Keeping tabs on tablet market

Graham Hind, ceo of Bioprogress, discusses the growing tablet and capsule market and gives an insight into Bioprogress' business plan for these markets

European consumption of gelatin is around 250,000 tons per annum (1), while annual consumption for pharmaceutical uses in Europe is around 20,000 tons (1). The global figure for pharmaceutical use is around 49,000 tons (11).Gelatin is used in most of the main pharmaceutical oral dosage forms, such as liquid containing capsules and two-piece coloured powder containing capsules. In the USA, the McNeil division of Johnson and Johnson (Tylenol) and Bristol Myers Squibb (Excedrin) pioneered the use of gelatin to coat tablets, producing glossy two-colour caplets that are easier to swallow. Due to patents filed by Banner Pharmacaps and Johnson & Johnson relating to gelatin coating and gelatin dipping of tablets, there are no other companies outside of the USA offering gelatin tablet coating.

The widespread awareness of BSE and its human form CJD has prompted the pharmaceutical industry to seek alternatives to animal derived materials like gelatin. This has created an opportunity for BioProgress to develop a range of new pharmaceutical dosage forms which use the BioProgress proprietary cellulose based film materials, coupled to new manufacturing processes, to replace the current traditional gelatin drug delivery forms. In addition to being animal free, these new processes are faster, lower cost and can also offer significant opportunities to improve drug delivery.

PHARMACEUTICAL ORAL DOSAGE FORM MARKET

Pharmaceuticals, vitamins, minerals and supplements are delivered into the human body in a number of different oral dose forms. BioProgress has developed oral dose delivery systems under the overall XGEL banner to provide a gelatin-free alternative to each of the major gelatin based dosage forms.

1. Spray coated and gelatin coated tablets (caplets)

Globally, the largest pharmaceutical and supplement dosage delivery forms by volume are tablets which, according to industry sources (2), account for around 75% of the total global oral dose market, with annual volumes of around 900 billion tablets. All the major global pharmaceutical companies produce their drugs in tablet form. The largest contract tablet manufacturer is Perrigo, which produces more than thirty billion tablets per year. BioProgress has developed TABWRAP , a new non-gelatin tablet coating technology which competes in this sector.

2. Gelatin two-piece two-colour capsules

This is the second largest sector by volume and accounts for around 20% of the total market, at 240 billion capsules per annum. The dominant companies in this market are Capsugel, with nearly 50% market share (3), and Shionogi Qualcaps from Japan. BioProgress has developed the gelatin-free NROBE technology to compete in this market sector.

3. Liquid-filled gelatin soft capsules

This oral dose market sector has annual sales of around 100 billion capsules (5), of which 60 billion are pharmaceutical products, particularly OTC analgesics, while 40 billion are supplements like vitamin E and cod liver oil. This market is dominated by a few large companies which contract manufacture capsules.

The largest is Cardinal Health (R. P. Scherer) with around one third of the global market, followed by Banner Pharmacaps, the largest in North America(5), but around one fifth the size of Cardinal Health. BioProgress is developing a non-gelatin liquid-fill technology called SWALLOW to compete in this market sector.

4. In-the-mouth soluble film

A fourth new oral dose delivery form is beginning to develop, based around small postage stamp sized pieces of soluble film which dissolve on the tongue. This market was pioneered by the Warner Lambert division of Pfizer through the introduction of Listerine breath freshening strips in the USA in 2001.

Vitamins and supplement products have already been introduced and pharmaceutical products are likely to follow in this new delivery form. BioProgress has developed and patented a technology called WAFERTABâ„¢ which can improve drug delivery in this dosage form.

In March 2004, BioProgress acquired a USA based company called Aquafilm LLC, which has since been renamed BioTec Films. This company has considerable expertise in the production of these new in-the-mouth dissolving films. BioProgress has also, through this acquisition, been able to capture further new IP in soluble film processing and production. Patents have now been filed based on processing technology by BioProgress, particularly in the area of dose loading and taste masking in the 'in- the- mouth' dissolving film.

