Big Opportunities Remain in Small Molecule Innovation

Kevin Cook- Chief Executive Officer, Sterling Pharma Solutions.

By its nature, the pharmaceutical industry thrives on innovation and the quest to find new ways to tackle diseases, and the response to the COVID pandemic highlighted the speed at which progress can be made, through the development of vaccines to combat its effects on the global population. Much recent innovation has been through biological therapies and the emergence of new modalities such as cell and gene therapies and mRNA-based therapeutics.

Rapid growth within this sector has led to conjecture that small molecule therapeutics are in decline, however, data on the total sales of drugs suggests that this is not the case. For example, when looking at the top ten drugs sold in 2021, representing almost one[1]third of the total drug market, two of the top three best sellers were COVID-19 vaccines. This skews the top-line numbers to an extent,¹ but it can also be shown that four of the ten are small molecules. However, removing these two vaccines (Comirnaty and Spikevax), the next two best sellers on the list (Xarelto and OPDIVO) split the ten highest-selling drugs in half, between small molecule and biologic-based drugs.

One cannot ignore the impact that biologic drugs have had on the sector since their inception in the early 1980s, when humanized insulin (5.8kD) was first launched. In the period from 2011 to 2017, revenue from the sale of biologics reached US$232 billion, which was a growth of 70%, and in 2016, their sales represented 25% of the total market.² The increase has steadily grown since then, with predictions that the sales of biologics are to significantly overtake those of innovative small molecules over the next five years, with biologic sales forecast to be US$120B greater than small molecule sales by 2027.³

Notwithstanding the impact of the COVID-19 vaccines in recent years, this increase in sales is currently driven by the rise of monoclonal antibody (mAb) usage, which as a class of therapy (and includes Humira and Keytruda) is forecast to account for 46% of all biologic sales in 2027. There is, of course, a difference in the cost of biologic drugs compared to small molecules: in 2017, only 2% of all U.S. prescriptions were for biologics, yet this accounted for 37% of net drug spending.⁴ By dose, small molecules make up as much as 90% of global drugs taken, but on average, a daily dose of a biologic costs 22 times more than that of a small molecule.²

Alongside this predicted growth of biologics, small molecule sales are also forecast to continue to grow by 49% in 2027, and this highlights the place that they have in the market to satisfy the demand for cost-effective drugs. The generic industry is also very much geared towards small molecules: the industry is still in its infancy in terms of biosimilars and the generic erosion of the biologics market; whereas in small molecule therapeutics, it is mature and benefits from a number of high-selling blockbusters having come off patent, or about to become available as generics.

Not only are sales in small molecules increasing, but so too is the number of small molecules in the clinical pipeline, making them a mainstay of pharma and biotech companies’ development portfolios. There are nearly 1,000 molecules in Phase 3 and over 2,000 currently in Phase 2 across a wide range of therapeutic areas.5,6 Funding in the pharmaceutical industry remains strong, and although reduced over the last two years, from the highs witnessed during the pandemic, investment still exceeds 2019 levels.⁷

This development feeds into the number of drug approvals, which shows that the number of small molecules continues to be higher than biologics, as illustrated in Figure 1.⁸

Outsourced Manufacturing of Small Molecule Drugs

As innovation in areas of drug development has increased, so has the reliance on outsourcing companies to meet the levels of demand, bring new drugs to market sooner, and drive sales and revenues of products in the crowded marketplace. In 2020, the value of the global small molecule innovator CDMO market was estimated at US$41B and is predicted to rise by over 75%, to approximately US$74B, by 2030.⁹ Within the industry, much talk has been around the market trends of “reshoring”- outsourcing to US and European partners from Asian manufacturers to mitigate against drug shortages and securing supply chains and this has led to greater competition amongst CDMOs in these geographical areas. This means companies that are working in the areas of developing and manufacturing small molecule drugs have had to react, not only in ensuring that capacity and experienced staff resources are available to meet this demand but also through investment in technology and capabilities.

Drug development is becoming increasingly complex across the whole spectrum of therapeutics and CDMOs need to be in a position to assist developers with the next generation of pharmaceuticals, throughout clinical development and on to commercialization, in order to maximize returns. Small molecules are not exempt from this and there are some key areas that are becoming more important in the field.

Highly Potent APIs

For drugs that require containment facilities, most innovators are not in the position to handle them past a small, laboratory scale. This means that they must partner with development and manufacturing companies that have made significant investments in specific capacity and technology to safely handle such projects, in order to progress programs through clinical phases and on to commercialization. Such is the research in this area, approximately 45% of all small molecule New Chemical Entities are highly potent, however, this does not include products in development.¹⁰ More than 25% of the total drugs worldwide are currently classified as highly potent, making HPAPI drugs one of the most prominent specialized segments of the pharmaceutical industry,¹¹ and the contract manufacturing market for HPAPIs is expected to grow at a CAGR of 10.1% through to 2027.¹²

Controlled Substances

Controlled substances include new innovator drugs, as well as a range of generic drugs that include opioids, antidepressants, stimulants, and cannabinoids. Such substances are used for a range of therapies, which include pain management, depression, post-traumatic stress disorder, attention deficit hyperactivity disorder, anxiety, and other central nervous system disorders such as epilepsy. It should be noted that despite the movement to legalize cannabinoids in many US states, as drugs, they are still considered controlled substances.

