Lonza is a company that designs, develops and manufactures a wide range of dosage forms for the pharmaceutical, consumer health and nutrition industries. We currently have more than 4,000 customers in over 100 countries. In the APAC region, we operate from eight sites in Sydney, Hong Kong, Mumbai, Bangkok, Jakarta, Suzhou, Delhi and Sagamihara.
I joined Lonza in January 2018 as the commercial director for the organisation’s Capsule Delivery Solutions team. In July 2019, I became Head of Sales in the Asia Pacific region for our innovative capsules in the Capsule Delivery Solutions portfolio. Then in early April 2020, I assumed responsibility for the APAC business as head of Lonza’s newly formed business unit for Capsules & Health Ingredients. I’m also currently Lonza’s Managing Director for India.
A notable trend in the APAC region is that the market for traditional medicines remains as strong as the market for western chemical API driven pharma products. As a result, we’re dealing with significant differences in regulatory and quality demands as well as supporting different approaches to brand marketing – for example, the nutrition market is very focused on green label and animal-free products at the moment, whereas for pharma this is less of a focus.
The region is also very fragmented and while we have strong and growing presence across the entire APAC region, the competitive landscape varies from country-to-country. In addition, there are further nuances in each market where the number of manufacturers, pricing, attitude to quality and the accessibility of various markets by pharma manufacturers all play a part in partner selection. As more western companies look towards the APAC region for services in the coming years, we’re likely to see this fragmentation lessen as the focus on quality increases. This is cyclical asit is not that long since manufacturing moved to the west, however, increasing growth in the APAC region and higher quality products becoming readily available for patients and consumers is making it an attractive prospect for customers once more.
A lot of our focus has been in the US and EU over recent years as these markets have been responsible for most of the innovation in the pharma and biopharma sectors. The APAC region is still very much relied upon to deliver traditional hard gelatin capsules so there are significant opportunities to introduce innovative products that deliver additional value.
Lonza’s Capsugel® range of capsules is one of the most diverse portfolios ranging from plant based HPMC (Hydroxy Propyl Methyl Cellulose) capsules to hard gelatin capsules.
The Asia Pacific market is still very heavily driven by the hard gelatin capsule market, with over 90% of Lonza’s manufacturing volume within the region remaining in this area currently. This is typically driven by western chemical API-based medicines. If we look at the traditional medicines market in India, the most common products are immunity supplements which are available in a range of dosage forms including powders and syrups, meaning at the moment there is a very limited share for capsules. This may in part be due to the animal derived polymer of traditional gelatin capsules which is problematic in a country where roughly a third of its population are vegetarian.
There are a few trends which may alter this dynamic in coming years. Firstly, the current drug development pipeline is heavily focused on oncology and where the dosage form is a capsule, developers are opting for HPMC products. These are a more robust capsule and are strong delivery vehicle for highly specialised APIs – both of which are vital for highvalue oncological drugs. There will be a challenge when it comes to volume as these products will not be typical blockbuster mass-market therapies but very specific, targeted therapies.
There is scope for hygroscopic APIs currently on the market to move into HPMC capsules and we are working with various customers to show them the advantages of our Vcaps® Plus products, for example its known pH dissolution performance. In general, we anticipate that there will be a movement to such capsules, but it will be gradual.
On the nutrition and nutraceutical side of the market, there is a huge push towards both sustainability and vegetarian products. Brand owners want to market their products with ‘Green Label’ claims to meet consumer demand and as a result there is a huge movement towards non-animal based capsules where provenance can be proven. This is a very fast-growing market for us at the moment, particularly in the APAC region.
We have two major challenges at the moment.
First is capacity – such is the demand for Capsugel® products that we are always working at a very high utilisation rate - that sometimes means our lead times can be longer than some of our competitors. However, we are continuously investing in our facilities to expand and ensure we can continue to cater for customer demand.
Second is cost – Capsugel® products are quality-centric and we focus on developing and using robust, validated processes to ensure the quality of our capsules is at the highest standard, in addition our processes and vendor qualification criteria is uniform across all our manufacturing sites to ensure consistency. Some of our competitors can undercut our prices by developing ‘minimum viable products’ that only just satisfy regulatory requirements but offer no value to brand owners or patients beyond that. Lonza’s offering is very different in this sense as quality is something that we pride ourselves on and it is the added value of our team’s expertise and ongoing support that really makes the difference for our customers.
As cost pressures increase in western markets, more and more companies will look to the East to support their manufacturing needs. 15 years ago, there was a very strong resistance to Indian APIs in western markets, now if you look at the United States, Indianmade APIs and generics are growing in popularity as they are more cost effective than those provided by competitors which manufacture domestically.
In addition, a lot of Lonza’s customers in India are manufacturing finished formulations and supplying them to the developed markets, for example some of the largest suppliers of paracetamol in the UK are manufacturers from India.
This dynamic is showing a steady, sustained move of manufacturing to the APAC region. There is a gap in the excipients supply market which will need to be filled in the coming years to ensure a long-term shift to manufacturing in the region can be sustained – given the scale of the opportunity, I’ve no doubt this will happen.
The pharma industry will always be a highly regulated market, and this poses a challenge for customers – switching a capsule over is not just about changing manufacturing processes. To convert a new capsule, or to qualify an alternate supplier for a particular molecule can be a very painfully slow process due to the regulations and it requires changes to be made to the dossier. The timeline can be anywhere from two years to three years. It also demands a lot of investment in terms of internal resources and capex from customers to develop an alternate vendor and ensure proper onboarding.
Adding to this is the increased interest from regulators such as the FDA and the EMA that is peaked when process changes occur.
From our customers’ perspective, if everything is working with their current supplier, why should they change? This works well for when it comes to retention as there are never any problems with our products, but when it comes to securing new business it can be a challenge.
Our approach to knowledge sharing and the support of our regulatory teams are two of the key enablers that help us overcome these challenges. We work hard to become knowledge partners to our customers, not merely a transactional dealer for them and that's how we drive the value. Our efforts around HPMC capsules are indicative of these efforts. We are conducting a significant number of seminars and bridging knowledge gaps for our customers so they can understand the value of HPMC capsules and start considering whether they can convert some of their hard gelatin volumes.
Rather than just support functions, we have regulatory experts in key geographic markets who have experience with local bodies and can provide additional consultancy to the customer. We have an advantage over our competition in terms of geographic flexibility because we have a physical presence in most major markets – especially in the APAC region where we have sites in China, Japan, Indonesia and India. Importantly, we can support our partners when they look to enter new markets – we have access to western markets and knowledge partners around the globe who can provide insight into the regulatory compliance requirements of most countries.
Lastly, Lonza also offers Lonza EngineTM equipment and we have seen high uptake of the filling machine in the APAC region usually combined with our Capsugel® capsules as well. This means we can deliver a complete solution to our customers.