Rise of 3D Printed Drugs
3D Printing (3DP) has permeated many fields of medicine, pushing new innovations and possibilities. Recently developments in 3DP technology have enabled its implementation in printing pharmaceuticals. Startups are emerging with promising advancements in personalized medicine and distribution of medicine.
Aprecia Pharmaceuticals
Based out of Pennsylvania, Aprecia Pharmaceuticals is a commercial stage startup in specialty pharmaceuticals. They develop and manufacture products using their proprietary ZipDose technology. In 2015, Aprecia Pharmaceuticals became the first company to have a 3DP prescription pill approved by the FDA. Spritam is a generic form of levetiracetam, a treatment for epilepsy, that is 3DP with ZipDose. ZipDose uses 3DP to bind together several thin layers of powdered drug that is interspread with liquid droplets which make the pill effortless to swallow for those with difficulty swallowing.
Aprecia’s strategy is to repackage highly prescribed, highly dosed drugs and make its delivery more effective and convenient. With a total of 4 drugs in their pipeline, Aprecia is expanding its portfolio of drugs with large market potential. Aprecia is currently positioned as a potential major threat to generic drug manufacturers.
Teva Pharmaceuticals
Teva Pharmaceuticals is a multinational pharmaceutical based in Petah Tikva, Israel. With specialties in developing, manufacturing, and marketing generic drugs, Teva is currently the largest generic drug manufacturer in the world. It has over 70 manufacturing sites in Israel, North America, Europe, and South America, and it’s 2015 gross revenues totalled $19.5 billion. Teva’s growth strategy is focussed on building a stronger brand by including more high impact products in their portfolio. This focus in the generics market is illustrated by their 2015 acquisition of Actavis Generics, the second largest pharmaceutical division in generic drugs. However, simply acquiring more generics will not be enough to sustain its growth in the coming age of 3DP drugs.
The 3DP High
3DP technology holds significant implications in the pharmaceutical industry. The most substantial advantages include:
1. Drug personalization
2. Distribution
3. Cost
Printing pills is a much more flexible process in which prescriptions can be manipulated to tailor ingredients and form to specific patients. Traditionally, generic products are undifferentiated and emerge as soon as branded drugs patent expire. This results in many generic pharmaceuticals producing the same product, where the lowest cost product would emerge on top. However, with 3DP advancements generic products can now be differentiated through innovations in their production and mechanism. Furthermore, these innovations can be patented to secure a competitive advantage in the generic drug industry.
Distribution of prescription drugs involves a complex supply chain with many intermediates. 3DP allows for the possibility of a decentralized supply network where becomes localized rather than centralized. It would change how drugs are manufactured and delivered affecting the speed, risk, and quality of the supply chain.
With advancements in 3D printing technology, materials and equipment become cheaper. This enables lower cost drugs with higher margins for pharmacy’s.
Challenge for Teva
The biggest challenge for Teva Pharmaceuticals with the advent of this technology is twofold:
1) Can’t compete with generic drug innovation
2) Losing control over the supply chain
Innovations
Startups like Aprecia are vetting popular generic drugs from the libraries of large generic producers like Teva. Teva’s market share in these products will become threatened as 3DP producers have more value add in the product, and could possibly offer it at a lower cost. How generic producers compete will no longer be based on only the lowest cost producer, but also on who holds patents on design innovations. However, the pharmaceutical industry is very sensitive as it is directly tied to the health of people. Hence, 3DP innovations in drugs are not yet legitimized as a safe alternative.
3DP democratizes the production of drugs, allowing for pharmacies and individuals to create their own drugs. Traditionally manufacturers pass products on to distributors, which include importers and wholesalers. The drugs are then distributed to dispensaries and retailers, and finally to the patient.
As startups and pharmacies gain the convenience and flexibility to create their own generic drugs, the relevance of traditional generic drug manufacturers like Teva is threatened. Taking a close look at the supply chain reveals stress points that could facilitate its disruption.