For a CDMO to operate a facility that can handle controlled substances, there are legislative and security implications. Specific government licenses are required for companies to handle and manufacture controlled substances, and there must be strict security in place across both production and storage, including the installation of steel vaults.

Over 80% of all controlled substances are opioid-based drugs, but the cannabinoid CBD, and the painkiller buprenorphine, are notable growth areas in this sector. There has also been a resurgence in research around the use of psychedelics as treatments for mental health disorders, particularly depression. The total global market size for controlled substances was estimated at nearly US$85B in 2022, with the expectation of it growing to over US$142B by 2032.¹³

Antibody-Drug Conjugates

Antibody-drug conjugates (ADCs) are a class of therapy primarily focused on targeting cancer. They are made up of a cytotoxic agent, which is attached to a monoclonal antibody through a chemical linker. When administered to a patient, the monoclonal antibody is directed toward a specific cell surface target in the tumor cells, releasing the cytotoxic agent that kills the cancer cells and reduces harm to healthy tissues. However, it is because of the very cytotoxic nature of the warhead that the handling and manufacturing of ADCs must be carried out in contained environments.

There are 12 ADCs currently approved, but significant (and increasing) numbers are now in the clinic, with the majority targeting oncology indications. As of the end of 2022, there were 167 clinically active ADC programs, and over 400 in preclinical development.¹⁴

This field of innovation represents another growing market for the CDMO sector. The small molecule part of the ADC is a highly potent API, which requires significant investment in containment within the manufacturing facility, and also needs extremely careful handling throughout, including when it is being conjugated to the antibody.

Small Molecules, But a Big Future

Despite the ever-changing and evolving nature of the pharmaceutical industry, with new trends in targets and technologies being leveraged to meet increasingly complex patient needs, the outsourcing of development and manufacturing will remain a vital part, as it looks to accelerate development and increase efficiencies. CDMOs cannot afford to wait for change, they must be proactive in their approach to predict these trends and be willing to invest in ways that will suit the needs of future therapies.

Industry research by GlobalData shows that new small molecule APIs are approximately twice as likely as biologics to be made by a contract manufacturer (although not all data are disclosed), and this figure has remained relatively consistent at around 50% for many years, with 48% of small molecules being outsourced in 2021 in contrast to just 23% for biologics. This, coupled with the strength of the developmental and clinical pipelines, clearly shows the continued importance of small molecules to the CDMO sector and goes against some industry narratives that suggest that the rise of biologic-based drugs comes at the detriment of small molecules.

The market remains strong and is evolving to present new opportunities for companies that support innovation through contract manufacturing. As ever, the challenge for CDMOs is to anticipate future market requirements and predict how small molecules will continue to advance in order to remain important and relevant to modern therapeutics.

References

1. https://www.drugdiscoverytrends.com/50-of-2021s-best-selling-pharmaceuticals/
2. https://www.biopharmatrend.com/post/67-will-small-molecules-sustain-pharmaceutical-race-with-biologics/
3. https://www.pharmaceutical-technology.com/comment/biologic-sales-small-molecule[1]sales/
4. Favour Danladi Makurvet, Biologics vs. small molecules: Drug costs and patient access, Medicine in Drug Discovery, Volume 9, 2021, 100075, https://doi.org/10.1016/j. medidd.2020.100075.
5. https://www.fda.gov/patients/drug-development-process/step-3-clinical-research – Phase I = 70%; Phase II = 33%; Phase III = 25-30% - FDA website
6. https://www.fda.gov/drugs/development-approval-process-drugs/new-drugs-fda-cders-new-molecular-entities-and-new-therapeutic-biological-products
7. IQVIA: Global Trends in R&D 2023
8. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6226120/ - Phase 1 = 75%; Phase II = 59%; Phase III = 88% - sample size of 786 project 2018
9. https://www.biospace.com/article/small-molecule-innovator-cdmo-market-size-to-hit-us-73-9-billion-by-2030/
10. https://affygility.com/potent-compound-corner/2021/07/09/percentage-of-drug-compounds-highly-potent.html
11. https://www.prnewswire.com/news-releases/hpapi-and-cytotoxic-drugs-manufacturing-market-3rd-edition-2020-2030-301057435.html
12. High Potency API Contract Manufacturing Market Size. Research and Markets. https://www.researchandmarkets.com/reports/5649397/high-potency-api-contract-manufacturing-market
13. https://www.precedenceresearch.com/controlled-substance-market
14. ADC Landscape Review, Hanson Wade, presented at World ADC Conference, February 2023.

Publication Details

This article appeared in Pharmaceutical Outsourcing:
Vol. 4, No. 24
Oct/Nov/Dec 2023
Pages: 10-12

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