Take one a day with water
- From: Vol 9, Issue 6 (June 2008)
- Category: Market insight
- Region: Unspecified
- Related Companies: Christ Water Technology, GE Infrastructure Water & Process Technologies, Siemens Water Technologies and Veolia Water Solution & Technologies
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The pharma industry needs water to sustain its growth. Gord Cope explores the opportunities and pitfalls of this niche market.
At first glance, the nostrums in your medicine cabinet may not appear very thirsty, but creating drugs consumes an immense amount of water. “Overall use of water in drug manufacturing is extremely high,” says Mike Costello, director of biopharmaceuticals for Siemens Water Technologies. “You might think there’s not a lot of water in a pill, but hundreds of gallons can be used for rinsing and sanitizing.”
In 2006, the pharmaceutical sector produced about USD500 billion worth of vaccines,
anti-cholesterol drugs, topical creams and other medications from over 10,000 regulated facilities. In order to produce them, most plants need purified water (PW), used primarily for sanitization, and water for injection (WFI). “Water for injection is for liquid-based drugs or IVs (intravenous),” says Costello. “It is high purity water.”
The sector spends slightly less than half of one per cent of its annual sales on water needs, or around USD2 billion per year. “I wouldn’t be surprised if it exceeded USD1 billion in North America; the US is the largest market, with about half of global needs,” says Costello. “Europe accounts for about 30%, and the rest [is] divided up around the world.”
Four companies dominate the pharmaceutical water needs market: Veolia, GE, Christ and Siemens. Veolia has over 1,000 installations worldwide. “We do 130-150 new plants per year now,” says Johann Bonnet, market manager at Veolia Water Solutions & Technologies’ pharmaceutical competence centre in France. “We have offices in 35 countries, including the US, UK, France, Germany, China, Singapore and India.”
GE has bout 400 systems worldwide. “Sixty per cent are in North America, and 40% rest of world,” says Mike Holland, commercial leader for pharmaceuticals with GE Water & Process Technologies. “Asia is a good market for pharmaceuticals. Ireland is a steady performer as far as expansion is concerned.”
Christ Water Technology Group has almost 800 devices in operation in the sector. “We have about 50% of the market in Europe,” says Reune Runyon, global key account manager for Christ’s pharmaceutical & life science division. “Globally, we have about 15-20%.” After the big four, the rest is serviced by smaller companies. “There are hundreds of regional players,” says Runyon.
Siemens estimates that global growth is around 7% a year. “Much of the North American market is mature, but there are emerging markets for biotechnology and vaccines,” says Costello. “Generics are one of the fastest growing sectors in Asia, the US, Europe and Latin America.”
“China is moving very fast, and we are seeing the biggest growth there,” says Veolia’s Bonnet. “Our business is doubling there every year. The difficulty of the Chinese market is that they want high specs, but there is strong competition and lower amounts for investment.”
Form follows function
Process engineering for water systems is governed by US Pharmacopeia in North America (there are similar bodies in the EU and Japan). Two basic types of system are widely used in the pharmaceutical sector. About 80% of systems are RO/EDI, and are primarily used for purified water.
“Originally, pharmaceutical companies used Ion Exchange, but that required chemicals,” says Bonnet. “Now, we do twin-pass RO and continuous electrode deionization, so there is no need for chemicals, and there is better quality. RO models are getting cheaper, and we can design bigger systems for the same price.”
Because WFI (water for injection) products are administered to the bloodstream, higher processing standards are used. “We don’t use filtration in WFI because you can have biofilm and bacteria on the upstream side that could break through,” says Bill Collentro, a senior consultant with Water Consulting Specialists, an engineering firm specializing in the design and validation of water systems for the pharmaceutical industry. WFI is therefore produced through distillation. “The distillation units are usually vapour compression. You use a phase change (water evaporating to gas) that removes endo-toxins (dead bacteria particles). It is then stored at 80°C and re-circulated.”
In the US, levels of water purity are set by the Food and Drug Administration (FDA). “Whether it is purified water or water for injection, there are three categories of impurities: chemical/ionic, organic and microbial,” says Costello. Generally, there must be less than 500 ppb TOC, 100 colony forming units (cfu) per millilitre for microbial, and 1.2 MOhm.cm resistance for chemicals.
The stringent quality levels are necessary for a range of reasons. Removing bacteria eliminates any potential for infection, but some drugs also have a sensitivity to trace chemicals that can degrade or destroy their effectiveness. “Biotechnology drugs, for instance, are very sensitive to water quality,” says Costello. On the other hand, removing TOC is primarily cosmetic. “It can cause bad odour, taste and [an] off colour,” says Runyon.
