Pharmaceutical Excipients Market Dynamics:

Driver: Increasing uptake of biopharmaceuticals

Biopharmaceuticals are gradually becoming popular in the healthcare industry due to their similarity to natural biological compounds found in the human body; thus, they offer high efficacy and fewer side-effects. They form one of the fastest-growing segments of the pharmaceutical industry. Novel concepts like cell therapy (for cancer treatment) and gene therapy (offering regenerative medicine) are steadily being refined. This presents an attractive opportunity for further growth in this sector.

The efficacy and safety associated with biopharmaceutical products, combined with their ability to address previously untreatable conditions, allows pharmaceutical companies to command high prices for innovative drugs, thus contributing significantly to their overall revenue. The majority of the blockbuster drugs currently available in the market are biopharmaceuticals, among the top 15 biopharmaceutical products. Hence, major pharmaceutical companies across the globe are increasingly shifting their R&D focus to large-molecule products.

Expected Revenue Gains:

The pharmaceutical excipients market is projected to reach USD 10.6 billion by 2026, at a CAGR of 5.8% during the forecast period.

Restraint: Cost and time-intensive drug development process

According to the California Biomedical Research Association (CBRA), it takes an average of 12 years for a drug to travel from the research lab to the patient, including 1–6 years for toxicology studies alone. Also, only 5 in 5,000 drugs that begin preclinical testing ever make it to human testing. Of these, only one is approved for human usage.

Moreover, late-stage failures in the drug development process increase R&D costs and impact the profit margins of pharmaceutical companies. The intensifying regulations on the quality and safety of the excipients and drugs result in the need to upgrade current manufacturing and quality assurance practices, which adds to the overall manufacturing cost. Thus, although excipient and drug production have seen significant advances in recent years, the requirement of high capital investments is expected to hamper market growth during the forecast period.

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Opportunity: Shifting focus of pharmaceutical manufacturing to emerging countries

The traditionally lucrative pharmaceuticals market is becoming challenging from a growth perspective due to the diminishing drug pipeline, government-induced pressures on healthcare cost, and the increasing regulations on innovative products. This is encouraging pharmaceutical manufacturers to move their manufacturing bases closer to high-growth emerging markets.

Through this, manufacturers can take advantage of low-cost manufacturing and financial benefits in terms of attractive tax rates and lenient regulatory guidelines for manufacturing. Many major excipient manufacturers are either planning capacity expansions of their existing plants in emerging countries or setting up new manufacturing plants in emerging markets such as China and India.

Challenge: Safety and quality concerns

With the current changes in government policies all over the world, upcoming trade policies could prove to be a challenge for the pharmaceutical industry, and in turn, the excipients industry. Trade between the developing countries who are considered to be pharmerging countries such as China, India, and Brazil and developed countries like the US and European countries, who are top markets in the industry, could be severely affected. BREXIT is another pressing issue in this market.

The possibility of fallout originating from Britain’s exit from the EU has led companies to consider shifting—or shift—their manufacturing from the UK to Germany, France, and other European countries. Although the effects of BREXIT on the pharmaceutical industry are still unclear, companies like Novartis, Astra Zeneca, and Roche have already shifted manufacturing sites in order to reduce any further risks.

Europe is expected to account for the largest share of the pharmaceutical excipeints market in 2020

In 2020, Europe accounted for the largest share of the pharmaceutical excipients market, followed by North America, the Asia Pacific, Latin America, and the Middle East & Africa. Many European countries are focusing their attention on the generics market due to the expiration of blockbuster drug patents in the coming years. As a result, the European region is expected to witness major growth in its generics market during the forecast period, which will propel the demand for pharmaceutical excipients.

Increasing government initiatives in countries such as Germany, Italy, and Spain for reducing drug prices are expected to drive the market for generic drugs in these countries. The abovementioned factors, alongside increasing investments for the development of biologics and advanced dosage forms, will increase the demand for novel excipients and thereby aid the growth of the pharmaceutical excipients market in Europe.

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