies in Region 63% 30% 50% 36% 83%
Influence of Regulations
No influence 60% 33% 50% 50% 80%
Some influence 40% 67% 38% 25% 0%
Significant influence 0% 0% 15% 25% 20%
Focus on existing/older technologies in Region 57% 50% 38% 27% 75%
Influence of Regulations
No influence 75% 20% 67% 33% 67%
Some influence 0% 40% 17% 33% 22%
Significant influence 25% 40% 17% 33% 11%
Technology avoidance AUSTRALIA CANADA EUROPE JAPAN USA
Develop certain product technologies in Region 43% 40% 25% 18% 67%
Influence of Regulations
No influence 100% 75% 25% 50% 88%
Some influence 0% 0% 75% 0% 12%
Significant influence 0% 25% 0% 50% 0%
Avoid certain product technologies in Region 63% 10% 44% 9% 58%
Influence of Regulations
No influence 60% 0% 0% 0% 0%
Some influence 40% 0% 71% 0% 43%
Significant influence 0% 100% 29% 100% 57%
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HOPES AND EXPECTATIONS
The industry’s view on the possible impacts of recent or current trends
and changes in regulatory approach
AUSTRALIA CANADA EUROPE JAPAN USA
Trend to wider participation in regulatory process, including public
comment +11% -9% -59% +33% -8%
Increasing requirements for post-marketing surveillance &
pharmacovigilance -33% -17% -47% -58% -92%
Increasing transparency with respect to data disclosure +67% +9% -47% +42% -8%
Increasing globalization of post-marketing surveillance outcomes 0% -9% -41% +8% -67%
Agency strategies on antimicrobials management - - -24% -
The harmonization of the summary of product characteristics (e.g. via
referrals) in Europe - - +6% - -
Moves towards a common technical document +100% +83% +6% +58% +75%
Acceptance of JECFA agreements for residues of non-contentious
molecules +89% +100% +47% +83% +25%
Agency initiatives on ‘Better Regulation’ - - +59% -
CVB
+67%
CVM
+25%
Moves towards electronic submission +67% +83% +59% +75% +67%
Increasing trend to move from a zero-risk approach to a benefit:risk
assessment +56% +100% +59% +92% +83%
Acceptance of notification of minor changes - - - +100% -
Conditional approval of new animal drug (Under Discussion) - - - +83% -
Consultation with NVAL on pre-application of new animal drug including
clinical trial design - - - +83% -
Acceptance of English documents for New Animal Drug Application
without translation into Japanese - - - +75% -
Acceptance of orphan animals drugs in same way as MUMS in the US
regulation - - - +42% -
Expansion of classification of quasi-animal drug (Under Discussion) - - - +42% -
Integration of evaluation offices into National Veterinary Assay
Laboratory only - - - +17% -
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Appendix 4: The 2006 Global Benchmarking Survey USA – a summary
The GBS 2006 was conducted in the USA in a time of regulatory reform instituted by the Animal Drug User
Fee Act (ADUFA) of 2003, implemented in 2004. Social concerns about the safety of pharmaceutical products,
shifts in the pattern of demand, and industry consolidation had all affected the industry, yet the power of
innovation was still recognized, and industry could point to continuing major unmet market needs.
The 2006 survey confirmed the belief by companies in particular strengths of the US approach to regulation –
the basis on high quality science, clearly defined processes, and well-established rules; the openness and
collaborative spirit exemplified by pre-submission test protocols and phased dossier submission. The FDA’s
CVM (Center for Veterinary Medicines) was seen by industry to be responsive to innovators, and to place a
strong emphasis on communication. The introduction of the ADUFA, though too early for the full impact to be
perceived, had provided additional resources for the review of new or improved veterinary pharmaceutical
products by CVM and there were initial signs of progress. Industry also expected to continue to benefit from
the strengths of the CVB (Center for Veterinary Biologics), in USDA APHIS. These were seen as recognition of
the importance of a competitive agriculture sector; an approach to assessing and managing risks that
combined flexibility and prudence; and excellent communication.
