A hi-tech boom helps the medicine go down

Injections without needles, pills with microchips - drug delivery systems are a rapidly growing secto

Faced with the prospect of having a needle jabbed into their private parts, most men would politely decline, but until recently such an injection has been the most effective way to cure male impotence.

Then Vivus, a US drug delivery company, found an alternative - packaging the same drug into pellets to be delicately inserted into the urethra - and took half the $60m world market in four months.

The next improvement could come from PowderJect, which will float on the London stock market this month and has a pain-free, needle-less injection. "If all men suffering from impotence had treatment, this would be a $500m market," says Paul Drayson, PowderJect's chairman.

As this example shows starkly, the way a drug is given can matter at least as much as what it does. This is the premise behind the drug delivery industry. The sector has come from nowhere 10 years ago, to capture a $12bn slice of the $150bn world-wide pharmaceutical market. Moreover drug delivery is growing fast - at 15-20 per cent a year, twice as fast as the wider drugs market.

The product that put drug delivery on the map was a heart pill called Procardia XL. The first version of Procardia, sold by Pfizer, had to be swallowed three times a day, restricting sales to $400m a year, and in 1989 was about to lose its patent.

In a well-timed move, Pfizer linked up with Alza - a then tiny drug delivery company - which came up with a once-a-day version, reviving Procardia's patent and tripling sales to $1.2bn. Felix Theeuwes, Alza's president of research and development, remembers the excitement: "We enormously expanded the market for angina drugs. Our technology gave Pfizer its first billion-dollar drug."

The range of delivery technologies today is vast and ingenious. It includes everything from simple skin patches, inhalers, gels and nasal sprays to implants, pills with microchips and contact lenses that release drugs into the eye.

SkyePharma's Geomatrix technology, for example, can release a drug in tablet form immediately, slowly over days or in prescribed bursts so that, say, someone at risk of heart attack could take a pill before bed and get regular doses throughout the night. Elan is developing a smart pill embedded with a microchip and Alza has a titanium implant, no bigger than a matchstick, that leaks out a cancer drug over a year.

The most exciting area in delivery, though, is driven by the biotechnology industry, which is developing protein and peptide-based compounds like insulin. These large and complex molecules have to be given by injection because they are digested if swallowed and are too big to pass normally through the skin.

Among the many companies working in this area, Cortecs is developing insulin and brittle bone pills, Inhale has an insulin dry powder inhaler and PowderJect a helium pump which can drive molecules through the skin at three times the speed of sound.

For both patients and healthcare payers, there are huge benefits in all this - the easier a drug is to take, the more compliant a patient will be. Alex Zisson of US broker Hambrecht & Quist says the cost benefits of improving compliance are central to the delivery sector: "In the US, 28 per cent of hospital admissions can be traced to people not taking their drugs properly."

Glen Travers, chairman of Cortecs, says that less than a third of women prescribed hormone patches for brittle bones stay on the treatment after two years: "The cost to the US government in hospital fees to treat broken bones is $10bn a year and growing."

For the big pharmaceutical companies, meanwhile, a clever delivery system can extend the patent life of their drugs, generating substantial extra revenues. The number of alliances with specialist delivery companies is growing.

Alza's Mr Theeuwes says: "It is financially unrewarding for pharma groups to spend millions on their own technologies to improve just one drug." Donal Geaney, president of Elan, says: "Many medicines stay on the shelf because they cannot be delivered properly and this is costly."

Rolf Stahel, chief executive of Shire, sees another reason for alliances: "Research directors in big pharma groups are not enthusiastic about delivery. It does not lead to Nobel prizewinners."

Investors, though, should be more excited. While the small numbers of UK delivery companies are normally lumped in with their biotechnology cousins, as Jo Walton of broker Lehman Brothers points out, their risk profiles are substantially different.

"Delivery companies work on existing chemicals, where all the data - animal tests, safety, which patients to target, which clinical trials to use - are already known. Times to market are shorter and the chances of success are higher." Mr Zisson agrees: "It takes a delivery company about three to four years to get a drug to market, compared to six years for a normal drug."

Financial risks are also lower. Robert Chess, chief executive of Inhale, estimates his research costs are a tenth those of an average biotech company and with three times as many products, risks are spread.

And as Richard Stewart, SkyePharma's finance director, points out, the development costs of reformulating an old drug are borne by clients, while established sales and marketing teams can push the new version at minimal cost: "All this means more in royalties," he says.

Though royalties can limit upside, companies working in protein delivery or on big drugs stand to gain substantial returns and make profits sooner than most biotechs. So far, their potential is more apparent in the US. According to Ms Walton: "Investors are more cynical in the UK, where hopefuls like Cortecs have not yet made it. In the US there are some huge and profitable companies." UK delivery companies may not be far behind.

Drug delivery contenders

Company Market value

Alza Corp (US) $2.5bn

Cortecs (UK) pounds 277m

Cygnus $292m

Dura Pharmacls (US) $1.7bn

Elan Corp (Irish/US) pounds 2.5bn

Ethical Holdings (US/UK) $78m

Guilford Pharmacls $501m

Inhale (US) $307m

Liposome Company (US) $993m

PowderJect (UK) pounds 109m

RP Scherer $1.3bn

Shire Pharmacls (UK) pounds 198m

SkyePharma (UK) pounds 307m

TheraTech (US) $237m

Vivus (US) $13m

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate