This document provides an overview of the pharmaceutical formulation landscape as of April 2005. It discusses key aspects of pharmaceutics including the diverse scientific disciplines involved. It outlines market segments and trends driving increased outsourcing and emphasis on formulation. These include industry downsizing, emergence of biologics, and need for specialized expertise. The document also provides estimates for the size of the US formulation and manufacturing services market and maps some of the major competitors.

1. PARIOFORMA
Parioforma
(formerly RM Consulting)
Pharmaceutics Landscape - summary
April 2005
Parioforma Ltd
55 Princes Gate
Exhibition Road
South Kensington
London SW7 2PN
United Kingdom
Tel: +44 (0) 207-225-3538
www.parioforma.com
charles.rowlands@parioforma.com
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2. PARIOFORMA
Pharmaceutics Environment
• Pharmaceutics is that area of biomedical and pharmaceutical sciences that deals with the design and evaluation of
contemporary pharmaceutical dosage forms (or drug delivery systems) so they are safe, effective, and reliable.
• It is much more than a single area of science; it encompasses a spectrum of diverse scientific disciplines
including analytical chemistry, formulation and dosage form development as well as manufacturing (process
development, scale-up and validation).
• The market was defined according to:
– Pre-formulation
– Physical characterization
– Method development
– Method validation
– Dosage form development
– Process validation
– Scale-up
– Clinical supplies manufacture, packaging, labelling and blinding
– Coatings
– Stability studies
– Technology transfer
– Life cycle management
– Regulatory support services
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3. PARIOFORMA
Pharmaceutics Environment
• The dosage form and delivery system used are key components to the successful development of new drugs and
therapies.
• Managing the formulation process without iteration is the secret to reducing development time and the right
decision, made by the right person at the formulations development stage, can have a dramatic impact on the
movement of that product through the rest of the development process – they can either accelerate it or slow it
down.
• In addition, a satisfactory dosage form must be allied with an efficient and cost-effective manufacturing process –
formulations that require new types of equipment for manufacturing will add to a product’s cost and time to
market.
• To avoid later stage re-formulations, process changes and stability failures, drug developers may conduct pre-
formulation studies. Such studies are aimed at providing as much relevant information as possible about the
physical and sometimes chemical properties of a compound before a dosage form is selected - considering these
variables at a very early stage the development of a better formulation. Factors considered include:
– Oxygen sensitivity
– pH stability
– Solvents and co-solvent systems or surfactants
– Ways to enhance the compound’s solubility or stability
– Methods of sterilization
• A critical pre-formulation concern is confirmation that each batch of API has the same crystalline structure, and
that this crystal form remains constant throughout the formulation and life of the drug product.
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Market segments – pharmaceutics services
Off-Patent
Products
NCEs/NMEs Generics
Drug Marketing
Discovery Approval
Line Extensions
Reformulations
On-Patent
Products
DEVELOPMENT & SALES &
MANUFACTURING DISTRIBUTION
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5. PARIOFORMA
Market trends & drivers
• Pharmaceutical industry leaders are downsizing and outsourcing. Their need to focus on drug discovery and large
scale commercial production has transferred a significant amount of their formulation development work into the
hands of smaller, more focused companies with relevant expertise to coordinate and participate in the formulation
and clinical trial supplies operations. In addition, more “virtual” biotechs are being formed.
• However, as the levels of outsourcing in drug development increase, some vendors now anticipate a change in
behaviour – routine outsourcing is expected to go offshore; but more strategic, value-added outsourcing is
expected to remain domestic.
• Demand for outsourcing services is currently geared towards manufacturing – this is in part due to the cyclical
nature of drug research – the industry generally goes in 10 year cycles so that the “fruits” of R&D activity in the
late 1990’s are now in the latter stages of development. The cycle is expected to come back around to early-stage
research over the next few years, after the new drugs now at the tail end of development hit pharmacy shelves.
• A trend supported by the fact that service firms are reporting more outsourcing of the final steps in drug
development – there is increasing demand for manufacturing services particularly for production used for clinical
trials.
• Clinical trial supplies is now a lucrative area, with in excess of 50 companies operating in this sector in North
America (RM top level research – we anticipate that the true number could be in excess of 70+).
• More emphasis is now being placed on formulation – formulation can differentiate a drug in today’s highly
competitive pharmaceutical marketplace, or salvage promising compounds that have been shelved due to
formulation difficulties.
• In addition, the complexity and size of drug molecules and problems in their delivery have grown, providing new
and expanded challenges for formulation scientists. Protein pharmaceuticals and gene delivery methods are
providing additional exciting opportunities.
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6. PARIOFORMA
Market trends & drivers
• The increasing demands and the new challenges facing formulators means that expertise is not always available
in-house – there is now a growing need to look beyond conventional formulations and to suppliers who can
provide the relevant expertise, innovation and novel drug development technologies. Generic companies are also
following this trend - they no longer need the formulation of the name brand drug, they want something better.
• The result has been the emergence of a large number of companies offering formulation services – there are in
excess of 80+ companies operating in North America in this sector not including offshore operators.
• A hot area of formulation development is early stage pre-formulation – this stems from the need to evaluate very
early the “druggable” qualities of a lead compound in order to make “go/no-go” decisions and to kill unlikely
compounds as soon as possible before heavy investments in time and money are made.
• Pre-formulation represents the interface between the drug substance and the drug product - yet on examining
pipeline data, pre-formulation has yet to make an input on reducing late stage failures.
• One of the biggest problems in pre-formulation is solubility – solubility has been the hottest and biggest trend in
formulation over the past few years.
• This trend is being driven in the main by the increasing numbers of Biotechnology products in pipelines – large
molecules tend to have solubility problems.
• However, in addition between 40-50% of traditional drug candidates synthesized each year by pharmaceutical
companies are poorly water-soluble. Most of these otherwise promising compounds are discarded because they
are not sufficiently absorbed or bioavailable and are refractory to traditional formulation approaches.
• Formulation development remains a slow process because much of it still depends on traditional experimentation
approaches, without the benefits of information technology, informatics, or the high-throughput methods used in
drug discovery.
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7. PARIOFORMA
Market trends & drivers
Over the next 5 years a shift from traditional medicine to targeted, biologic solutions is expected – this will have
an associated impact on the pharmaceutics market placing more demand on the need for innovative, functional
formulations.
Traditional High Density Targeted Treatment
 1st line therapy  2nd line therapy  1st & 2nd line therapy
 Usually oral  Specialist administered  Multiple delivery systems
 Mass population  Clinically defined population  Targeted populations
 Mainly NCEs  Mainly biologics  Diagnostics & biologics
 Chronic conditions  Mainly chronic conditions  Chronic & acute conditions
 Mostly symptom relief  Mainly disease modifying  Disease modifying & preventative
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8. PARIOFORMA
Market trends - summary
Market Trend Notes
Formulation development is A more systematic approach is being used – drug developers now realize that cutting corners in the pre-
beginning earlier formulation phase of development may lead to trouble later.
Testing of the API rather To reduce API demand and shorten the time to begin clinical trials for a new compound, some
than a formulated clinical pharmaceutical companies are testing pure API instead of formulated clinical supplies during proof-of-
supplies concept or early Phase I studies .
A drug may undergo reformulation as it progresses through development, especially after Phase I.
Increasing requests for
For an existing drug product, pharmaceutical companies may request reformulation to change the route
reformulation
of administration.
The pace of blockbuster launches and NCE approvals has slackened in recent years.
Increasing emphasis on Big Pharma now realize the importance of maximizing their ROI of existing products through managing
lifecycle management and extending the lifecycles of those products nearing the end of their patent protection – protecting
against generic competition for as long as possible.
Outsourcing formulation Outsourcing formulation development is becoming increasingly common even among companies that
development is increasing employ their own formulation scientists.
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9. PARIOFORMA
Market trends - summary
Market Trend Notes
A common solution for start-ups and virtuals, but service providers note that Big Pharma are
“Complete packages” on
increasingly requesting “complete package” drug solutions including formulation, analytical
the increase
development and in some cases manufacturing and packaging.
Drug molecules have grown in complexity and size – e.g. protein therapeutics.
Complex formulation
In addition, formulators are being asked to develop more novel or more demanding dosage forms to
challenges
improve marketability or to compete with other products.
Increasing numbers of Start-up companies, generics companies, biotech, virtual companies, and university research groups are
small pharmaceutical firms also active in seeking formulation solutions.
The number of companies already in or trying to enter the contract service business is at an all-time
The number of contract
high.
service providers is
These range from full service contractual organizations to specialized fee-for-service firms, each
increasing building its own unique selling proposition in formulation-development capabilities.
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Market sizing assumptions
• In 2004, R&D spending in the US was estimated at US$30.6 billion§. A further US$8.2 billion was spent abroad,
but this was not included in the market sizing exercise.
• When factoring in research and development by American biotechnology firms, an estimated $41.1 billion was
invested in R&D in the US in 2004§.
Outsourced Outsourced
~ $0.7 – ~ $0.7 –
$0.8 bn $0.9 bn
Dosage Form Process
Development & Development &
Stability Testing Quality Control
$3.4 bn $3.7 bn
Typically, 8.2% of R&D spending is on Typically, 9.1% of R&D spending is on
dosage formulation and stability testing Process development and quality control
including analytical support§ including analytical support§
§ PhRMA
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11. PARIOFORMA
Competitor landscape – US 2005 Fisher Clinical Services
CTS
Dow Chemical Company CLINICAL TRIAL Cangene Corp
SUPPLY
API CONTRACT
MANUFACTURERS MANUFACTURERS DSM
Diosynth Patheon
Emerson Resources FluidAir/
CONTRACT McKesson
PharmaPro
MANUFACTURING
PACKERS
FORMULATORS ProClinical
KPT
West Pharma Formatech Abbott Laboratories
PHARMACOS/
TECHNOLOGY COMPANIES GENERICS
Drug Delivery Dr Reddys
With excess capacity
PHARMA-
Baxter BioPharma Quality
CEUTICS
Chemical Labs
Charles River
DEVELOPMENT TESTING Metrics Inc
CONTRACT
PPD CONTRACT RESEARCH LABORATORIES
ORGANIZATIONS Exygen
Quintiles
Newport
SFBC ACADEMICS ABC Scientific
The
Xenobiotic
UP
Pharmaceutics Northview
Whitehouse
M Marketplace Laboratories Biosciences
University
SSCI
of Iowa
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