Formulation and delivery technologies have long been considered merely part of the product manufacturing process, with little need for innovation compared to new active ingredients. However, faced with compounding challenges, including patent expiries ending blockbuster monopolies, innovation drought leading to a waning pipeline, and budget cuts due to global economic woes, pharmaceuticals are increasingly turning to formulation and delivery innovation to extend existing product lifecycle, reposition existing actives, or even revive previously rejected compounds, fueling the investment scene in this sector. Consistent with this, the formulation and delivery sector has experienced a consistent year-over-year growth in transactions and deal value. A total of 180 formulation and delivery technology developers garnered more than 600 investment transactions worth up to a cumulative $7 billion over the past decade. The investment landscape since 2008, in particular, has been vibrant with total deal flow doubling from 2008 to 2012, with a 70% rise in value per investment within the same time period. The question is, what technology classes have been slowly heating to a boil for corporate partners to take advantage of?
At a high level, formulation innovators did better than device developers in capturing a greater share of the investment pie. In aggregate, formulation developers captured 44% of all in-flowing funds from non-dilutive and dilutive sources compared to device developer’s 32%. Despite this, particle formulators, a sub-segment of formulation, experienced loss of interest with a consistent decrease in investments from 2010 to 2012, putting forward an uncertain future for nano-formulation developers. Drilling down one level further, of nine distinct delivery routes, transdermals developers snagged 30% of total deal value. While injection route takes second place, pulmonary delivery, with very recent large acquisition deals, may yet prove to be the preferred route for many new drugs.
Moving forward, broader market trends indicate transdermals are far from a by-gone fad. The lines between health care and consumer goods are becoming blurred, with preventive medicine meeting health and wellness, and both approaches increasingly vying for the same target audience. The importance of consumer-focused factors such as product format, ergonomics, and ease of use in products is coming into focus. All of this is leading to increased investment in and adoption of alternative, non-invasive, user-friendly delivery routes like transdermal and pulmonary administration on the pharma side, and products with increasingly sophisticated function on the consumer side. Greater specialization of formulation like liquid dosages rather than solids for pediatric and geriatric care, enabling convenient dosing schedules, and catering to select groups such as diabetics and lactose-intolerants, or even to cultural restrictions, are also gaining momentum. We’ll be exploring notable developments in transdermal deliveries in an upcoming report, and would strongly suggest others looking for future revenue streams in health and wellness do the same.
Source: Lux Research report “Tracking Capital through the Decade in Formulating and Delivering Health” — client registration required.