Excipients Slow and Steady But Not Winning the Race

27 July 1998 00:00  [Source: ICB Americas]

By Feliza Mirasol

Despite a bullish pharmaceuticals industry, the excipients market is growing at a sedate pace. The push for new drugs offers some opportunity for excipients, but analysts say the economics for developing new compounds are unfavorable.

A major hindrance to developing new excipients is their cost. Excipient manufacturers face the problem of not seeing profits for new compounds before patents expire and competition and price erosion weaken the market.

The price for excipients is measured at a dollar per kilogram rather than a dollar for a much smaller unit of an active ingredient, only a few milligrams of which may be used in a product.

The launch of an excipient does not gain immediate access to the final drug market, and pharmaceutical manufacturers, not patients, are the target customers of most excipients. As a result, the products face a sizable lag time between their launch and commercial sales of their end products.

The International Pharmaceutical Excipients Council (IPEC) estimates the worldwide market for excipients at just under $2 billion, with the US accounting for $700 million to $800 million.

Very few excipients are primarily made as pharmaceutical products, notes Louis Blecher, chairman of IPEC-Americas. Pharmaceutical excipients are becoming a niche use, he says, as most excipients go into foods and food additives.

In Mr. Blecher's opinion, the excipients market should be growing in tandem with the pharmaceutical industry because drugs' active ingredients cannot be delivered without them. However, FDA does not approve excipients by themselves. Although new compounds are needed "there aren't a lot of people out there looking," he says. "If you come up with a new compound, you have to get someone to put it in a new drug application. That's the only way FDA will look at it."

Kline & Company, the Fairfield, N.J.-based business consultancy, adds that the excipients industry is complex and fragmented. "In terms of growth, this has not been a market where, traditionally, new excipients have been developed," says Ann Armour, an associate with Kline.

The size of the market depends on how players define it. In general terms, excipients include everything other than active ingredients.

Kline defines excipients as functional additives that play a significant role in the manufacturing process for a pharmacological dosage and in determining its final performance characteristics. Based on this definition, Kline rates the US market at $800 million per year.

FMC Corporation, a leader in pharmaceutical excipients, agrees that the industry's growth is not high. The market is healthy, but it is hardly growing at the double-digit level of the pharmaceuticals industry, says Lawana Dumas, FMC's director of marketing.

FMC, which manufactures excipients in Newark, Del., and Cork, Ireland, is seeing regional differences in the growth of excipient sales in the US and other countries. Consumption is stronger in the US because price controls and tighter pharmaceutical regulations restrict excipient use in other markets, such as Europe and Japan. As a result, those regions are facing volume declines.

The majority of FMC's excipients sales are in the microcrystalline cellulose (MCC) area, in which few companies have sales at FMC's level, according to Ms. Dumas. She notes, however, that no single excipient manufacturer has a leading position in multiple categories.

FMC is identifying needs for new excipients in the marketplace as a way of working with its customers, though its newer products are still in the developmental stage.

Penwest Pharmaceuticals Company (PPC, formerly Mendell) is another major player in the global excipients market. It has facilities in Cedar Rapids, Iowa, and Nastola, Finland.

"With the price constraints and restrictions on prescribing [drugs], it is difficult to estimate whether [excipients] are growing, contracting or staying the same," notes a company spokesperson.

PPC deals mainly with tablet excipients, which represent about 80 percent of all dosage forms manufactured, according to the spokesperson. One of its newer products, Prosolv SMCC, is a combination of MCC and colloidal silicon dioxide which enhances particle properties and improves process efficiencies.

International Specialty Products (ISP) Inc. is also a leading producer. Its main excipients are in the povidone family: Plasdone S-630, Plasdone K, Polyplasdone, Pharmasolv and Gantrez. Celex 101, a newer product, is a brand of MCC for direct compression tableting.

Other prominent excipients manufacturers include Hercules Inc.'s Aqualon Division, BF Goodrich, ColorCon, Dow Chemical Company, Eastman Chemical Company, Particle Dynamics, RhÖne-Poulenc Chemicals, Rohm Tech, Shin-Etsu Chemical and Union Carbide.

Leading excipients include magnesium stearate, lactose, starch, MCC, silicon and titanium dioxide, stearic acid and povidones.

AMGEN Inc., based in Thousand Oaks, Calif. posted a 14 percent increase in earnings per share during the second quarter and an 8 percent increase in net income to $216 million. Total product sales reached $611 million, an 8 percent increase.

Epogen (epoetin alfa) sales rose 14 percent to $337 million, up from $295 million last year, while Neupogen (filgrastim) stayed flat at $271 million in sales. Infergen (interferon alfacon-1) contributed $4 million to sales in the second quarter.

CISAPRIDE--Janssen Pharmaceutica N.V., a wholly owned subsidiary of Johnson & Johnson, has received exclusive worldwide rights to Sepracor Inc.'s norcisapride, an isomer of Propulsid (cisapride), Janssen's treatment for nocturnal heartburn caused by gastroesophageal reflux disease.

Janssen will pay Sepracor royalties on product sales beginning upon launch. Royalties will grow as milestones and sales volumes are achieved. Under certain circumstances, Sepracor may also co-promote the product in the pediatric market.

CREATINE--Waukegan, Ill.-based Pfanstiehl Laboratories is introducing a new creatine monohydrate-sucrose aggregate that provides a directly compressible and instantly soluble compound.

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