Financial Feasibility of Developing Sustained-Release Incrementally Modified Drugs in Thailand’s Pharmaceutical Industry: Mixed Methods Study

Introduction

The Thai pharmaceutical industry is undergoing significant transformation in alignment with Thailand’s Pharmaceutical Development Action Plan (2023‐2027), which builds upon the foundation of earlier policies, including the National Strategic Master Plan (2018‐2037). These initiatives collectively emphasize enhancing the national drug system, fostering domestic pharmaceutical manufacturing capabilities, and achieving self-reliance through sustainable development [1-3]. The current action plan (2023‐2027) prioritizes accelerating the industry’s capabilities in research, development, and production of vaccines, drugs, herbal products, and biologics, while promoting local pharmaceutical industries to reduce import dependency and increase export potential. By focusing on innovation, technological advancement, and strategic investments, this plan ensures the industry’s alignment with national health care priorities and global market demands, driving growth and competitiveness in the pharmaceutical sector.

Currently, Thailand’s pharmaceutical manufacturing industry is predominantly focused on the production of generic drugs, with an average of 540 generic drug approvals annually, including approximately 35 new ones [3]. However, the development of new chemical entities (NCEs) remains limited due to challenges such as insufficient investment, lack of advanced technology, and a shortage of specialized talent. Given these constraints, a more feasible approach for Thailand’s pharmaceutical sector lies in the development of incrementally modified drugs (IMDs). IMDs involve enhancing existing drugs through modifications in delivery systems, indications, combinations, administration routes, dosage forms, and strengths, offering a pathway to sustainable self-reliance while reducing costs and risks associated with NCE development [4].

Globally, IMDs have gained traction in high-income countries, with high listing and reimbursement rates, demonstrating their potential to improve patient outcomes and health care efficiency [5]. In Thailand, focusing on IMDs aligns with the country’s strategic goals of fostering innovation, reducing reliance on imported pharmaceuticals, and enhancing the competitiveness among local manufacturers. By leveraging advanced technology platforms, the development of IMDs can provide a viable pathway for the Thai pharmaceutical industry to achieve greater self-sufficiency and contribute to the broader health care system.

This study aims to examine the financial feasibility of developing IMD dosage forms within Thailand’s pharmaceutical manufacturing industry. By evaluating the economic viability and potential return on investment of IMDs, this study will provide evidence-based insights to support decision-making and guide strategic investments in the sector. The findings may provide a foundation for policy makers and stakeholders in formulating targeted strategies to promote innovation in IMDs, enhance domestic pharmaceutical capabilities, and reduce reliance on imported drugs. Ultimately, the study may also contribute to strengthening Thailand’s pharmaceutical sector, ensuring its alignment with national development goals and global health care trends.

Methods

Study Design

This study used a mixed methods approach, combining qualitative and quantitative components. Given the lack of publicly available data on IMD development, this approach was necessary to triangulate data from multiple sources, ensuring robustness and reliability. The qualitative component included a literature review, surveys, and expert interviews, while the quantitative component focused on financial modeling and analysis.

Data Collection

Literature Review

A comprehensive review of existing IMD dosage forms, manufacturing processes, cost structures, regulatory requirements, and market trends was conducted using PubMed, Scopus, and industry reports. This review served as input for the development of the financial model and interview guide.

Survey

A survey was designed to estimate costs associated with IMD development. The cost structures were adapted from a prior study on the impact of the Thai–European Union (EU) free trade agreement (FTA) on the pharmaceutical supply chain in Thailand [6]. Cost collection forms were sent to five IMD experts for feedback, refinement, and validation, after which cost estimates were provided.

Interviews

Snowball sampling was used to identify participants due to the specialized nature of IMD development and the limited number of manufacturers in this field. This approach allowed the research team to access experts with relevant knowledge and experience in IMD development.

Semistructured interviews were conducted with 15 experts, including company owners, industry leaders, policy makers, and researchers. Interviews continued until data saturation was achieved, with no new themes emerging.

Interviews were conducted online and recorded with participants’ consent. The key interview questions were focused on costs associated with research and development (R&D), manufacturing technology, and clinical and nonclinical studies. Data saturation was achieved when no new themes emerged. To ensure transparency and reproducibility, detailed descriptions of the interview guide and survey questions are provided in Multimedia Appendix 1.

Ethical Considerations

The study received ethical approval from the Research Ethics Review Committee for Research Involving Human Subjects, Health Science Group at Chulalongkorn University, Thailand (COA No. 176/2564). We confirm that participation in the online Zoom sessions was entirely voluntary. Participants were informed in advance about the purpose and format of the sessions, and they had the right to decline participation without any consequences. Choosing to join the Zoom session was considered as implied consent by action, in alignment with ethical practices for minimal-risk research. To protect participant confidentiality, no personally identifiable information was recorded during the sessions. All data were de-identified prior to analysis. Participants received approximately $30 USD as compensation for their time and contribution, ensuring transparency and fairness throughout the research process.

We confirm that participation in the online Zoom sessions was entirely voluntary. Participants were informed in advance about the purpose and format of the sessions, and they had the right to decline participation without any consequences. Choosing to join the Zoom session was considered as implied consent by action, in alignment with ethical practices for minimal-risk research.

