Decline of the blockbusters

Big pharmaceutical companies no longer can rely in the long term on the blockbusting drugs that traditionally have been their cash cows. This is because the patents on a great number of the more established brands were granted decades ago and are now expiring. As patents expire, generic copies can enter the market. The copies often are produced by smaller, independent companies that can compete on price—particularly because they don't face the same research and development costs as the original producers.

By 2008, more than $80 billion worth of blockbuster drugs will face patent expiration, and hence competition, from producers of generic brands. When the generics hit the market, the established drugs will risk losing more than 80% of their market share, according to a report by business intelligence firm Cutting Edge Information (1).

Costs squeeze

While the increased competition from generics producers is driving down the price of ingredients, and therefore revenues, Big Pharma is being squeezed in other ways. Pressure on the top line is coming from healthcare management organizations and governmental bodies wanting to spend less for their drugs. Meanwhile, the increased costs of regulation and quality-assurance compliance are affecting the bottom line.

This squeeze is forcing excipient companies to readdress their efforts focusing on continually enhancing their good manufacturing practices and developing innovative drug-delivery solutions. Drug manufacturers increasingly are looking toward low-cost natural excipients to replace their high-cost synthetic solutions.

Counterfeits

Counterfeit medicines are another challenge affecting not just excipients, but the pharmaceutical industry as a whole. This phenomenon, which has long affected the developing world, appears to be on the rise in industrialized countries. According to a study carried out by the Council of Europe's ad hoc group on counterfeit medicines, counterfeit medicines in Europe may have a market share as large as 10% (2). Counterfeit medicines are a significant threat to patient safety because they often lack any therapeutic benefit or may contain toxic ingredients. They also undermine trust at a time when pharmaceutical companies are coming under closer public scrutiny than ever before.

Meeting the challenges

One solution to rising costs and shrinking revenues is to invest in raising manufacturing standards. Such investments, however, are not always easy to justify because they do not always provide an immediate return through increased sales or higher prices. Smaller companies will find it more difficult to justify investing significantly in raising standards, which means they are likely to struggle to survive in competing with the largest producers.

Many companies find that using starch-based excipients entails significantly lower costs than using cellulose-based or synthetic excipients and can help lower formulation costs and increase functionality. One example is producing tablets by direct compression using directly compressible binders.

Using excipients with multiple functionalities is another solution. For example, C*PharmGel directly compressible starch (Cargill Pharma and Personal Care, Mechelen, Belgium) can be used as a binder, diluent, and disintegrant is available.

Many companies are starting to look again at pharmaceutical grades of maltodextrin as an alternative to povidone. Meanwhile, certain directly compressible starches on the market such as C*PharmDry (Cargill Pharma and Personal Care, Mechelen, Belgium) offer strong binding capability, thereby allowing for lower inclusion rates and reduced cost of producing the finished tablets.

Compressible starches with good flowability and polyols also can be used to increase production capacity of tablets, and highly compressible polyols enable smaller tablets to be produced—again lowering costs.

The changing definition of excipients

Many pharmaceutical companies, facing rising costs from various sources and declining profit margins, are trying to find ways to cut development costs without compromising the quality of their products. This has led to the increasing use of excipients as a low-cost way of adding further functionality to their preparations without affecting the bottom line.