Curiously, pharmaceutical standards are not as stringent as semiconductor standards. If one makes the water too clean, it becomes harder to remove microbes. “If you have a minimal nutrient environment, bacteria enter a defence mechanism where they get much smaller in size and are more difficult to remove,” says Costello. “That means you have to run culture tests that take up to 10 days to detect them.”
In addition to RO/EDI and distillation, most pharmaceutical plants operate several other water systems. “You need a pure steam generator for autoclaving,” says Collentro. “You inject it into tubing and closed vessels and sterilize at 121°C for 15 minutes. These systems are rated at 200-300 lbs/hr.”
Ozone plays an important role in controlling bacteria in storage tanks and pipes. “There are a lot of studies that show microbes grow resistant over time to chemical sanitization, but it’s difficult for them to grow resistance to ozone and heat,” says Costello. “Microbes are tricky, and try to find ways of surviving, such as secreting biofilm that creates an environment that protects them. Heat and ozone can destroy biofilm.”
Waste water must also be comprehensively treated before discharge. “Stringent, regulated steps are taken to concentrate wastes,” says Collentro. “Materials are filtered to generate solids and treated as hazardous waste.”
The size of systems varies widely. Small R&D firms need 5-10 gpm for PW and 10 gph for WFI. A system for a biotechnology pharmaceutical plant might need 500 gpm. “The biotechnical process uses aqueous solution and adds bacteria and nutrients to produce drugs through bacterial fermentation,” says Runyon. “These are big, complex molecules, and require lots of purifying.” Plants that produce generic pills are designed with economies of scale in mind. “Larger companies making bulk products might need 100-250 gpm for PW and up to 3,000 gpm vapour compression stills,” says Runyon.
Capital expenditure per plant for water equipment also varies widely. “The costs of systems range from USD250,000 minimum up to USD20 million (for custom designs),” says Collentro. Fortunately, most facilities can rely on off-the-shelf designs because performance specifications are globally similar. In 1996, Christ devised the Osmotron line, the first skid-mounted system for the pharmaceutical industry. “Before that, we did what most companies did, we had bits and pieces of water softeners, EDI, RO, that we would ship to site, then assemble,” says Runyon.
“It took longer to install and commission. Then we decided to try a skid-mounted system that was completely wired up in our workshop. We could do a complete Factory Acceptance Test. It reduced the typical time required to deliver a system from six months to three months. The clients were very happy. It has become a common standard in the industry now.”
The trend is your friend
Several water need trends are emerging within the pharmaceutical industry. “There is a lot of concern about making drug production more environmentally friendly,” says Costello. “Overall use of water in drug manufacturing is extremely high. Manufacturers are working to produce an efficient plant design that consumes as little feed water and [emits as little] waste water as possible. It is part of the greening process, but it also lowers costs.”
“There’s a trend of companies looking to become greener and more energy efficient,” agrees Holland. “A big part of that is water usage and the disposal cost. You do an audit of water usage and identify the big wasters. RO systems, for instance, operate at 75% recovery, which means that 25% goes down the drain. You isolate the stream and treat it with ultrafiltration or membranes and recover over 50%. With further treatment you can use it in cooling towers and boilers, and grey water uses like toilets.”
Pharmaceutical companies are also looking to reduce their energy intensity. “We’ve used ozone in place of hot water sanitization systems to reduce energy and save money,” says Holland. “We replaced a hot water sanitization unit in WFI with two ozone units and saved three quarters of a million dollars in energy the first year.”
Because the industry uses large amounts of stainless steel for water purifying equipment, storage tanks and heat exchangers, recent metal commodity price hikes have had an impact. “We were quoting on a system refit that needed a lot of stainless steel,” says Collentro. “We quoted USD600,000 in October 2007. By the time we got going in February 2008, the price was over USD700,000.” Some industry participants blame growing demand in Asia, which could lead to long- term price increases, but others say it is more a reflection of being picky about who provides the steel. “The rise in the price of stainless steel is not so much due to demand in China, but from customers wanting a certain supplier,” says Bonnet. “Then the supplier has difficulty meeting demand, and therefore the price rises.”
While most pharmaceutical companies rely on in-house water experts, some are outsourcing their water needs. “Pharmaceutical facilities are becoming mean and lean,” says Collentro. “Let’s say you have an employed person taking care of your water system, and you’re paying them USD100,000 per year plus another USD100,000 in benefits and retirement. You can contract a person for USD100,000 a year without the benefits. I’ve seen situations where you terminate an employee and hire them back one month later.”
“We are seeing more and more requests in the last three years for turnkey projects,” says Bonnet. “The latest projects in Asia produce vaccines for bird flu and other diseases. They are often large projects, where we offer a total turnkey water solution. The end user could simply say, “I want 1000m3/d,” and Veolia Water Solutions & Technologies designs and builds to the right quality and amount.”
