The Capsules & Health Ingredients division serves two primary markets – Pharmaceutical and Nutraceutical. Within the capsules industry we are seeing different dynamics by market:
From a geographic perspective, there was a strong demand for Nutraceuticals coming from North America and steady demand for Pharmaceuticals in EMEA. We see continued increasing demand for both segments in Asia-Pacific markets, especially in generic drugs and the traditional medicine products in China and India.
Our Capsules & Health Ingredients division is the trusted partner in innovative capsules, dosage form solutions and health ingredients for pharmaceutical and nutraceutical companies.
Our capsules business portfolio has two sub-businesses: empty hard capsules, and liquid-filled hard capsules. In addition, our Dosage Form Solutions portfolio offers formulation and manufacturing services to allow our customers to customize their liquid-filled hard capsules. Alternatively, for customers looking to go to market quickly, we offer “ready-to-go” ingredients, as well as pre-filled liquid or semi-solid hard capsules.
Billion Capsules Produced Annually in 2020
Customers benefit from our rich and extensive end-consumer market insights and long-standing expertise in dose delivery science. This has enabled us to develop a comprehensive range of proprietary dosage forms and delivery technologies. These include targeted delivery, liquid-filled hard capsules, capsule-in-a-capsule or tablet-in-a-capsule solutions and lipid multi-particulates.
We also offer integrated product design, development, clinical supply and commercial manufacturing services to our customers around the world. Our diversified customer base includes companies that make branded, generic and over-the-counter medicines in the pharmaceuticals market, and branded, proprietary, and generic supplements in the nutraceutical market.
In addition to our broad capsule range, we offer a selected portfolio of high-quality nutritional ingredients across joint health, active nutrition, digestive and immune health, weight management, sports activities and pet nutrition.
We serve more than 5,000 customers around the world thanks to a state-of-the-at network of 10 production sites across three continents.
The Capsules & Health Ingredients business has maintained operations and business continuity throughout 2020. There was high capacity utilization across existing assets, which led to increased lead time for capsule products. We reported high single-digit sales growth for the full year, mainly driven by our nutritional offerings.
Throughout 2020, we have benefited from increased consumer interest, driven by COVID-19 pandemic. With limited disruption to the manufacturing network arising from the pandemic, we began expanding our capacity to meet increased demand for both nutrition capsules and health ingredients. In addition we made the decision to invest to increase our overall capsule capacity from 230 billion to 260 billion capsules annually by 2022. This additional manufacturing capacity will address the growth across our gelatin, vegetarian and specialty polymers portfolio, as well as the liquid-filled hard capsules sold under the Licaps® brand. The investment will be made over two fiscal years, 2020 and 2021, across eight global manufacturing sites.
Looking ahead to 2021 and beyond, our business priority is to accelerate our profitable growth by meeting our customers’ evolving needs to deliver more complex drugs, cleaner vegetable-based dosage forms and ingredients that enable healthier living. We will continue to develop new innovative capsules, enhance drug delivery and improve our operational and functional efficiencies.
Capsules & Health Ingredients
As a newly-formed division the Capsules & Health Ingredients (CHI) business has delivered a strong financial performance against the backdrop of a world pandemic.
The COVID-19 pandemic created an unprecedented increase in demand for us as consumers continued to focus on their health during the pandemic. This inevitably placed pressure on our global supply chain but our short-term expansion allowed us to produce an additional 10 billion capsules; we also leveraged our inventory to meet the sales of 230 billion capsules in 2020. We continue to work with our customers and vendors to ensure we stay ahead of this dynamic market environment as the pandemic continues.
Whilst working tirelessly to meet this increased demand, we also focused on bringing different legacy groups together to create one CHI team with common goals and practices. We established a new Leadership Team and developed a structured management framework with a common vision, customer centric strategies and key performance indicators (KPIs) to monitor progress.
As we look to 2021, we are focused on continuing to strengthen our global manufacturing network and innovation capability, as well as becoming a more customer centric organization. We do not simply want to meet our customers’ needs, we want to exceed their expectations across the organization. By focusing on these three key pillars, we will continue to be a global leader and better meet the needs of consumers as they look to protect and improve their health.
In 2020, we introduced an enhanced product line, aimed at tackling concerns around bias during blind clinical trials. Capsugel® DBcaps® double-blinded capsules are designed to provide an over-encapsulation of the drug to overcome the challenges of blinding products during clinical trials. The portfolio now covers a broad range, including both gelatin and FSC-certified hypromellose (HPMC) variations, making it suitable for use with multiple formulation properties and multiple oral dosage form sizes. In late 2020, Capsugel® DBcaps® capsules received the CPhI Pharma 2020 Award for Excellence in Pharma: Finished Formulation. This was assessed against a very demanding set of criteria, including product innovation, purpose, problem-solving capacity and competitive advantage.
Throughout 2020, we have continued to bring new consumer-driven capsule innovations to the market. For instance, we extended the range of our clean-label colored capsules. The different color options are achieved using a variety of plant-based foods, with Vcaps® Plus Spicy Yellow and Red Radish capsules now launched into the North American market.
Further, our customers continue to leverage our dosage form solutions. We assisted a wide range of product introductions, from mood, immunity, and digestive health to personal care supplements for skin and hair. Technology and dosage forms continue to solve a variety of problems, including the following:
Within health ingredients, we announced the launch of a new and unique probiotic strain TWK10®, isolated from Taiwanese Kimchi. A novel probiotic designed to deliver sports nutrition benefits for both elite athletes and active consumers, the TWK10® brand has been clinically shown to enhance endurance, improve body composition and energy levels. Licensed exclusively from Synbio Tech, the clean label vegan ingredient can be used in dietary supplements and in foods, with additional applications already in development. The TWK10® probiotic is now available in North America.