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How to Win with Transdermal Drug Delivery

Posted by: Andrew Day on 10/27/20 9:49 AM

In an early 2019 article published on Forbes.com, contributor Peter Cohan offers readers advice on investing in transdermal drug delivery. Specifically, he advises readers that an investment in transdermal drug delivery companies is something to avoid. That investors may find some success putting their investment dollars elsewhere — allowing that perhaps a private company could make for a good PE investment.

This article was not written to contest with Cohan’s investment advice. Rather, we are more interested in dissecting the reasoning behind his advice. 

Betting on Transdermal Drug Delivery 

Transdermal drug delivery demonstration

In the article “Should You Bet on Transdermal Drug Delivery?” Cohan explains, “After all, the market is getting smaller, the cost of developing new drug/patch combinations is high, competition in the business of delivering generics by patch is intense, and insurance companies would rather pay for cheaper pills.” 

Let’s take a closer look at those claims. 

Is the Market for Transdermal Drug Delivery Getting Smaller? 

Not exactly. 

The market for transdermals in the U.S. is untapped. Compared to other parts of the world like southeast Asia and Japan where transdermal medication maintains significant market share, the U.S. has yet to adopt transdermal drug delivery into the mainstream. 

Currently, the U.S. market contains a mere fraction of patches on the market in developed eastern countries. This represents significant potential in the U.S. for pharmaceuticals and over-the-counter active ingredients delivered by transdermals.

Is the Cost of Developing New Drug/Patch Combinations High? 

Not exactly. 

On the regulatory side, the FDA is moving to lower the cost and time needed for approval of either ANDA (generic) complex systems (like transdermals) or through the 505b2 pathway where a previously approved drug can be reformulated for transdermal delivery while leveraging the former version's previous clinical data. 

On the research and development side, the cost of developing new patch formulation is contingent on variables like expertise and experience in the area of transdermals as well as access to and competency, equipment, and facilities for producing transdermal patches. 

Is the Competition in the Business of Delivering Generics by Patch Intense? 

Not exactly. 

There are only a handful of CDMOs that specialize in patches. Within the market, there is far less generic or 505b2 competition overall for patches vs oral solids and the return on investment is usually far greater than generic oral solids.

Would Insurance Companies Rather Pay for Cheaper Pills Over Transdermal Drug Delivery Systems? 

Perhaps. 

While acquisition cost is king for pharmacy departments and insurers, the overall cost of treatment is heavily considered too. 

Because patches can solve significant problems like non-compliance and inability to swallow pills, patches are an important option. As the saying goes, “the most expensive medicine is the one that is never taken.” Outcomes are always worse and more expensive with non-compliance in patients, and transdermal drug delivery yields fantastic results in patient compliance.  

How to Win with Transdermal Drug Delivery

All this being said, Cohan's view seems reasonable from a less informed point of view. Further, it is no simple task to develop a transdermal patch. Speaking from the CDMO perspective, there is a high barrier to entry when it comes to developing and manufacturing transdermal patches. 

Yes, these drug delivery systems are simple and elegant to administer and use, making them ideal for many categories of patients. In creation, they are complex and sophisticated to design and develop. 

Developing a successful transdermal patch requires experts in the field, high-quality specialty equipment, exceptional science, and significant facilities. Given the nature of materials often used in transdermal production, it also. takes a high level of skill and artistry. Further, perseverance and determination are always required to bring any drug to approval in the U.S. market. Nonetheless, pharmaceutical companies who recognize the benefits and significant potential of patch drug delivery systems  have an opportunity to stake their claim to a huge untapped market. 

So, how do you win with transdermal drug delivery? You do it by partnering with a CDMO with experience and expertise in transdermal drug delivery systems. 

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Topics: Transdermal

Andrew Day

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