BIOPROGRESS BUSINESS MODEL

The BioProgress business model for its XGEL dosage forms is based upon the Tetrapak packaging model - the supply of specialised production machines to produce the dosage form and the supply of the proprietary films needed to run the machines.

Applying this model to pharmaceutical products means that any new pharmaceutical product or any existing product being transferred into the BioProgress XGEL technology will require new data on stability or improved product performance relating to the BioProgress films submitted to the relevant regulatory authorities to amend a medicine's product license for the product.

In this process, the BioProgress patented films become specified as part of the new medicine's product license. This makes a competitive response more difficult as any further new films offered by a competitor of BioProgress films would require new data to be produced, at a significant cost, and it is unlikely there would be enough of a price differential to make this viable.

To successfully implement the business model, BioProgress had to be able to show pharmaceutical customers that the XGEL machines would be built, installed and serviced to the highest standards.

STRATEGIC ALLIANCE WITH HARRO HOEFLIGER

To provide this capability, BioProgress entered into a strategic alliance with Harro Hoefliger, the German pharmaceutical machine manufacturer in October 2003. A Harro Hoefliger supply nine out of ten of the world's leading pharmaceutical companies and has a global sales and service support network. Harro Hoefliger will assist with the design, build, installation and commissioning of BioProgress pharmaceutical production machines and will provide a global parts and service network. However, while Harro Hoefliger will be the BioProgress preferred global supplier, there may be specific circumstances where BioProgress allows machines to be built under license by parties other than Harro Hoefliger.

The machines vary in cost according to their complexity, but are in line with the costs of other modern sophisticated pharmaceutical packaging systems. NROBE and TABWRAP machines cost in excess of £1 million, depending on specification, while SWALLOW XGEL liquid fill capsule machines are around £0.5 - 0.75 million depending on specification.

FILM MANUFACTURING TO PHARMACEUTICAL STANDARD (cGMP)

The ability to manufacture and supply BioProgress proprietary films to pharmaceutical standards has been an issue that the company has needed to address. There are third-party film suppliers in the USA and Japan which can make and supply food grade films that would be adequate for dietary supplements and non licensed medicines. However, licensed medicines require films produced to pharmaceutical standard, and third-party suppliers have been reluctant to make the investment necessary to upgrade their facilities. The Aquafilm business is a good example of this. It had historically been a supplier to BioProgress of food grade films but the owners chose to sell the business to BioProgress rather than further invest themselves.

The principal difference between pharmaceutical cGMP and food cGMP standards is the need to use purified water for pharmaceutical production, which requires the installation of a specialised water purification plant. The Aquafilm plant has current capacity to provide film for around 20 NROBE machines or 10 TABWRAP machines on its existing single line. BioProgress is planning a second line at this plant, including the installation of a water purification system, with a total investment of around US$4 million. This should be completed by the end of 2005

BioProgress still intends to establish a film production facility in the UK to service the European markets for its technology and a number of options are being evaluated.

One attractive option for BioProgress would be to install a film production line within an existing UK pharmaceutical plant. The production line would be owned by BioProgress and visited by BioProgress customers but would be operated under contract by the pharmaceutical company. The Pharmaceutical Company would have in place existing appropriately qualified personnel and procedures to meet UK and US FDA pharmaceutical film production regulatory requirements.

BioProgress would provide the technical know how to produce the film. This partnering concept would be highly cost effective for BioProgress who would not have to recruit, employ and train the production and quality control personnel.

It is understood that BioProgress is in discussions with several companies. It is expected that a facility will now come on line in 2005.

BIOPROGRESS TECHNOLOGY COMMERCIALISATION MODEL

It is a major challenge for a small company like BioProgress to develop a range of new pharmaceutical dosage delivery systems and commercialise them internationally in the $390 billion+ (4) global pharmaceutical market. The company therefore has chosen a technology licensing business model to commercialise each of its technologies.

Of its five new pharmaceutical dosage forms, BioProgress has licensing agreements which have been agreed for three out of the five and active discussions are in progress for the remaining two.

LICENSING OF BIOPROGRESS XGEL PHARMACEUTICAL ORAL DOSAGE FORMS.

BioProgress has so far licensed three of its five XGEL dosage form technologies - SWALLOW liquid fill capsules, TABWRAP tablet coating technology and NROBE powder fill technology. Negotiations are actively underway relating to licensing the two other BioProgress dosage forms, namely SEPTUM and WAFERTABâ„¢.

NROBE powder fill and light compaction technology

NROBE is an entirely new pharmaceutical dosage form. A number of pockets are vacuum formed in the BioProgress proprietary glossy coloured cellulose film. This can be visualised as bubble wrap packaging material pulled in half. A powder mix containing the pharmaceutical drug is then deposited into the preformed film pocket and lightly compacted to form a dome tablet shape. A second film is then vacuum formed over the top of the powder dome, completing the dosage form.

The NROBE technology has a number of advantages. It is a non-gelatin alternative system to the two-piece gelatin hard capsule, the second largest global pharmaceutical dosage form after tablets, of which some 250 billion are sold annually (3).

The two-piece gelatin capsule is often the dosage form of choice for new ethical pharmaceutical drugs. Powder form medicines are easier to formulate, enabling a faster time-to-market and as long as possible a time period for patent exploitation. Following successful introduction, the products are then often re-formulated in tablet form to reduce costs.

NROBE has the potential to provide an effective non-gelatin alternative to the two-piece gelatin capsule dosage form as an initial choice dosage form for new medicines. As NROBE does not require the excipients and binders needed for traditional tablet forming; it also holds the promise of a means of reformulating drugs in tablet form approaching the end of their patent life.

Over the next five years, more than fifteen blockbuster drugs will face patent expiry, resulting in the potential loss of up to $50 billion in revenues(6). Intelligent use of drug delivery technologies can help a product maintain and extend its market share by providing drugs with additional clinical benefits and extending the product life-span beyond the patent expiry of the active substance.

NROBE technology may provide licensing revenue opportunities for specific pharmaceutical molecules reaching the end of patent life. The NROBE technology could be exclusively licensed, offering product enhancement which would be unavailable to generic alternatives.

FMC Corporation - the BioProgress global Licensee for NROBE

FMC is a $2 billion annual turnover US Corporation with diverse interests from agricultural chemicals and food ingredients to pharmaceutical products. The FMC BioPolymer Division is the licensee for Bio Progress's NROBE technology. It has a long established relationship with all the leading global pharmaceutical companies and operates in all the major international pharmaceutical markets. This makes FMC an ideal partner for BioProgress to develop the NROBE technology.

TABWRAP tablet coating technology

TABWRAP is a new tablet coating technology which was specifically developed as a non animal derived alternative to replace the two-colour gelatin coating and caplet process used to coat brand-leading OTC products in the USA, such as Tylenol and Excedrin.

A pocket is formed in the BioProgress proprietary film which is the size and shape of the tablet. The tablet is placed in the film pocket and a second film is wrapped onto to the other side of the tablet. A two-colour tablet presentation is produced, which is indistinguishable from a gelatin coated tablet presentation. Although gelatin coating is currently used in the US and in most other parts of the world, tablets are coated by a cellulose spray or sugar coating technique. This involves batch processing and only one colour is achievable.

TABWRAP replaces slow spray coating batch production with a fast continuous process, linking the tablet press with the tablet container or blister packer. The BioProgress proprietary film can be formulated to dissolve much more quickly than tablet coatings, releasing the drug into the body faster.

The TABWRAP technology competes with gelatin, cellulose spray coating and sugar tablet coating technologies in the 900 billion per year solid tablet global market (2

SWOLLOW liquid fill capsule technology

SWALLOW is a compact liquid filling capsule process where the machine takes two rolls of BioProgress proprietary film - a half capsule is formed on each roll and the two halves of the capsules are brought together to form a full capsule. The films are made from BioProgress proprietary formulations of cellulose (HPMC).

The SWALLOW technology has major advantages over gelatin liquid capsule production or wet starch based capsule production.

