Industry Benchmark: Part 3 Excipients
The 2017 Nice Insight Pharmaceutical Excipients Survey demonstrates spending is expected to increase in all regions and across all categories.
Pharmaceutical excipients are used in combination with APIs in multiple medicinal products, including tablets, capsules, oral liquids, transdermal patches, implants and inhalers. Traditionally, these excipients were used to add bulk to formulations. However, they are increasingly used for functional reasons, such as improving the wetting and organoleptic properties of a drug or providing stability.
According to Mordor Intelligence, the global pharmaceutical excipients market is expected to reach $9.9 billion by the end of 2021, increasing at a compound annual growth rate of around 7.2% from 2016. This will be driven by increasing demand for the drugs themselves, but also by innovation in the excipients and the techniques used to manufacture them.1
The 2017 Nice Insight Pharmaceutical Excipients Survey finds that companies across the pharmaceutical and biotechnology sectors worldwide use an extraordinary variety of excipients in their formulations, with no single category either dominant or insignificant in consumption terms.2 Most excipient users expect their consumption to increase in the coming three years, both overall and in every major category of excipient. They also expect to broaden their supplier bases.
Quality, in the broadest sense of the word, comes out on top when users are asked how they evaluate potential suppliers and rank existing ones. However, there is no single most important selection criterion. Naturally, cost matters, but it does not drive decisions very often, except when all other things are equal.
This industry segment includes some of the biggest general chemicals companies as well as small specialists. Name recognition does not harm the former, but it does not necessarily get them picked as suppliers either.
Broad Base
The survey was based on responses from a grand total of 541 respondents, spread fairly evenly by geography (33% in North America, 29% Europe, 38% Asia) and size of company (35% large, 39% midsized, 19% small, 6% emerging and 1% contract development and manufacturing organizations). Respondents were split in terms of their job titles, with 29% working in analytical, 24% in manufacturing, 23% in corporate management, 15% in formulation and 9% in contracting, sourcing and purchasing. Importantly, 87% of those polled had decision-making authority on renewing existing excipient supplier contracts and on selecting and approving new contracts. That proportion was consistently high across every region, type and size of company, type of product manufactured, and department worked in.
At least 29% and up to 52% of the companies where respondents work are involved in manufacturing one or more of five main product categories, i.e., branded and generic small molecules, branded large molecules, biosimilars and over-the-counter drugs. Likewise, at least 42% and up to 65% were active in the four main types of dosage form, i.e., oral and non-oral, solid, semisolid and liquid.
There was also a good spread in company size, with 23% and 12% respectively considered large pharma and biotechs (>2,500 employees), 25% and 14% respectively midsized pharma and biotechs (501-2,500) and 10% and 9% respectively small pharma and biotechs (<500). U.S. players in both fields were relatively more likely to be “big.” On the other hand, Asian firms skewed more on the smaller side.
The companies in the survey are active across a wide and even spread of therapies, with drugs for infectious, metabolic, cardiovascular, respiratory, oncological, endocrine and central nervous system diseases in their pipelines.
These companies used 16 different categories of excipient in their formulations, plus combinations. The most important were solvents (used by 48%), coatings, solubilizers and thickeners (all about 38%). Even the least common were used by over one-fifth, i.e., glidants and combinations (both about 20%) and humectants (24%). This shows an extraordinary diversity in product consumption, even at the most basic level.
Spending More
The companies vary hugely in their purchasing budgets, though nearly half spend between $10 million and $100 million/year on excipients. In all, 64% expect this expenditure to increase in the next year and 30% say that it will stay the same, while only 2% expect a decrease and 4% are unsure. This trend is particularly marked in Asia, where 82% expect an increase, 16% say it will stay the same, none expect a decrease and 2% are unsure.
Every single product category is expected to see growing expenditure in that time frame. This also holds true for the three categories that are currently used the least: over 50% of participants expect combinations, glidants and humectants to increase.
Coloring agents are perceived to be the least promising category, with the lowest proportion projecting an increase in purchasing (38%) and the highest projecting a decrease (17%). Other traditional products — preservatives, thickeners and lubricants — also show relatively low growth projections. Even so, demand is expected to grow far more often than it is to fall, in every case.
The mean number of excipient suppliers used by companies is 8, though this is somewhat lower in North America (7) and somewhat higher in Asia (9). Most respondents — 61% globally, but 84% in Asia — think that this number will grow in the next three years.
Quality the Driver
In order of importance, the key criteria customers use when ranking suppliers are quality assurance, reliability, minimizing risks, regulatory track record and affordability. There is no single main selection criterion when deciding to work with an excipient supplier, however.
References from colleagues and coworkers, personal relationships with suppliers, a global presence, and supplier size and structure all scored between 61% and 65%, though the latter two were significantly more important for Asian customers than North Americans or Europeans. There were fewer differences when the criteria were collated against product type and company size.
When evaluating an excipient supplier, quality compliance is tied in importance with on-time delivery, both at 50%. Communication and transparency (46%), safety audits (44%) and regulatory compliance audits (43%) round out the top five criteria. As the difference between these selectors is just a few percentage points, it is easy to assume that a strong service provider can successfully demonstrate a track record with each.
When deciding to work with an excipient supplier, 80% rank regulatory compliance as important, ahead of product specifications (79%) and inventory availability (76%). A global presence, while still important at 61%, ranks last of the 14 specified attributes. In other words, being a big player may get you considered, but will not swing the final decision.
Once actually working with a supplier, companies value on-time delivery (82%), quality compliance (80%) and communication and transparency (78%); there are some subtle changes in priorities for customers at this stage of the process. Similarly, the most common sources of dissatisfaction when working with a supplier are product or service quality, ahead of product or service delivery.
Chemical stability and bioavailability were the most important of nine major characteristics ranked for designing drug product formulations.
Cost Matters, But…
Users are more likely to select suppliers from an already approved supplier list than any other source: 53% do this, ahead of databases (45%), referrals and colleagues (39%) and industry events (37%). At every stage of the pharmaceutical manufacturing process — bench, kilo, pilot plant and commercial — they are most likely to buy directly from the manufacturer in a list of approved suppliers. Other sources vary considerably in popularity at different stages.
Although ‘better price offered by competitor’ is the most common reason (mentioned by 56%) to change supplier, companies of all sizes in all regions agreed that cost is less important than quality and reliability when selecting an excipient.
Asked about their pricing tolerance, ‘We select a mid-priced option when other performance metrics prove similar’ was the choice of 41% of the global total, followed by ‘We select an excipient based on other factors when there is a small price differential between them at 38%. Chemical stability and bioavailability were the most important of nine major characteristics ranked for designing drug product formulations. Likewise, bioavailability and solubility were cited as the technically most challenging aspects when designing oral solid dose formulations. This indicates that bioavailablity is an integral feature in excipients; the manufacturer who comes out ahead in this game is likely to emerge as a clear choice for buyers.
Read Industry Benchmark: Part 4 Pharmaceutical Intermediates
References
- Global Pharmaceutical Excipients Market Growth, Trends & Forecasts
(2016-2021). Rep. Mordor Intelligence. Nov. 2016. Web. - The 2017 Nice Insight Pharmaceutical Excipients Survey.