The Supply Chain
The supply chain is complex and requires substantial coordination. Responsibility for inventory management and demand planning falls on the dispensaries, which can get complicated. These factors create friction in the supply chain and creates an incentive for pharmacies to adopt a more convenient solution. 3DP offers the convenience of on demand supply, product innovation, and control into the hands of players downstream the supply chain. Thus, the supply chain is prime for disruption in the near future. However, the current barrier to this fate is the difficulty for regulators to establish 3DP guidelines.
Teva’s top five generic drugs makeup $2 billion of its revenues, where 50% of these revenues are from the United States. Even a modest loss in US market share of these few products would be a substantial loss for Teva. Losing 5% of this market translates to $50 million in lost revenue. With the emergence of more 3DP startups targeting its broad portfolio of generics, the impact could be much greater.
Strategy
To stay relevant, Teva pharmaceuticals should develop a network of decentralized 3DP facilities, and work with regulators to develop 3DP guidelines for pharmaceuticals.
New Tech
Teva has expressed interest in 3D printing, but has yet to aggressively pursue it. It has a history of expanding its generic portfolio by acquiring products from other businesses. Teva pharmaceutical should now acquire Aprecia Pharmaceuticals to acquire their patents on 3DP drug and ZipDose technology. These two capabilities will allow Teva to bring many of it’s other generic products to market quickly. This would secure an innovation that differentiates Teva from its competition that cannot be copied. Starting by digitizing the drugs that would most benefit form ZipDose, Teva can increase its market share in those markets, and use the funds to invest into R&D for new 3DP innovations.
New Model
Teva has a massive supply network connected to many pharmacies around the world. This scale can be leveraged to implement 3DP into its own supply chain. The largest point of friction they face within their supply chain is between the distributor and dispensary. By building a network of 3DP facilities across the states, Teva can bring in a localized production model. Facilities would house 3D printing machines and take orders from local pharmacies with detailed specifications. Completed drugs could then be transported locally to dispensaries quicker and cheaper than traditional methods. This would retain intellectual property in the hands of Teva while servicing the pharmaceutical community. If the 3DP technology and chemical blueprints are secured, the issue of piracy by third parties should be contained.
A large barrier to pharmacies printing their own drugs instead is regulation. Although a 3DP drug has been approved by the FDA, regulating the 3DP process of drugs is uncharted territory. Regulators need to ensure that printed drugs are made consistent, tamper proof, and error free. Regulating printing for individual pharmacies is difficult feat and infeasible as every pharmacy would have to be individually checked. It would be much easier for regulators to approve a standardized approach through 3DP facilities. Teva should collaborate with the FDA to develop regulations for 3DP facilities. Regulating this will help the public accept the safety of 3DP drugs and legitimize it as a suitable innovation.
Impact
Drug innovation
Approximately 200 000 people die each year from adverse drug reactions (ADR). 80% of these ADRs are dose dependent. This implies that better dose control and personalization can reduce the prevalence of ADRs. 3DP allows for more flexibility in tailoring drug ingredients and delivery mechanism. About 40% of adult Americans have difficulty swallowing a pill. Innovations like the ZipDose technology have huge potential to improve the quality of life for many people.
Reach
With a network of 3DP facilities, Teva’s reach would be expanded. Currently a large issue facing developing nations in access to drugs is distribution and price. This strategy would solve the distribution issue as the supply chain would no longer be dependent on international distributers, but only on local distribution.
Profitability
Teva is currently the market leader in generic drugs, with 18% of the $80 billion market in the US. 3DP can allow Teva to capture more of the US market share through product innovations, and can reduce distribution costs that increase margins. Distributor margins can range from 10–30% and make up a significant portion of cost. Furthermore, a professor at the University of Glasgow is developing a 3D printer for drugs for as low as $1200. This illustrates how low the upfront capital investment could be. This solution would increase the margin for Teva while improving patient outcomes.