Innovation was confirmed as the principal long-term driver of competitiveness and animal health companies
had brought major new products to the US market. However, regulatory-induced increases in time and cost
had accelerated since 2001, especially for pharmaceutical and vaccine products based on new technologies. In
addition, between 1990 and 2005, the US market for animal health products had grown by less than 30%, but
the costs of developing a new livestock or companion animal product had grown, because of regulatory
factors, by over 100%.
Companies in the US Animal Health Industry identified the US regulatory framework and the small size of
market segments as the major obstacles to innovation.
The regulatory framework was regarded as the single biggest obstacle to innovation, as in 2001:
it increased the costs of development (all companies reported this);
it increased development time;
and it created significant uncertainty.
From 2001 to 2006, industry reported that regulatory factors increased the average length of time
needed to develop a major new FAP (product for food-producing animals) by 1.2 years, for CAP
(companion animal products) by 1.3 years and for MS (minor species) products by 0.9 years; for CAP and
MS products, the increase was greater in the USA than in Europe.
Regulatory factors increased the average total cost of developing a FAP by 106% over the period 1991-
2006 and CAP by 96%, with much of the increase in the period 2001-2006 - +32% for FAP, +37% for CAP
and +28% for MS products. The industry estimates for full time and full costs (including capital
expenditure apportionment and failed product amortization) were 8 years and $100M for an innovative
FAP pharmaceutical and 6 years and $80M for an innovative biological FAP, from research to market.
The regulatory framework was identified by industry as the biggest single obstacle to exploiting existing
products more profitably, which was seen as the most important driver of short-term competitiveness,
causing:
diversion of financial resources away from the development of new, innovative products;
significant uncertainty; increased cost of production (57%);
restriction of the extension of existing technologies to additional species/indications;
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and disproportionate costs for renewing marketing authorizations.
Companies were highly confident that assessment of new product applications was based on best
available science in the USA, to levels higher than perceived in Europe, but were more concerned about
how well the principles of risk assessment were used, and about inconsistency in the application and
interpretation of guidelines for new products.
For existing products, companies believed that the overall processes for maintaining existing products
were insufficiently predictable.
In general, industry ranked agencies in the USA below those in other countries for predictability and
timeliness.
Major strategic decisions taken by animal health companies in Europe and the USA were directly affected
by regulations. In the period 2001-2006:
64% of animal health companies in the USA reduced the number of breakthrough products
launched, and regulatory factors had an impact in all cases, continuing the situation reported in 2001,
when 55% of companies had reduced the number of breakthrough products launched, and 80% of
these stated that regulatory factors had some or a significant influence on this decision;
many companies have shifted investment away from the USA, especially in production facilities, but
beginning to be seen in switches of R&D budgets and R&D facilities to locations outside the USA;
nearly two-thirds of animal health companies made a strategic decision to focus on older or existing
technologies, rather than innovative technologies, and regulatory factors played a part in 75% of
these cases, a large increase compared with 1996-2001;
nearly two-thirds of companies avoided certain product technologies and regulatory factors played a
role in all cases;
nearly three-quarters of animal health companies in the USA avoided certain production
technologies and regulatory factors played a role in all of these decisions.
The report concluded that an era of caution had emerged at the FDA, leading to risk aversion, and there
were continuing problems of regulatory quality weaknesses at APHIS. The implementation of ADUFA at
CVM was expected to lead to greater responsiveness by regulators and improvements in the time needed
to assess submissions, but was not seen as the complete answer, which might require legislative or policy
change. Actions had been taken by APHIS to improve CVB’s regulatory quality, to respond to greater
investment in vaccines and greater use of advanced technologies by animal health companies, but there
was concern that further action was needed that might impose extra and unwarranted cost on industry.
