Excipients that enhances drug solubility is projected to grow at a faster clip

In collaboration with Kirti Vatsa, Senior Research Analyst, Contract Manufacturing and Excipients
Currently, more than 50% of drugs are poorly soluble, prompting pharma companies to find excipients that enhance a drug's solubility.

However, despite poor solubility, excipient market is growing due to increasing demand for drugs. Excipients, which are used in Oral Solid Dosage Form (OSDF) currently constitutes 50-55% of the overall market and is growing at a CAGR of 7-8%.

Most of the growth is coming from the generic business - about 7-8%; whereas branded pharma contributes only 4-6% of the growth, according to Ken Seufert, Managing director, Meggle USA, one of the leading lactose manufacturing company.

"With many drugs coming off patent, the growth is skewed by the increases in the generics industry.  Much of this growth will be the same excipients used by the innovators.  For these drugs, they don't have solubility issues.  The new ones coming through branded pharma companies, however, do have solubility problems," Seufert said.

Even though poor solubility excipients are on a growth trajectory, the markets for enhanced solubility excipients are comparatively growing at a faster clip - i.e., at CAGR of 13-14%, which is expected to last till 2020.

And within solubility enhancers, lipid-based excipients followed by polymeric excipients such as Cellulose (HPMC, HPC), Povidone and PEG are expected to grow even faster.

Given the pace of growth, excipient suppliers are partnering with Contract Manufacturing Organizations (CMOs) for launching new solubility enhancing excipients. For example, in recent times, Dow Chemical partnered with Bend Research - a unit of Capsugel, while BASF formed a partnership with Calatent.

Given the hot trend in solubility enhancing excipients, what should category managers look for?

For starters, prior to entering new therapeutic fields, excipient buyers need to look at suppliers as partners who can help them solve bioavailability issues.

"I think they are going to look for specific technical expertise.  Traditionally when there were solubility problems, the pharma companies simply put the project on hold.  Now, with tightening pipelines, they need the expertise to get the solubility problem solved.  They need to look to the excipient suppliers for the right solution," Seufert said.

Besides treating them as partners, excipient buyers need to be aware of suppliers who can provide expertise in selecting the right excipient that can be paired with a drug's API. Suppliers should also be in a position to offer R&D support to address various formulation challenges that may arise due to introduction of new excipients.

Apart from the problem of science i.e., pairing of the right excipient with the API, procurement managers need not worry about supply situation of solubility enhancing excipients. As with any other market, more players will get involved as and when these excipients become commoditized.

However, the main sourcing challenge is in finding quality excipients. A Other challenges include:

• Having to deal with limited number of suppliers. For example, for cellulose-based excipients a handful of suppliers hold 70-80% of market share.
• High switching cost for existing drugs. On an average, it costs about $100,000 to $200,000 to switch to other substitutes in the U.S.
• Every time the composition of a drug is changed, the pharma company has to get FDA approval, which may take about 2 years.
• Hurdle in switching to an alternate supplier as there are differences between suppliers of the same grade excipient. It takes almost 6 months to 1 year to switch to an alternate supplier.
• High demand from other industries could affect the bargaining power of excipient A buyers.

Notwithstanding sourcing challenges, the new excipients would continue to make inroads at the expense of its poor soluble cousins.