The development side
Most water equipment manufacturers are heavily involved in R&D. “At Siemens, we spend a lot of money on new technologies, and a big portion is specific to the pharma- ceutical industry,” says Costello.
“We work to improve water quality, robustness and risk aversion on existing technologies, and research radically new technologies.” “We are working on endocrine disruptors in feedwater because it’s becoming a big issue with living species, municipalities and pharmaceutical companies,” says Bonnet.
“There’s a lot of work improving EDI, making it more robust and compatible with the way pharmaceutical companies go through the sanitization process,” says GE’s Holland. TOC monitors have also been improved. “Normally, you take a sample and use a bench-top unit to get a result. We now have on-line, real time monitoring, so you get a quicker reaction to water quality. You can tell instantaneously if it is in-spec and ready for release.”
While water needs within the pharmaceutical industry are heavily regulated, most industry observers expect few major changes to current standards. “There are rumours that particle restrictions might be added in the next few years,” says Runyon. “These are fine particles that do not have resistivity or TOC – things like sand. They are not linked to any problem, but some companies have additional requirements to deal with them.”
Most pharmaceutical companies are focused on the political climate in the US, where the future of the medical industry is being played out in the 2008 presidential election. “Some plant construction projects are being delayed,” says Collentro. “There is polarization in what to do about healthcare, and there may be some price regulations on drugs. That talk doesn’t make pharmaceutical companies happy.”
Regardless of this, most market participants expect the long-term prospects of the pharmaceutical industry to remain solid. “People get sick, and they need drugs,” says Christ’s Runyon. “Our global growth is in the range of 10%. And emerging markets are asking for more and more high-quality drugs. Growth there can be 15-20%, especially in countries like India that are seeking to export their drugs and need FDA approval.”
“I’m certainly optimistic about the sector,” says Costello. “Pharmaceutical has had its ups and downs over the years, but I’m feeling bullish about its future.”
A case for positive vetting
Drugs are not just for humans. Gord Cope explores the dynamics of water use in the veterinary drug market.
While the beneficiaries of veterinary medicine are not human, treated water needs within the sector rank as a high priority. “There’s a lot of crossover between human and veterinary product needs,” says Mike Costello, director of biopharmaceuticals for Siemens Water Technologies. “Some veterinary drug manufacturers follow similar or the same standards as human needs, especially if they are conducting animal trials for human use.”
The sector sells around USD18 billion worth of drugs annually. There are two main parts to the business: supplying vaccines, hormones and parasitic protection to food producing animals, such as cattle and poultry, and medication to prolong the life of companion animals, such as dogs and cats.
Many global pharmaceuticals have animal health divisions within their portfolios. Merial, for instance, is a joint venture between Aventis and Merck. The company has 5,000 staff around the world. In 2007, it sold USD.5 billion in pharmaceuticals, mainly anti-parasite medications and vaccines for such diseases as foot and mouth, avian influenza, swine flu, and rabies. “Merial is one of our clients,” says Johann Bonnet, market manager at Veolia Water Solutions & Technologies’ pharmaceutical competence centre in France. “They use the same specs as human pharmaceuticals.”
Typically, veterinary pharmaceutical plants rely on two basic types of systems to cover their pure water (PW) and water for injection (WFI) needs. About 80% of systems are RO/EDI, and are primarily used for PW. Because WFI products are administered in the bloodstream, they require higher standards, and use vacuum distillation to produce water free from endotoxins.
The current annual spend on water needs within the sector follows the human pharmaceutical trend of slightly less than half of one per cent of sales, or approximately USD80 million.
As growing economies in Asia expand their consumption of meat, the market for veterinary medicine is growing at around 7% annually. “As a ballpark guess, about 90% of our systems are for human drugs, and 10% are now for veterinary drugs,” says Reune Runyon, global key account manager for Christ’s pharmaceutical & life science division.
Water needs in the pharma industry
* The global pharmaceutical industry produced approximately USD500 billion worth of products in 2006, from over 10,000 regulated facilities.
* Most pharmaceutical plants use RO/EDI systems to produce purified water (used primarily for sanitization), and distillation units for water for injection (mixed with intravenous drugs). Systems range in size from 5 gpm to 3,000 gpm. Ozonation and UV systems are also common.
* Annual capital expenditure on new equipment and refits is approximately USD1 billion in North America, USD600 million in the EU and USD400 million in the rest of the world.
* Four companies dominate the pharmaceutical water needs market: Veolia, GE, Christ and Siemens.
* Global growth is in the range of 7%. Some emerging markets, such as India, are growing at 15-20%.
* The veterinary pharmaceutical industry sells about USD18 billion worth of products annually. Water requirements are similar to human pharmaceutical plants. Capital expenditures for water needs are approximately USD80 million annually.