1. Five myths of the Drug Delivery Industry
Abstract Text
The drug delivery market is often viewed as the poor relation of the pharmaceutical
industry. Here many of the common myths associated with the sector are analysed and
what becomes apparent is that far from being a sector on the wane, drug delivery is a
vibrant source of technology-based product solutions which pharmaceutical companies
could be well advised to consider as a means of bolstering their lagging product portfolios.
The often cited arguments that drug delivery has not performed, is in decline, is a business
model that is not sustainable and is a collection of companies offering the same services
with little value are examined here and dispelled.
1. Drug delivery has not delivered
Many believe that drug delivery as a method to introduce new drugs to the market has gone
past its sell by date. However an analysis of the drug delivery market overall and its place
within the larger pharmaceutical market, paints a very different picture. There has been a
steady flow of drug delivery-based product approvals over the past decade. According to a
review by Bossart, Seto and Kararli in May 2010 i, 213 products drug delivery products were
launched in the past ten years. With 20 approvals in 2009 for drug delivery products (17 of
which were enhanced and 3 enabled), this compares very favourably with nine biologics
(New chemical entities classed as biologics) approvals for 2009ii. Drug delivery systems
continue to play a key role in addressing the challenges faced by the pharmaceutical industry
by developing and enabling better treatment options for patients and healthcare systems.
Based on a recent analysis by MedTRACKiii database, there are over 1,400 controlled release
products currently on the market. Drug delivery has indeed delivered and continues to be a
very important source of products for the pharmaceutical market.
2. Drug delivery market is in decline
According to recent analysis by IMS, drug delivery based product growth has outpaced total
pharma growth over the past 10 yearsiv. In 2007 the drug delivery market accounted for 27%
of total pharma sales and is expected to account for 32% by 2012, according to IMS. Growth
in technology and intensifying industry competition will lead to drug delivery systems growth
as companies seek opportunities to extend the lives of their drug candidates. It is interesting
to note that approximately 75% of recent drug approvals by the U.S. Food and Drug
Administration (FDA)v are for new or improved formulations of existing drugs. Changes
internationally in healthcare approaches will also favour drug delivery where improving
therapeutic outcomes, compliance and the reduction of the overall cost of patient treatment
will be helped through the application of drug delivery solutions. Industry analysts believe
that product line extensions will continue to be a key area of pharmaceutical growth.
Declining R&D productivity, increasing development costs and pending genericisation of
many pharmaceutical products mean that companies need to focus on having a constant flow
of new products that address real patient needs and more generally the needs of healthcare

2. systems. Pharmaceutical companies are under increasing pressure to provide value to patients
and healthcare systems while maintaining and enhancing their revenues. Drug delivery
systems and the products developed incorporating them have a significant positive
commercial impact within the pharmaceutical industry.
3. The drug delivery model is not sustainable
It is true that not all drug delivery companies are sustainable, and it is a market that includes
many start-ups, as well as many that have struggled for years to reach profitability, similar to
the biotech industry. However it is a very active sector with over 1,000 companies classing
themselves as drug delivery firms. The top 10 drug delivery companies had combined
revenue in 2009 of $6.8Bvi. Examples include Elan Drug Technologies (part of Elan Corp
plc) which as a business unit, have been a stellar performer with its net income increasing by
124% between 2005 and 2009 from $29 million to $65 millionvii. Other drug delivery
companies that consistently perform well include Cima Labs, Alkermes and Nektar. However
for more drug delivery companies to become and remain viable, strategic innovation is
important to ensure complex and competing technology investments are aligned with
emerging market needs and support their clients (the pharma companies) goals.
4. Drug delivery based product life cycle management strategies are not worth the bother of
pursuing
There are many approaches to life-cycle manage a product, however those pursued using drug
delivery approaches have proven better than most where patient/clinical benefits are apparent.
A Cutting Edge Information reportviii found in particular that new formulations were shown to
deliver one of the best returns on investment. New formulations as a strategy proved
significantly more effective than pursuing an OTC switch, repositioning, seeking new
indications or going the branded generic route, according to the report. A Merrill Lynch
Industry reportix found that 87% of ‘switch and grow’ strategies not only sustained the value
of the original franchise, but they increased their sales following the switch to the optimised
formulation. Examples include Ritalin® LA which grew the methylphenidate franchise by
62% for Novartis over the first four quarters following launch, Xanax® XR enjoyed an
increase of 34% and Fosamax® an increase of 25% in the first year post launch.
5. All drug delivery companies offer the same services
While many drug delivery companies offer controlled release technologies, mostly for oral
delivery, there are many drug delivery companies that offer a whole range of technology
solutions. Indeed central to Elan Drug Technologies’ success over the past decade, where it
was seen as the top performer x, was that it had “a broad portfolio of drug delivery assets that
could embrace their clients’ products”. This broad and unique platform from Elan includes
technology solutions for oral controlled release, delayed release, pulsatile release to
technology solutions for poorly water soluble compoundsxi. While oral drug delivery is still
the most active in terms of deals signed, the market has evolved significantly over the past
number of years with now a variety of goals being sought beyond the more typical
extended/controlled release solutions. Companies offering targeted site delivery, pulsatile
release, bioavailability enhancement technologies are some examples.

3. Indeed what has shown to be more effective than having a unique offering is having a proven
range of technology solutions. A recent Bionumbers reportxii showed that a product with a
validated technology has twice the chance of gaining approval over an un-validated one.
When speed to market for a life cycle management strategy is key, a drug delivery solution is
a significantly faster way of getting approval than for example a new chemical entity with
average time from initial development to market approval being ~5.8 years (NCE average
over 8 years). Considering that every six month delay in launch results in a loss of around
$100M on the NPV or a drop of 0.5 percentage points in the IRR as calculated by
PriceWaterhouseCoopersxiii, having a proven technology behind the product innovation is key.
Conclusions
The pharmaceutical industry faces a significant challenge to provide genuinely improved
treatment options for patients and healthcare systems that are also cost effective. New drug
output continues to stagnate, while R&D costs remain high. Addressing this challenge
requires that pharmaceutical companies rethink their approach to new drug discovery and
development, develop improved products that address real needs and to commercialise those
products. Scientific advances in our understanding of diseases, new molecules which treat
those diseases and methods to best deliver those molecules for patients, continue to evolve.
Elan Drug Technologies’ Athlone facility - the drug delivery business has developed 35
products over the past 40 years for its clients.
Optimally delivering new and existing molecules to improve patient treatment is core to the
drug delivery industry. As an industry leader, Elan Drug Technologies has been at the
forefront of drug delivery for over 40 years and has been the most prolific drug delivery
company in terms of products developed and launched for its clients with 12 product launches
since 2001. Singularly focused on the drug delivery model, Elan Drug Technologies strives
to continue developing and growing the drug delivery industry for the benefit of
pharmaceutical products for many decades to come.
For more information on how Elan Drug Technologies can help you realise your products’
potential, check out www.elandrugtechnologies.com or e-mail edtqueries@elan.com
References

4. i
Delivery Report – Drug Delivery Products & Technologies – a decade in review: Approved Products 2000-
2009, Bossart, Seto, Kararli, Drug Delivery Technology, May 2010 Vol 10 No 4
ii
The FDA New Product Approvals 2009 http://www.fiercebiotech.com/story/fda-approvals-2009/2010-01-25
iii
MedTRACK presentation made by Sarah Terry, CRS Annual Meeting, Portland Oregon, July 2010
iv
IMS database, 2009 report
v
Sourced from FDA drug approval lists 2002-2009 from FDA database
http://www.fda.gov/drugs/informationondrugs/default.htm
vi
Yahoo sector analysis http://biz.yahoo.com/ic/513.html
vii
Elan Drug Technologies’ Business Review 2009, www.elandrugtechnologies.com
viii
Defending brand revenue – pharmaceutical life cycle management planning – Cutting Edge Report, 2008
ix
Merrill Lynch Industry Report, January 2006
x
Delivery Report – Drug Delivery Products & Technologies – a decade in review: Approved Products 2000-
2009, Bossart, Seto, Kararli, Drug Delivery Technology, May 2010 Vol 10 No 4
xi
Elan Drug Technologies website – technology page http://www.elandrugtechnologies.com/technology
xii
Parameters of Performance Series – An overview of key parameters that impact clinical development and
approval of drug delivery enabled and enhanced pharmaceutical products – Bionumbers, March 2010
xiii
Pharma 2020 The Vision – which patch will you take, PWC report http://www.pwc.com/gx/en/pharma-life-
sciences/pharma-2020/pharma-2020-vision-path.jhtml