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Cost issues compel drug development to be more financially viable
The global pharmaceutical industry is currently in a state of flux according to Frost & Sullivan.
Excipients identified as cost-reduction opportunity
The global pharmaceutical industry is currently in a state of flux according to Frost & Sullivan. Imminent patent expiries, growing generic competition and drug failures are combining to create significant cost issues for pharmaceutical companies, compelling them to cut expenditure on product development without compromising on quality. In such a scenario, excipients offer a welcome opportunity to add better functionality to products at lower costs.
Pharmaceutical companies are increasingly realising the importance of excipients in drug efficacy, safety, stability and storage. Although traditionally, little attention has been paid to excipients, companies are expressing greater interest in them for their cost-saving potential in drug development.
Global growth consulting company Frost & Sullivan estimates the total pharmaceutical excipients market revenue to be worth USD 1.13 billion in 2004. The market is expected to grow at a compound annual growth rate of 5.3% between 2004 and 2008, representing revenues of USD 1.39 billion in 2008. One of the major challenges facing pharma companies is that their profit margins do not reflect the constantly increasing investment in drug development. On the one hand, this factor has acted as a key driver for pharmaceutical companies, growing interest in cost-effective excipients.
"The low returns on investment coupled with various regulatory issues account for the dwindling focus on innovation in the pharmaceutical industry," remarked Frost & Sullivan Industry Analyst Himanshu Parmar. "However, new technological advancements and novel drug applications in the pharmaceutical industry are likely to drive the excipients market, as well as heightened innovation in this sector."
While Europe and North America currently contribute to approximately 75% of the global excipients market (with Europe accounting for about half of this share) the entry of manufacturers with substantial cost advantages is posing a challenge to European pharmaceutical excipients manufacturers. For instance, India and China are poised to enter the excipients market in the next four to five years.
