Sizing Up the Global Market for Excipients - Pharmaceutical Technology

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PharmTech Europe

Sizing Up the Global Market for Excipients
The global excipients market shows moderate growth, increased consolidation, and expansion activity in emerging markets and select product areas.

Pharmaceutical Technology
Volume 35, Issue 10, pp. 62-68

Company deals and expansions

Like the pharmaceutical industry as a whole and within specific sectors of the pharmaceutical ingredient supply chain, the excipient market has seen a fair amount of mergers and acquisitions (M&A) in 2010 and 2011. In some instances, this M&A activity has been part of larger acquisitions among specialty-chemical and fine-chemical companies and other buyers. The deals also have included targeted product-line acquisitions as well as specific acquisitions by Western excipient manufacturers to increase their manufacturing, technical-service capabilities, and product offerings in emerging markets. Additionally, excipient manufacturers have partnered through alliances or other agreements to expand their product reach. Along with this deal-making, some excipient manufacturers also are expanding production capacity for select products.

Lubrizol. One of the largest and most recent deals occurred in September 2011, when the conglomerate Berkshire Hathaway completed its $9.7-billion acquisition of the specialty-chemical company Lubrizol, which included the company's excipients business. Lubrizol's excipient business includes excipients used in solid, semisolid, and liquid dosage forms for oral and topical formulations. For oral solid dosage forms, key products are Carbopol polymers and Noveon polycarbophil, high molecular-weight polymers of acrylic acid, which are chemically crosslinked with polyalkenyl alcohols or divinyl glycol. These polymers are used in several commercial tablet forms, including swallowable (peroral), chewable, buccal, and sublingual tablets (2). With the closing of the deal, Lubrizol became a wholly owned subsidiary of Berkshire Hathaway, and Lubrizol's international headquarters will remain in Wickliffe, Ohio, according to a Sept. 16, 2011, Berkshire Hathaway press release.

Berkshire Hathaway's acquisition of Lubrizol follows recent investment by Lubrizol in India and the United States. In November 2010, Lubrizol opened a new regional applications and business center in Mumbai to support its advanced materials business segment, which includes pharmaceutical ingredients and other consumer and industrial products. The center includes a development and applications laboratory, which includes development, formulation, and applications-testing capabilities in multiple personal-care and coatings applications as well as a pharmaceutical application development center.

In May 2010, Lubrizol Advanced Materials, a business segment of Lubrizol, announced an investment of approximately $40 million in its Calvert City, Kentucky, manufacturing facility. The facility specializes in the production of Carbopol polymers, which are used in pharmaceuticals and personal care and home care products.

Ashland. Another recent large deal was the $3.2-billion acquisition of International Specialty Products (ISP) by the specialty-chemical company Ashland. The deal was completed in late August 2011. ISP is being integrated into Ashland Aqualon Functional Ingredients commercial unit, which was renamed as Ashland Specialty Ingredients following the acquisition. The deal combines the companies' product portfolio in water-soluble polymers and functional ingredients, inclusive of pharmaceutical excipients.

Ashland Aqualon Functional Ingredients offers functional excipients for solid, semisolid, and liquid dosage forms with a range of cellulosic products: hydroxypropylcellulose, methylcellulose, hypromellose, hydroxyethylcellulose, ethylcellulose, and carboxymethylcellulose. Ashland formed the Ashland Aqualon Functional Ingredients business following its 2008 acquisition of the US-based specialty-chemical company Hercules. With the acquisition of ISP, Ashland gained additional excipients (e.g., crospovidone used as tablet disintegrants as well as povidone and copovidone used as binders). Ashland also acquired process technology for drug solubilization (e.g., spray drying and hot-melt extrusion) and related ingredient supply for drug solubilization (e.g., cyclodextrins and polymers for solid dispersions) as well as coating technology for immediate and delayed-release formulations.

BASF. In December 2010, BASF completed its acquisition of Cognis, a specialty chemical company to the food, home care, personal care, and pharmaceutical industries, including excipients. The equity purchase price was €700 million ($958 million). Including net financial debt and pension obligations, the enterprise value of the transaction was €3.1 billion ($4.2 billion). Completion of the structural integration of Cognis is targeted for the end of 2011, according to a Dec. 10, 2010, BASF press release.

From a strategic perspective, although BASF's acquisition of Cognis was centered on increasing its position in functional ingredients in nonpharmaceutical markets, such as food, personal care, and home care, the company gained additional product offerings in excipients. For example, some products of the former Cognis businesses include oleochemical-derived pharmaceutical-grade excipients, such as specialty esters, fatty alcohols, ethoxylates, hard fats, stearic acids, mono- and triglycerides, and castor-oil derivatives, which are used in topical, oral, and parenteral formulations. Other product offerings from the former Cognis businesses include chitosan, a natural cationic polymer (polysaccharide), which is used in dermatology, medical applications for wound healing, tissue engineering, and as a drug-delivery agent in pharmaceutical formulations, and D-alpha tocopheryl polyethylene glycol 1000 succinate (TPGS), a water-soluble derivative of vitamin E used to enhance the bioavailability of poorly soluble actives.


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