Focus – Emerging markets
Rethinking emerging markets for regulatory affairs
with the creation of a Regulatory Authority Development Index
Authors
Alan Morrison, VP International Regulatory Affairs and
Safety, Amgen Ltd, Cambridge, UK; Romi Singh, Executive
Director, Regulatory Affairs and Safety, Amgen Ltd, Thousand
Oaks, CA, US.
Keywords
Emerging market; Emerging countries; Emerging economies;
Developing countries; BRIC – Brazil, Russia, India and China; G8+5; G-20;
Pharmemerging countries; Regulatory Authority Development Index
(RADI); Drug regulatory authorities (DRAs); Clinical trial authorisation
(CTA); Primary market; Secondary market; Harmonisation.
Abstract
This article discusses the concept of the “emerging market” and the
associated terminology that has evolved historically to what is being
currently used. Countries or regions can be classified as “emerging”
or “developing” according to a raft of different criteria such as
economic status, industrial development, relative level of per capita
income, human development index, etc. From the perspective of the
biopharmaceutical industry, most of the major companies have either
created or reorganised their groups to focus on emerging markets based
on the market size or commercial potential of a region rather than by its
regulatory systems. From a regulatory science perspective, historically
markets are classified as “primary” or “secondary” depending on
the level of data submitted in the registration dossier. The “emerging
markets” label may not be applicable for regulatory sciences. Thus,
an initiative has begun to create a Regulatory Authority Development
Index (RADI) as a measure of the “regulatory sophistication” of
a regulatory authority. This index will be generated through the
measurement of various factors such as transparency, review/approval
efficiency, consistency, clarity, effectiveness, lack of barriers, etc. It is
intended that the RADI will initially be compiled following responses
from TOPRA members to a questionnaire which will be made available
in the near future on the TOPRA website (www.topra.org).
The terms “emerging markets,”1 “emerging economies”2 and “developing
countries”3 are common in today’s vocabulary. The term “emerging market
economy”2 was coined in the early 1980s, representing approximately
80% of the global population in reaction to the Group of Six (G6)4 created
by France in 1975, for the governments of six major economies: France,
Germany, Italy, Japan, the UK and the US. Subsequently, Canada and then
Russia were added to the group to become what is known as the G8.5
Over the past three decades, terms such as emerging countries,
emerging economies, developing countries, BRICs,6 G8+5,7 G-20,8
least developed countries (LDC),9 less developed countries (LEDC),10
most economically developed countries (MEDC),11 newly industrialised
countries (NIC),12 advanced emerging markets13 and even terms such
as pre-emerging markets14 and failed states15 have all been used to
describe the “status” of a country. These terms have been crafted by
various global agencies, including the United Nations (UN), World Bank,
International Monetary Fund (IMF), investment banks (Goldman Sachs,
Morgan Stanley) and academics. It is clear there is no single definition
www.topra.org
that describes emerging markets, and statistics on emerging market
countries contradict each other from report to report, sometimes
within the same organisation.16
The terms emerging market, developing market and developed
country introduce a quite bit of confusion. Does a country’s
classification as emerging, developed or developing refer to its actual
economy or to the extent to which it has financial liquidity; a modern,
developed securities market or industrial infrastructure; or the human
development index? For example, while Russia is part of the advanced
economies of G8, it is part of the BRIC group of emerging countries.
Nevertheless, a few general definitions are appearing. For example,
based on a report by Forbes,17 an emerging market country can be defined
as a society transitioning from a dictatorship to a free market-oriented
economy, with increasing economic freedom, gradual integration within
the global marketplace, an expanding middle class, improving standards
of living and social stability and tolerance, as well as an increase in
cooperation with multilateral institutions. By this definition, an analysis of
all 192 country-members of the UN leads to the selection of 81 countries
that can be categorised as emerging markets. The role of emerging market
countries in the world is now difficult to overestimate.
