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Facing cost pressures and regulatory changes, pharmaceutical companies address the need for increased functionality by looking to excipients.
The dividing line between excipients and active ingredients is becoming increasingly blurred. The big pharmaceutical companies traditionally have regarded excipients as relatively marginal to the main business of producing blockbusting active ingredients, but this view is changing rapidly under the pressures of an evolving market and increased costs. These trends, combined with new technological developments, mean excipients are being given greater functionality than they ever had before.
Excipients are usually defined as the nonactive ingredients that are mixed with pharmacologically active compounds to form medicines, particularly tablets. The behavior and effectiveness of many drugs are governed in part by excipients. Some ingredients are used to ensure that a preparation has great crushability and therefore is easy to manufacture in tablet and capsule forms. Others give tablets a sweet taste. Still other excipients may ensure slow release of the drug or provide great compressibility so that a pill can be made smaller. Excipients also can improve a drug's general efficacy, safety, stability, and storage. The main categories of excipients include:
Public awareness and safety
The trend toward greater public awareness of food additives and ingredients has led inevitably to greater attention to pharmaceuticals. Consumers are becoming increasingly curious about which substances are used in the manufacture of drugs. The result has been a growing interest in excipients and a drive to establish standards for quality and control.
In the United States, the use of excipients is controlled by the US Pharmacopeial Convention, an independent body that publishes and maintains the United States Pharmacopeia and National Formulary, which contain the monographs (i.e., standards) with which excipients must comply.
In the European Union, a similar system is in place. Excipients must conform to monographs that are published in the European Pharmacopoeia, although US standards are accepted where no European monograph exists. Japan also has its own monographs governing the use of excipients, published in either the Japanese Pharmacopoeia or Japanese Pharmaceutical Excipients.
Significant efforts are being made to harmonize international standards of monographs to pave the way for easy and fast development and approval of excipients, but this goal is still some way off. In the short to medium term, pharmaceutical companies face increased costs resulting from the various testing procedures that must be applied to the same products serving different areas of the world.
Regulatory developments are one of the major agents of change in the excipients industry. The most recent are the guidelines from the International Pharmaceutical Excipients Council (IPEC) and the Pharmaceutical Quality Group (PQG). IPEC is a global organization representing producers, suppliers, and end users of excipients. The body has three divisions in Europe, Japan, and the United States, each of which focuses on local regulations concerning the excipients market, as well as on new research and business practices. PQG is an association that publishes monographs and provides training and information for quality professionals within the pharmaceutical industry.
One of the most important aspects of the guidelines is their focus on "one-up–one-down" traceability. This means that companies at each level of the supply chain must be able to trace where their materials or supplies came from and where their products have ended up. This means pharmaceutical companies will have to find more resources for administration and documentation to achieve this traceablility.
Though the guidelines currently are voluntary, they provide much of the focus of current thinking on manufacturing practices for excipients. Implementing them is a must for companies that wish to stay competitive and not be left behind on safety and public-health grounds. Pharmaceutical companies must implement quality procedures that at least meet, if not exceed, the legal requirements. The guidelines also represent an opportunity to move toward a common set of standards that can be applied to excipients.
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).
Added to this is the fact that pharmaceutical companies are developing fewer blockbuster drugs. This is partly because the market emphasis is moving away from the traditional pharmaceutical model of producing widely used drugs that can treat as many diseases as possible to more targeted, compartmentalized treatments. The process has been accelerated by the failure of some high-profile blockbusters. This leaves many of the big players in the industry facing tougher competition as they are challenged by generics producers that compete much more on cost.
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.
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.
Excipients can enable enhanced drug effectiveness in important ways. They already are used to control the drug's absorption into the body. Disintegrants, for example, allow the tablet to break up into particles that are small enough to enter blood vessels. Excipients can perform many other functions such as improving the safety, stability, and storage of medicines. So, it is no surprise that excipients are becoming a more important aspect in tablet manufacture than they were previously and are even helping innovate drug formulations.
Present and future markets
Excipient production is overwhelmingly based in North America and Europe. These two regions currently account for more than 75% of the market, according to a Frost and Sullivan study (3). Demand is likely to increase as further innovations take hold and excipients are adapted for more uses.
While the European and North American markets are anticipated to continue growing during the next five years, both China and India will be in a position to enter the market during this time. The ability of both countries to combine low-cost manufacturing capability without compromising on quality will certainly have a significant effect on the established markets.
Excipients historically have been overlooked by many in the pharmaceutical industry in favor of active ingredients. In the light of the challenges from generics producers, falling revenues, and the decline of the blockbuster drugs as big revenue generators, however, excipients offer many opportunities to meet some of these challenges. In particular, excipients can be used to cut drug-development costs without adversely affecting the quality of the products.
The line between active ingredients and excipients has therefore become more blurred as the latter increasingly are coming to be seen as functional materials rather than inactive bulking agents. New developments such as the use of natural starch-based products, biotechnological research, and the use of nanotechnology to manipulate small molecules all mean that the range and uses for excipients are likely to increase. Examples in recent years include using mannitol in oral-dispersal tablets and speciality starch grades for slow-release applications.
Excipients' functional characteristics and increasing attractiveness to Big Pharma for cost-reduction reasons make it likely that market conditions for excipients will remain promising for the next few years.
James Taylor is category leader at Cargill Pharma and Personal Care, Bedrijvenlaan, 9, 2800 Mechelen, Belgium, tel. 132 0 15 400 508, fax 132 0 15 400 591, email@example.com
1. "Combating Generics: Pharmaceutical Brand Defense," Cutting Edge Information (Research Triangle Park, NC, 2006) www.cuttingedgeinfo.com/pharmagenerics, accessed Sept. 7, 2006.
2. "IPEC Europe News," International Pharmaceutical Excipients Council-Europe (Nov. 2005), www.ipec-europe.org/docs/pdf/newsletters, accessed Sept. 7, 2006.
3. "Strategic Analysis of Pharmaceutical Excipients Market in Europe," Frost & Sullivan (San Antonio, TX, May 12, 2005) www.frost.com/prod/servlet/frost-home. pag, accessed Sept. 7, 2006.