Potency, generics and biopharmaceuticals drive ingredient growth but supply chain security and GMP compliance remain major concerns in developing regions. Susan Birks reports
The global active pharmaceutical ingredient (API) market is expected to grow at a CAGR of more than 8.0% from 2014 to 2019, according to Research and Markets.1 Factors such as expiry of patented drugs and the shift towards the use of lower cost API drugs due to economic recession are driving growth in the API market. In addition, the rising use of highly potent actives in targeted therapies is boosting growth. However, the market faces challenges of transparency and increased market fragmentation, the report says.
North America still accounts for the largest share of the API market, followed by the Asia-Pacific sector, then Europe, but Asia is growing at the highest CAGR, according to the report. Key players in the API market include Sandoz-Lek-Biochemie (Switzerland), GlaxoSmithKline Pharmaceuticals (India), AstraZeneca (UK), Novartis (Switzerland), Pfizer (US) and F. Hoffmann-La Roche (Switzerland).
The report also estimates that US demand for excipients will rise 4.3% p.a. to US$2bn in 2018. In volume terms, demand is expected to grow 1.9% annually to 900 million lbs over the same period. While continued growth in pharmaceutical output will be the primary driver of increases in excipient demand, gains will accelerate as excipients play a larger role in bringing additional value to products by enhancing properties such as controlled release or the improved absorption of APIs.
Trends in dosage formulation will have a strong influence on excipient demand. The report predicts output of parenteral preparations will rise at a strong pace to 2018, supporting demand for suspension agents and preservatives. Solvents are also expected to benefit from increased shipments of parenteral drugs, although gains will be limited by the continued decline in glycerin prices due to oversupply, the report says.
Oral formulations such as delayed- and extended-release tablets and capsules and dissolving tablets are expected to take a greater market share, increasing demand for binders and disintegrants
Oral preparations are the largest category and thus tend to require greater volumes of excipients than other dosage types. Shipments of oral pharmaceuticals are forecast to rise at a faster pace than seen in the 2008–2013 period, accelerating demand for fillers, binders, coatings, flavouring agents, capsules and disintegrants. In addition, oral formulations such as delayed- and extended-release tablets and capsules and dissolving tablets are expected to take a greater market share, increasing demand for binders and disintegrants.
The main trend in formulations is increased dependence on excipient blends that can add value to products by differentiating them from competitive products, and by optimising the production process. More value-added blends are being formulated for use in specific manufacturing processes such as direct compression or wet granulation, and optimised for performance characteristics such as delayed- or extended-release in oral tablets. As generic products increase their market share, product differentiation will become increasingly important, particularly as consumers take a more active role in choosing their drugs from a range of products containing the same APIs.
The report also says that product versatility will be a key factor affecting excipient demand in future. Polymers, including cellulose derivatives, povidone, starch, polyethylene glycol, acrylic polymers and natural gums, are expected to benefit from this trend, as many of these products can function in multiple applications and are easily formulated with other excipients. These favourable characteristics will serve to offset the higher prices associated with some polymers.
In Asia, China is one of the largest excipient producers, and according to the China Pharmaceutical Excipients Industry Report 2014–20172, the top 10 pharma excipients in China ranked by market size are: gelatin capsules, sucrose, starch, film-coated powder, 1,2-propylene glycol, polyvinylpyrrolidone (PVP), hydroxypropyl methyl cellulose (HPMC), micro-crystalline cellulose, hydroxypropyl cellulose (HPC) and lactose.
China still relies on the import of film-coated powder, polyvinylpyrrolidone (PVP) and other new-type high-end pharmaceutical excipients
Among them, gelatin capsules are produced in large volumes for export. The report says in the first half of 2014, China’s gelatin capsule export volume amounted to around 1,427 tons and the export value hit $32.408m. However, China still relies on the import of film-coated powder, polyvinylpyrrolidone (PVP) and other new-type high-end pharmaceutical excipients.
Currently, pharmaceutical excipients account for 2–3% of China’s total output value of pharma preparations, says the report; its pharmaceutical excipient market reached around RMB26.35bn ($4.25bn) in 2013 and it is expected to be RMB54.83bn ($8.85bn) in 2017.
There are some 400 excipient manufacturers in China, of which more than 90 (23%) specialise in the production of pharma excipients, while most focus on chemical or food processing. Because of previous contamination and adulteration scares, quality of supply to the rest of the world remains a concern.
Ingredients are increasingly sourced globally
China has proposed many new regulations and standards, including good manufacturing practice (GMP) regulations for excipients, but some industry commentators speaking at the recent IPEC conference argued ‘many have not been fully implemented or enforced’ and that there are also ‘some fundamental differences between China’s excipient GMP and the IPEC-PQG standard’. More China excipient monographs are being published, but it was argued that these are not always harmonised with US, European or Japanese Pharmacopeia and may contain different limits and methods.
Many pharma excipient companies, such as Colorcon (US), Degussa (Germany), Meggle (Germany) and Roquette (France), have set up joint ventures, wholly-owned companies or offices in China. Among the biggest home grown suppliers are Er-Kang Pharmaceutical, Sunhere Pharmaceutical Excipients, Dongbao Bio-Tech, Qinghai Gelatin, Shandong Liaocheng A Hua Pharmaceutical, Zhanwang Pharmaceutical and Qufu Tianli, but their market concentration rate is said to be low. Er-Kang seized about 2.7% market share in 2013.2
India has decided to frame a policy designed to incentivise local manufacturing of raw materials and bulk drugs
Indian bulk drugmakers have also depended on Chinese suppliers in the past; however, India has decided to frame a policy designed to incentivise local manufacturing of raw materials and bulk drugs. India is known for complex intermediates and APIs and has no specific GMP regulation for excipients as yet, although it does require licensing of excipients that purport to be compliant with Indian Pharmacopoeia.
According to a report by Reportlinker3, as patterns in developed regions remain flat and opportunities for growth shift from traditional markets, the API industry is expected to witness the rise of second wave emerging markets in countries such as Brazil, Mexico, South Korea and Taiwan.
The report says: ‘Latin America’s regulatory oversight, investment in domestic speciality manufacturing capabilities, formation of a growing number of partnerships and infrastructure help this region to be an important area for sourcing low-cost APIs.’
On the other hand, Taiwanese API producers have gained recognition for high quality and international GMP compliance, it says. For countries in Eastern Europe, such as Ukraine, things started changing when GMP standards became obligatory for Ukrainian pharmaceutical producers in 2010. Ukraine’s regulatory improvements have encouraged foreign pharmaceutical companies to increase their presence in the country, and a number of collaborations are emerging, providing a major impetus to the API space not only in Ukraine but also in other eastern European countries, the report says.
1. Active Pharmaceutical Ingredients (API) Global Market – Forecast to 2020 Research and Markets www.researchandmarkets.com/research/hdwzd4/active
2. China Pharmaceutical Excipients Industry Report, 2014–2017 www.reportbuyer.com
3. Global API Market Outlook 2018, http://www.reportlinker.com/p02390423-summary/view-report.html