Stronger Pipelines and Approvals Drive Small-Molecule APIs and CMO Opportunities

With biopharma developments dominating most pharma industry news, it can be easy to forget that small-molecule drugs still drive the global pharmaceutical business.  Powering these therapies are small-molecule APIs.

A March 5 webcast, “Resurgence of the Small-Molecule API Market,” sponsored by Cambrex Labs, explored the figures and drivers of today’s market. Presented by Cambrex VP Matthew Moorcroft and Edinburgh-based consultant Jan Ramakers, the program reminded viewers that small-molecule innovation and market growth are going strong. It also reinforced the message that, although much of the commodity API market has moved offshore, strong demand for high-end and specialty APIs will present growth opportunities for US- and European-based suppliers and service providers.

The program sketched overall market growth, and also presented rankings of contract manufacturing organizations and contract development and manufacturing organizations (CDMOs), based on existing data. (More details will appear in the  cover story of Pharmaceutical Technology’s May issue). The data also suggested that today’s late-stage clinical candidates will mean more than 3000 new opportunities for CDMOs and CMOs in the small-molecule space.

Moorcroft cited IMS Health data that the global pharma market was worth $1 trillion last year, and is expected to reach $1.3 trillion by 2018. Small molecules represented 84% of the industry’s revenues last year. Currently, more than 900 drugs are in late-stage clinical trials, and two-thirds of them are based on small molecules.

Demand for APIs was relatively unaffected by the patent cliff and austerity measures, Moorcroft said. In addition, the top therapeutic areas have shifted significantly over the past 10 years, with an emphasis on antivirals, such as treatments for HIV and Hepatitis C, and oncology drugs. New therapy classes have arisen over the past 10 years, including protein kinase inhibitors, worth $18.4 billion; DPP-IV inhibitor antidiabetics, worth $10.3 billion; other immunosupressants, worth $13.8 billion; and antineoplastics, worth $12.6 billion.

Small molecules are expected to remain predominant in most sales categories, Moorcroft said, citing projections that he developed for Cambrex, as well as data from Evaluate Pharma. In the blockbuster (over $1 billion in sales) category, he noted that 75 small-molecule drugs were on the market last year, but he expects that number to swell to 89 in 2020. In the $500- to $1-billion category, 111 small molecule drugs on the market in 2013 should increase to 140 by 2020, and in the $120- to $500-million category, the number of small-molecule drugs should increase from 160 in 2013 to 227 in 2020, Moorcroft said.

New product approvals are expected to average 35 per year over the next few years, Moorcroft noted, returning to levels seen during the early 2000s, and boosting demand for APIs.

Understanding the actual size of the API-manufacturing business can be extremely difficult, since fine chemicals companies manufacture some of these products, contract manufacturers produce some, and some pharma companies still manufacture APIs in-house. Currently, Moorcroft noted, estimates of the market range widely, from $55 billion to $113 billion per year. He sees the small-molecule API market as $20 billion for the United States and Europe, and between $50 and $60 billion if Asian CMOs and captive pharma manufacturing are included in the total.

Using benchmarking data from consultant and Lonza veteran, Peter Pollak; consultant and former DSM executive Jan Ramakers; and the agency, That’s Nice, Moorcroft presented a ranking of top 100 small-molecule API manufacturers, which, collectively, did $20 billion in business last year.  Of these, the top 10 CMOs he noted, each control between 2‑5% of the market. His research defines the Top 10 small molecule API CMOs and CDMOs as:

• BASF

• Evonik

• Lonza

• Saltigo

• Johnson Matthey

• Teva

• Sumitomo

• DPx Patheon

• Cambrex

• Siegfried

While the growth in biopharma demand has led to a separation within the CMO market, with some companies opting to specialize in small molecules, and others in biopharma, Moorcroft says that demand for small-molecule APIs, and the drugs they make, should remain strong over the next few years.

A number of companies, including Cambrex and DPx/Patheon, have been expanding US capacity and investing in more challenging areas of the market, such as highly potent API manufacturing, to keep up with growing demand.

To view the archived webinar, click here.