- it uses dry preformed rolls of film, eliminating the wet mixing stage required for gelatin or starch

- the capsules are dry and do not require the up-to-two-day final drying stage required for gelatin or starch

- capsule production is much faster than gelatin or starch based processes, which average hourly outputs of 60 to 80 thousand capsules per hour. The SWALLOW technology has the potential of hourly capsule output speeds of several hundred thousand capsules per hour.

The large multi million pound capital infrastructure required for the current gelatin or starch based production of capsules has resulted in the normal business model being one of contract manufacturing. A few large companies, such as Cardinal Health, Banner Pharmacaps and Swisscaps make liquid capsules for the pharmaceutical market, while capsules for the dietary supplement market tend now to be made by low cost producers in the third world, including India.

The BioProgress business model is to target the customers of the toll manufacturers rather than the toll manufacturers themselves. In the same way as the computer industry changed when the PC replaced the mainframe computer, BioProgress customers can directly purchase the small compact SWALLOW capsule machine and the films necessary to operate it. This gives the flexibility of capsule production and, as there are no toll manufacturer margins, particularly in the higher margin pharmaceutical sector, it is much more cost effective for the customer to buy a BioProgress SWALLOW machine and films and make their own capsules.

The soft capsule global market is estimated to be 100 billion capsules, with around 600 soft gelatin capsule machines operating worldwide(5). The BioProgress business model is to target the customers of the current contract gelatin capsule producers rather than the producers themselves. This business model changes the dynamics of the liquid capsule market in the same way as the data processing market, which was dominated by a few large companies with big expensive mainframe computers, was revolutionised by the introduction of the Personal Computer.

Companies wishing to make liquid capsules will not need to go to the large contact encapsulators; instead they can buy a BioProgress XGEL machine and the films to make their own non-gelatin capsules. This means the potential market for BioProgress machines is much larger than the current estimate of 600 installed gelatine machines worldwide.

The BioProgress business model also offers an interesting opportunity for the growers of high value oil crops used in dietary supplements. These producers currently have to send their extracted oils to be encapsulated in gelatin by the large contract gelatin encapsulators. They could buy XGEL SWALLOW machines and encapsulate their own oils, selling finished oil capsules increasing their margins and moving their business up the value chain.

"In the mouth" dissolving film technology

In 2001, Pfizer Warner Lambert Consumer Healthcare division launched Listerine pocket-pack breath freshening strips in the US and achieved sales of $200 million in its first year (9). Time Magazine in 2002 called the Listerine product one of the best recent inventions, along with breakthroughs like the birth control patch. Consumers liked the convenience of placing a small postage stamp sized piece of fast dissolving film on the tongue.

In 2002, Pfizer faced a number of competitors with the launch of breath freshening strip products from Wrigley's and the Altoids mints division of Craft Foods. Pfizer spent $52 million advertising Listerine pocket packs in 2002(10) while, in 2002, Wrigley's gave away about 40 million samples of their breath freshening product via Delta and United Airlines (11).

BioProgress filed a patent early in 2004 on a film technology called WAFERTABâ„¢. It is understood the patent relates to novel methods of adding pharmaceutical actives to soluble film, to enable the delivery of medicines via the fast dissolving 'in-the-mouth' films. In addition, supporting know-how was also acquired with the purchase of the Aquafilm assets in Tampa, and BioProgress have filed other patents relating to manufacturing processes which enable the addition of high levels of vitamins and other actives into the film strips.

The core BioProgress proposition is very exciting - no less than the possibility of changing the way the world's pharmaceuticals and dietary supplements are delivered. The background situation in relation to gelatin, and the pharmaceutical industry's desire to move away from animal derived materials, helps create the right climate for the BioProgress proposition.

To fulfil the promise BioProgress must deliver three things.

Strong Intellectual property which protects licensees and customers

The ability to design, build and deliver the XGEL machines

The ability to manufacture and supply the XGEL films

Bioprogress Business

The company develops soluble film materials and designs engineering processes to turn these films into commercial products. It currently has in excess of eighty patents either granted or pending. The company is focusing on high value applications for its technology such as pharmaceutical and medical products.