Similarly, World Bank18 has a methodology for classifying markets as
developed or developing. To arrive at a country’s classification, World
Bank focuses on a country’s economy and, in particular, its relative level
of wealth per capita. Countries with high levels of per capita income are
classified as developed. Meanwhile, those countries with low, middle,
and upper-middle incomes per capita, relative to incomes in other
countries around the globe, are classed as developing, or emerging. For
the most part, the output of this classification system synchronises with
what is expected. The UK, the US, Canada, Western Europe, Australia,
New Zealand and Japan all count as developed markets, as do rapidly
growing and relatively wealthy countries such as Singapore, Saudi
Arabia and South Korea. (Singapore and Saudi Arabia are still classified
as emerging markets under some frameworks, while measures such as
the Morgan Stanley Capital International (MSCI) Emerging Market Index
classify these as developed countries.)19
“Pharmemerging” countries
New definitions continue to arise such as, emerging, newly emerged,
graduated developing countries, to-be emerged, and the list goes on.
Despite the criticism and confusion of placing countries in any of these
categories, our industry seems to have created a category based on its
own criteria. The most common category for the biopharmaceutical
industry is based on the market share and what is generally referred to as
a “pharmemerging” market is based on its sales and growth potential.20
There are 17 countries in this category ranked in three tiers – China in
the first, the other three BRIC countries in the second and about a dozen
in the third category from five continents. The list of “pharmemerging”
countries has grown from eight to 17 in past few years and the list
continues to be dynamic, with more and more countries being added.
From the perspective of the biopharmaceutical industry, the
definition of emerging markets also continues to evolve. Most major
companies have either created or reorganised their groups to focus on
emerging markets based on the market size or market potential rather
than by regulatory systems. However, from a regulatory perspective,
the definition and demarcation of “emerging markets” is rather
straightforward. Generally, from the regulatory affairs perspective, the
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Focus – Emerging markets
Table 1: Comparison of clinical trial authorisation (CTA) requirements in selected emerging markets
Country
Estimated number of
patients for stand-alone
registration studies*
Estimated number of
patients if participated
in Phase II to Phase III
CTA approval
time (months)
Comments, special requirements
China
300
Variable depending on
number of Chinese in
global studies
16–22
Extensive CMC section; CTA similar to full MAA;
extensive quality testing upfront as part of CTA
approval process (see Notes a–c, e, f)
India
200
0–100
6–9
New CMC regulations require more information
than before (see Notes d–f)
S Korea
100
0–50
4–6
Straightforward CTA approval process
Taiwan
0–50
0–20
4–6
Straightforward CTA approval process
Russia
No guidance
No guidance
3–6
Inclusion Russian sites in global development
programme exempt from mandatory local preregistration inspection
*Patients on study drug
a. Number of patients can be negotiated depending on therapeutic area, medical need, etc.
b. Approval times can be reduced through special review mechanisms (eg, orphan drugs)
c. East-Asian countries may use data from other Asian countries (eg, Taiwan could use Japanese data)
d. Biologics approval may take a few months longer
e. Biological samples (eg, full blood, tissues) need special permission
f. First-in-human (FIH)studies not permitted unless molecule “discovered” in country.
world is broken down into “primary markets” and “secondary markets”.
The primary markets are those where the regulatory agencies conduct
complete evaluation of safety, efficacy and quality of the product
(usually the original ICH countries/regions). The secondary markets are
the countries which depend on the approval of the “primary countries”
and generally require a Certificate of Pharmaceutical Product (CPP).
From the content perspective, the primary countries would get the
full content as per the ICH guidelines. For the “secondary countries”,
which are also referred to as the “emerging countries” or “Rest of the
World”, the dossier would be a stripped-down version of the full
Common Technical Document (CTD). The rationale of stripping down
the emerging markets dossier ranges from intellectual property (IP)
concerns to the Drug Regulatory Authorities (DRAs) not requiring the
expansive level of detail. Some DRAs focus their review on the some
components of the marketing authorisation application (MAA) – safety,
efficacy and quality – while some focus just on the quality section while
referring to review/approval in a major ICH country as a basis for their
approval. The past few years have seen an increasing trend towards a
third or hybrid model where some countries have started requiring
local clinical trials and the local clinical data become part of the MAA
package. Historically, the countries that required local clinical trials
were from Asia, but recently countries such as Russia have also started
requiring data from Russian patients to be included in the registration
dossier. With a focus on growth in emerging markets, this has meant
that biopharmaceutical companies have had to rapidly obtain
regulatory expertise, to understand registration requirements and to
plan for clinical trials in these “hybrid model” markets. Table 1 gives
examples of such requirements.
The “estimated number of patients” in Table 1 has little scientific
basis to it and can at times become a barrier for their inclusion in
global development. In China, there is a requirement to include
300 Chinese patients on treatment and at times the study design
Regulatory Rapporteur – Vol 9, No 4, April 2012
or the logistics make this difficult to accomplish. For example, if the
global Phase III study is small, inclusion of ~600 patients from China
(treatment and control) makes it difficult for China to participate
in the global study. Also, the long clinical trial authorisation (CTA)
approval timelines make it logistically challenging to include
countries like China in global studies. Thus, it makes it difficult to
place “emerging markets” in a single category.
While most of the countries require data generated from patients
in-country, to add further complexity to the situation there have also
recently been some significant regional harmonisation activities that
allow for ‘pooling’ of regional data. Some examples of harmonisation
activities include East Asia Harmonisation which includes China, Korea
and Japan. The driver behind this initiative is the need to show that
East Asians are generally similar in their pharmacogenetic disposition,
thus obviating the need for stand-alone studies in individual countries
if the data from the region could be pooled to satisfy the country
regulatory requirements. While this particular regional harmonisation
has not yet been implemented, this is an example of how there is now
amalgamation of emerging markets with those of advanced countries
such as Japan. A complexity of harmonisation efforts is that the
emerging countries cannot be viewed on a stand-alone basis; instead,
they are now viewed on a regional basis. Moreover, some countries
such as Korea and Taiwan are generally considered to be “advanced
economies” and yet they are grouped into “emerging countries”
from a regulatory aspect. Again this speaks for the need both for
excellent, local/regional regulatory expertise and upfront discussion
and dialogue with the agencies concerned when considering the
regulatory strategy, clinical trial programme and overall filing plan.
The definition of emerging markets from a regulatory perspective
continues to be muddied with various “regulatory harmonisation”
activities. The first successful harmonisation effort was the setting up
in 1995 of the European Medicines Agency (EMA), which was mainly
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Focus – Emerging markets
made up of what we would today consider primary countries. However,
in the past few years countries from “Emerging Europe” (eg, Romania,
Bulgaria) have recently joined the EU and, while they come under the
auspices of the EMA, as per the IMF definition, they are still considered
to be “emerging countries” by biopharmaceutical companies from an
economic and sales perspective, if not from a regulatory one.
Another recently observed trend is whether the countries have onesize-fit all regulations for the development of biologics therapeutics.
Historically, the regulatory framework for approval of safety, efficacy and
quality of drugs has its roots in small molecules, or chemical entities. While
only 20% of the drugs on the market today are biologics, it is expected
that with 650 biotechnology medicines in development in 2010 for
more than 100 diseases, one third to a half of the new drugs approved
in 2015 will be biologics.21 Unlike the small-molecule drugs, biologics
generally exhibit high molecular complexity, and may be quite sensitive
to manufacturing process changes. To address these differences, over
the past few years various new ICH guidelines have been developed
specifically for biologics, and major regulatory bodies such as the US FDA
and the EMA have developed separate regulations for these products.
However, changes to the biologics regulations in key emerging markets
are occurring at a varied pace. Some countries have taken a holistic
approach to develop regulations for all biologics, while other countries
have preferred to first develop the biosimilars regulatory system. For
example, Mexico first generated a comprehensive biologics regulatory
framework (which included the removal of local manufacturing
requirements) and then followed up recently with biosimilars guidelines.
Thus, there appear to be differences in how various health authorities in
emerging markets approach biologic/biosimilars guidelines.
Tremendous efforts are being made by DRAs as gatekeepers to ensure
availability of new medicines while maintaining safeguards on quality,
safety and efficacy, and regulatory obligations to protect public health.
