Monday, December 22, 1997
One reason the drug delivery model has been attractive for companies and investors alike is its relatively low-risk profile compared to companies developing novel compounds from scratch. In contrast to the risks involved in taking a new product of unknown efficacy through the clinic, once a delivery company has its technology up and running, it can be applied multiple times to products that have already been approved.
The downside is that the royalty stream from the formulation of client company compounds can be modest compared to the revenues possible from proprietary pharmaceuticals. In addition, delivery company earnings can be hostage to the sales efforts of the compound owners that have incorporated the delivery technology into their products.