Drugs contain ingredients with therapeutic activity, so-called “active ingredients” as well as inactive ingredients. These inactive ingredients, called excipients, are included in oral products for various reasons, such as to enhance the stability of the active ingredient or change the color or taste.
The pharmaceutical excipients market is growing rapidly due to a number of factors, including key patent expirations on branded drugs and the corresponding increase in drug production as generic alternatives drive prices down. Furthermore, as generic competition increases, careful selection and sourcing of excipients can become an important factor affecting both differentiation among generics as well as profitability.
However, one way in which generic drug manufacturers can differentiate their products from those of their competitors is by carefully selecting and sourcing their excipients. In this article, we will discuss the importance of excipients in the manufacture of generic drugs, and we will provide some examples of how different excipients can affect both differentiation and profitability.
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Excipient utilization increases when drug patents expire
For the general pharmaceutical market some of the key drivers of growth are the increasing prevalence of chronic diseases and the rise in geriatric population. But what makes excipients special is that their market size increases as drug patents expire, allowing lower-priced generics to enter the market and to increase overall consumption.
Strategy #1: Find drugs versions using substitute excipients
Excipients can differ between brand name and generic products.
Some generic manufacturers and compounding pharmacies will substitute excipients to avoid side-effects, such as allergic sensitivities, and some may substitute excipients for supply chain reasons such as cost.
For generic manufacturers not using a given excipient, it may be possible to offer them a strategic reason to switch. For example, excipient substitution may enable differentiation by avoiding allergies. Excipient selection can also impact shelf life, solubility, and bioavailability.
By quickly identifying all the generic alternatives not employing a given excipient it is possible to generate a list of potential clients, along with a rationale for them to switch.
Strategy #2: Offer an alternative to current excipient suppliers
Additionally, some manufacturers may choose to use brand name excipients. This can convey greater confidence in the integrity excipient, but it can also mean a higher cost and a single point of failure in the supply chain. For cases such as this, alternative excipient sourcing can offer compelling pricing while also increasing the diversity of the supply chain through alternate vendors and alternate locations.
In other cases, a generic manufacturer may select an excipient source using price as the primary consideration. This focus on price may leave the generic manufacturer exposed to quality control problems or exposure to supply chain risks.
An excipient manufacturer can offer an alternative source to ensure sufficient supply chain diversification with an eye on controlling costs.
Excipient selection and supply chain diversity are more important then ever
As the competition among generic suppliers continues to increase, it is vital for generic manufacturers to differentiate themselves with the quality of their products as well as the integrity and resilience of their supply chains. These combined factors create an imperative for strategic excipient sourcing.
