Gil Y. Roth03.03.10
Solid Dosage Manufacturing Trends
A rebound for CMOs and equipment makers?
By Gil Y. Roth
Nearly every major pharma company has taken to calling itself a “biopharma” lately, but oral solid dosage forms still make up a huge share of the pharma market. We spoke to several contract manufacturers, equipment makers and process engineering companies to find out how the solid dosage manufacturing market has fared in the global financial collapse. Mirroring the broader market, several equipment companies said that they had an excellent 2008, but saw a significant reduction in capital spending in 2009. What does 2010 hold?
Photo courtesy of GEA Niro |
“I see an uptick in interest,” said Martin Hack, vice president and general manager of L.B. Bohle, a manufacturer of equipment for process engineering in granulation and coating. “The inquiries for projects is definitely increasing. Everything has been on hold because of the economy, and lots of organizations are being careful with capital. Still, we’re optimistic that the next six to 12 months will show signs of improvement and renewed spending.”
A representative from another engineering company referred to the past year as “a significant dry spell,” adding that business remained down, but was showing some signs of life, particularly overseas. “There’s a lot of caution in terms of capital expenditure, but we see purse strings starting to loosen, especially for new or unique technology that provides a clear benefit, be it in terms of immediate savings, time, or unique applications.”
A third equipment provider noted his company’s customers are “buying again,” and that one of the key areas of focus has been containment systems: “We’re seeing continued interest in ‘containment’ style capsule fillers. As products increase in potency and as the long-term effects of exposure to traditional products become more apparent, the need to protect workers will become more of a front line issue. Containment systems effectively do this with the benefit of not requiring gowning as seen in cleanroom operations, which translates to better ergonomics and productivity.”
Mr. Hack, whose company will be displaying its Bohle Tablet Coater (BTC) at Interphex in April, explained, “Cost is becoming more important to everybody. Now they’re starting to look at the operational cost of equipment, not just the upfront capital cost.” He noted that CMOs “can be more diligent than their big pharma counterparts when it comes toROI and questions about what equipment will cost to run. They’re bidding contracts to companies and have to know their cost per tablet so they can adjust their bid price.”
Similarly, he noted, generic marketers are very focused on the total cost equation, not simply the immediate outlay for new equipment or processing trains. He pointed out that those two groups — generics marketers and CMOs — were showing increased levels of interest in his company’s machinery.
He pointed out that the BTC is engineered to reduce process time and increase coating efficiency. “If you’re running traditional coaters that have 85-90% efficiency, that means you’re losing 10-15% of the solid material you’re using to coat. That material could just be low-cost, if it’s a cosmetic coat or a color or clearcoat. But more and more these materials are time-release coatings or otherwise functional coatings, and the cost per kilo of those solids can be extremely expensive. If you can save an additional 10% of that material with a coating efficiency of 96-98%, that equipment is adding to its value right there.” Shorter process times, similarly, allow for more runs, while less waste equals less cleanup time and less environmental impact.
Another technology provider has seen growth from a different client base. “Nutraceuticals manufacturers are definitely feeling pressure to buy more complex, pharma-like machinery,” said a representative of this company. “There are two reasons for this. In the first place, customers like to see a GMP rating of some sort on the equipment, and many of the manufacturers in that field need to improve the quality of their filling systems. In the second, they need to either be prepared to comply with future government regulation, or prevent regulation by voluntarily increasing their production standards.”
On the CMO side of the field, several providers said they too had a rough 2009, and gave mixed signals about the year ahead. Several CMOs and CDMOs we spoke to said that they’re seeing business flow back, especially from large pharma companies.
One remarked, “In response to the cost-cramming of the current administration and Congress — and who knows how healthcare reform will turn out? —a lot of big pharma companies have been making the move to contract out pieces of their portfolios, particularly specialized products with smaller runs.”
However, another provider pointed out that an ongoing trend in dosage forms has been putting a crimp in the solid dosage manufacturing business. “As they become biologic-centric, the global companies are focused on steriles,” said the CMO. “The smaller players and startups, which comprise two-thirds of the development pipeline, have been walloped by capital constraints, so many of the oral solids they had in the pipeline are on hold. We haven’t seen enough signs yet of a thaw in that side of the market. If it comes, we’ll see a rebound in development — and commercialization, I hope! — of new oral solids.”
Oliver Mueller, executive vice-president Glatt Pharmaceutical Services, pointed out two key drivers for his company’s clients: “First, lifecycle management (LCM) has grown in importance to both large and small pharma companies. Pipelines haven’t yielded as many new drugs as they expected, so companies are turning to different dosage forms to make up part of the gap. This includes extended release formulas, orally disintegrating tablets and other innovations. Second, we see a trend for combining existing drugs — like Pfizer’s Caduet, which combines Lipitor and Norvasc — to create new doses with enhanced efficacy.”
He added “New technologies and development services are crucial in this field. As drug companies are working to cycle their products, they are looking for IP that applies to their product and helps create barriers to entry for competitors, like modified release formulations.”
Glatt Pharma’s parent company, Glatt GmbH, began in fluid bed technology and is a major supplier of solid processing equipment. In that context, Mr. Mueller said, “We’re seeing improved activity since spring of 2009.”
A wild card is the impact of industry mega-mergers. With Pfizer-Wyeth, Merck-Schering-Plough and Roche-Genentech staff and facility reductions looming, both CMOs and equipment makers are holding their breath. It’s a given that all three of those companies will reduce their manufacturing footprint, and that’s going to lead to surplus equipment and surplus capacity on the market.
“Everyone has a wait-and-see attitude right now,” said one equipment maker. “We’ve already seen announcements of science and management cuts from these mergers, but the manufacturing shutdowns can’t be far behind.”
A CMO remarked, “Look at Puerto Rico. With the Warner-Lambert, Pharmacia and Wyeth buys, Pfizer gained a bunch of sites on the island; they’re going to have to cut down those numbers.”
We spoke to another CMO who floated the idea of buying redundant mega-merger facilities on the cheap with a supply agreement from the seller, but we’re hoping that the industry has evolved to the point where that doesn’t become a “growth strategy” again.
One CMO focusing on internal growth is Patheon. In January, the company announced that it was building a pharma development center at its manufacturing site in Bourgoin-Jallieu, France. The move, according to the company, would allow the site to offer a full range of solid dose services as part of its Pharmaceutical Development Services (PDS) business.
“We currently provide our customers with solid dose Phase III and commercial supply from our facilities in North America. With this expansion we will offer the same services in Europe by the end of 2010,” said Wes Wheeler, Patheon’s chief executive officer and president. “The investment reinforces our commitment to provide our customers with a full range of product development services — from preclinical through late-phase stages, on to commercialization.”
The expansion was driven by several considerations, including geography, Mr. Wheeler noted. “Since Patheon established its Tokyo office in 2008, we have received numerous enquires from Japanese clients wishing to supply global markets from a European base, which the new facility will achieve pending full FDA approval,” he commented, noting that a number of clients from both Europe and Japan were particularly interested in high-potency capabilities at the site.
He also contended that the expansion at Bourgoin was done in recognition that clients have endured funding constraints. He remarked, “We identified that, by providing a one-stop-shop capability, significant savings can be achieved, particularly on technology transfer costs.” The facility will be operational before end of 2010.
As one equipment maker put it, “Interest from both in-house and CMO customers is rebounding, but it does seem as though there has been more contract work than in the past. This keys in to the idea of flexibility; manufacturers find that the most flexible solution is often to let someone else do it. Contract manufacturers are also taking on the role of providing higher end solutions (containment) and some of the lab/clinical work, pointing toward big pharma’s reluctance to invest in specialty equipment for product lines that they aren’t 100% sure of.”