Bespak operates across a number of complementary market sectors: Respiratory, Auto-Injection, Nasal, Nicotine delivery and Point-of-care (POC) diagnostics.
All these sectors share key characteristics: large multinational customers serving global markets; high levels of regulatory control, high barriers to entry, and the ability to deliver substantial growth in the near term.
The respiratory sector is large, estimated at US$24bn drug sales and £272m of device sales in 2013 with the device revenues predicted to deliver a compound annual growth rate (CAGR) of 3% to 2016. Bespak estimate current share of 22% of this market. The respiratory sector is one of the most highly regulated resulting in high barriers to entry. A number of key drugs are coming off patent resulting in a number of new generic entrants and associated opportunities for Bespak to supply both metered dose inhaler (MDI) and dry powder inhaler (DPI) devices. Although sales remain relatively flat in the traditional western economies, significant volume growth is being seen in emerging markets with the Brazilian, Russian, Indian and Chinese (BRIC) markets becoming more important in terms of their domestic consumption.
The auto-injector sector is a relatively high growth market, the end drug market of which is estimated at US$175bn in 2013 with a CAGR of 5% to 2016. Growth is being driven by a large number of new drugs that require delivery by injection. Whilst Bespak currently have a negligible share of this market, it is estimated that circa 60% of all new drugs in development will be delivered parenterally and may therefore require some form of auto-injector. Many of these new "large molecule" biologic drugs are highly viscous and require specialist devices to enable them to be effectively administered, often by the patient themselves in a non-clinical environment. The continued drive to greater self-administration with the associated improvements to patient compliance, patient outcomes and healthcare economics will create significant opportunities for Bespak to develop and manufacture auto-injectors to meet these needs.
The nasal drug market is estimated to be worth circa £8.9bn in 2013 with the associated device sales being £310m. CAGR is estimated at 2.4% through to 2016 with growth being delivered from two main areas. Firstly a number of existing branded drugs are coming off patent leading to generic entrants all requiring their own delivery system as the original device associated with the branded drug is normally unavailable to them. Secondly, the nasal route is extremely effective and a number of existing and new drugs are being reformulated to enable delivery via the nose, again all requiring delivery devices. Bespak currently has a negligible share of this market, yet has two firm development pipeline opportunities.
Although the non-tobacco nicotine substitution delivery market is in its infancy, with 2012 UK, France and Germany revenues estimated at £310m, it is forecast to deliver significant growth over the short term, estimated CAGR of 116% to 2016. The key drivers for this growth centre on both the consumer and regulatory appetite for safer alternatives to tobacco smoking coupled with the associated public health and healthcare economic benefits. Bespak will participate in this market through the Nicoventures contract awarded in December 2012.
The POC diagnostic sector is a relatively high growth market with an estimated CAGR of 6.6% to 2016. This diagnostic model enables the patient to be tested, diagnosed and treated in one appointment, whereas the traditional model requires samples to be sent away to a laboratory for testing, with patient recall required for treatment. Market growth is being driven by the combined benefits of: increased patient compliance, improved patient outcomes and lower cost of provision. Pharmaceutical companies are looking to exploit POC systems as part of a companion diagnostics strategy where drugs and tests are sold as combined "test and treat" strategy. Bespak has an equity investment in the Atlas Genetics, as well as a manufacturing contract to produce disposable test cartridges for Atlas.
In conclusion, Bespak operates across a number of diversified but complementary market sectors, each offering significant growth opportunities based on existing and emerging core competencies, with high barriers to entry and opportunity to protect value through the generation of IP.