All DRAs strive to be viewed as science- and fact-based reviewers. Thus
the “emerging market” label in regulatory sciences could be viewed as
somewhat derogatory. Clearly, from a regulatory perspective, emerging
countries cannot be force-fitted with the existing definitions. Instead of
bundling countries into “primary”, “secondary”, “Rest of the World” or
“emerging countries”, we believe there is a need to create a new definition
for the biopharmaceutical industry. This is the thinking behind the
initiative to establish a Regulatory Authority Development Index (RADI),
which aims to measure the “sophistication” of a region’s regulatory system
on a need-to-know basis for regulatory professionals. “Sophistication”,
however, should not be confused with “complexity”. This would also apply
to regulatory agencies that approve innovative medicines. The factors
defining this index and the information sought will be as follows:
DRA transparency:
l T
imely communication with sponsors
l C
lear identification of the objective of regulation
l D
efined avenues for consultation
l S
haring of assessment reports
Review/approval efficiency:
l P
redictability based on guidelines/regulations
l D
efined timelines
l H
armonisation with regional/ICH guidelines
l R
eferencing another agency’s review (eg, use of CPP)
Consistency:
l M
inimisation or elimination of bureaucratic discretion
l R
eliance on established processes and procedures of the regulatory
system
Clarity:
l O
bjective regulatory decision making
l C
larity of questions
Effectiveness:
l P
eriodic review and update of regulations/guidelines
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l D
istinguish between regulations, standards and guidelines
Support of simultaneous global development:
l A
cceptance of ICHE5 guidelines in lieu of local registration studies
l A
cceptance of batch release data from the source country
l G
MP inspections and mutual recognition of inspections based
on PIC/S
Barriers:
l L
ack of intellectual property protection
l P
oor data protection and exclusivity
l I mport/export of test drugs and biological samples
l L
anguage barriers – translation, interpretation.
A step forward
There are close to 250 countries/autonomous regions in the world,
and not all have regulatory agencies. Some of the countries can be
combined under the ICH Regional Harmonisation Initiative (eg, Gulf
Cooperation Council)22 or the evolving East Asia Harmonization
initiative. The RADI will provide relative listings of the DRAs based
on key measures. This table aims to be a “living document” which
can be added to by regulatory professionals as and when new
information becomes available. It is intended that the RADI will be
updated annually. This measure will hopefully add clarity to the
definition of “emerging markets” for regulatory affairs. Additional
details will be made available in the near future on the TOPRA
website.
References
1World Bank. ‘Emerging Markets – How we Classify Countries’. http://data.
worldbank.org/about/country-classifications.
2Antoine W Van Agtmael. ‘Emerging Markets/Emerging Market Economy’,
International Finance Corporation of World Bank, 1981. www.investopedia.com/
articles/03/073003.asp.
3United Nations Statistics Division – Standard Country and Area Codes
Classifications. http://unstats.un.org/unsd/methods/m49/m49regin.htm.
4G6. wikipedia.org/wiki/1st_G6_summit.
5G8. wikipedia.org/wiki/G8.
6J O’Neill, Goldman Sachs. BRIC N-11, (Next-11), ‘The World Needs Better Economic
BRICs’, 2001. wikipedia.org/wiki/Jim_O’Neill_(economist)#cite_note-1.
7G8+5. wikipedia.org/wiki/G8%2B5.
8G20. wikipedia.org/wiki/G-20_major_economies.
9Least Developed Country (LDC). wikipedia.org/wiki/Least_developed_country.
10Less Developed Country (LEDC). wikipedia.org/wiki/Developing_country.
11Most Economically Developed Countries (MEDC). wikipedia.org/wiki/
Developed_country.
12Paweł Bożyk. ‘Newly Industrialized Countries, Globalization and the
Transformation of Foreign Economic Policy’, s.l., Ashgate Publishing Ltd, 2006.
13Advanced Emerging Markets. www.ftse.com/Indices/FTSE_Emerging_
Markets/index.jsp.
14Pre-Emerging Markets. www.imf.org/external/pubs/ft/weo/faq.htm#q4b.
15Failed State. wikipedia.org/wiki/Failed_state.
16Statistics on Emerging States. ‘IMF Global Financial Stability Report’, Sep 2011.
www.imf.org/external/pubs/ft/gfsr/2011/02/pdf/text.pdf.
17Vladimir Kvint.’Forbes Definition of Emerging Market’, s.l., Forbes, 28 Jan 2008.
18World Bank Classification System. http://data.worldbank.org/about/
country-classifications.
19MSCI Development Index. www.msci.com/products/indices/country_and_
regional/em/.
20Pharmemerging Markets. www.imshealth.com/imshealth/Global/Content/
IMS%20Institute/Documents/Pharmerging_Shakeup.pdf.
21Biologics in 2011. www.giiresearch.com/press/fd216648.shtml.
22Gulf Cooperation Council. wikipedia.org/wiki/Cooperation_Council_for_the_
Arab_States_of_the_Gulf.
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