Data Analysis

Financial Model Development

Two financial model scenarios were developed to assess IMD feasibility, focusing on IMD types and cost estimation. Sustained-release formulations, which are the most preferred type of IMDs by the domestic pharmaceutical industry, were selected based on results from a prior feasibility study [7]. The cost estimation was adapted from the Thai-EU FTA study [6], covering sourcing, R&D (ie, laboratory scale, pilot batch, and stability studies), nonclinical and clinical trials, and registration and process validation [8,9]. Costs were estimated under two regulatory scenarios: (1) conducting only phase I clinical trials and (2) conducting full clinical trials [10].

Sensitivity Analysis

A sensitivity analysis was conducted to evaluate the impact of variations in key variables including cost, duration, and payback period on the financial feasibility of IMD development. This analysis provided insights into the robustness of the financial models under varying assumptions.

Results

Overview

A prediction market analysis by Hongthong et al [11] on the feasibility of IMD development by the domestic pharmaceutical industry identified sustained-release dosage forms as the most preferred option, which guided the financial feasibility analysis in this study [7,12]. The assumptions and input data used for this analysis are detailed in Table 1.

Financial Feasibility Analysis Model

To assess the financial viability of investing in the development of sustained-release dosage forms, a financial feasibility analysis model was developed. This model calculates the payback period and market growth rate based on two primary components (ie, cost and revenue components). The cost component estimates the expenses associated with R&D of the new dosage form, while the revenue component forecasts the income required to achieve a return on investment within a specified payback period. The model’s flexibility allows for adjustments in key variables such as the payback period and market growth rate, enabling stakeholders to make informed strategic decisions regarding pharmaceutical R&D investments.

Cost Analysis for Sustained-Release Dosage Form Development

Table 2 presents the cost analysis for two development scenarios. In scenario 1, which involves only phase I clinical studies, the R&D process for new sustained-release IMD formulations was estimated to take 7 years, with development costs ranging from US $1.46 to 3.09 million. Approximately 60% of the total costs were allocated to process validation batches, a critical step requiring three consecutive production batches. This phase represents a significant capital investment, with varying costs depending on production complexity. In scenario 2, which includes full clinical trials from phase I to phase III, the development duration extended to 11 years, with fixed costs ranging from US $18.60 to 20.23 million. In this case, 70% of the total R&D budget was dedicated to clinical studies, which are essential for demonstrating the efficacy and safety of new drugs.

The sensitivity analysis presented in Table 3 evaluates the financial implications under different scenarios. For scenario 1, which involves only phase I studies with R&D costs of US $1.46 million, the annual income required to recover the invested capital—assuming a 5-year payback period—ranges from US $0.20 to 1.80 million. In contrast, for scenario 2, which includes full clinical trials, the required annual income increases substantially, ranging from US $3.01 to 27.11 million.

The duration of the R&D process substantially impacts financial expenditures; shorter R&D periods can reduce costs and enhance project feasibility. High-risk activities such as complex formulation and analytical method development often involve a higher likelihood of failure and require advanced clinical studies, necessitating larger capital investments. Therefore, well-planned R&D processes can substantially reduce costs and improve investment returns.

The analysis also examines the impact of extending the payback period to 10 years, which lowers the capitalization point and reduces the annual income required. This consideration is particularly relevant for drugs targeting chronic diseases, which typically have longer market life cycles. Additionally, factors such as annual sales growth rates upon launch, the competitive landscape, and government regulations critically influence the financial feasibility of developing sustained-release IMDs [15].

Discussion

Principal Findings

This study systematically explores the financial viability and strategic implications of developing IMDs, with a focus on sustained-release dosage forms. Our analysis highlights the financial and investment requirements for launching IMDs into the market, particularly in comparison to generic drugs.

Developing IMDs, particularly as sustained-release formulations, is substantially more resource-intensive and time-consuming than producing generic drugs. The extended timelines and higher costs are primarily attributed to the complexities of modifying and validating existing drugs, which necessitate extensive clinical testing. In contrast, Liangrokapart et al [6], in a study on the impact of the Thai-EU FTA concerning intellectual property rights on the pharmaceutical supply chain in Thailand, suggested that generic drug development typically required 25 to 46 months, with considerably lower R&D costs ranging from US $0.19 to 1.13 million [6].

A key challenge in this analysis is the absence of specific active ingredient data, which complicates accurate forecasting of market growth and sales revenue. Despite these limitations, the chosen methodology effectively captures the financial intricacies of IMD development, providing robust insights into the associated costs and investment requirements.

Compared to the development costs of NCEs reported in previous studies—including an analysis by Sertkaya et al [15] on drug development costs in the United States (2000‐2018) and the study by DiMasi et al [18] on the price of innovation and research on R&D costs and returns by therapeutic category—the costs for IMDs are substantially lower. This is primarily because IMDs do not incur discovery and preclinical expenses. Additionally, IMDs have lower failure rates than NCEs, suggesting a potentially lower-risk investment profile. This aligns with findings from a study on IMDs under the USFDA 505(b)(2) NDA pathway, which reported clinical trial completion times of 12‐24 months and development costs of US $2 to 10 million, closely mirroring the outcomes of this study [4].

The findings from both scenarios underscore that IMD development entails higher costs and longer timelines compared to generic drugs. These challenges stem from the need to develop new formulations and conduct comprehensive clinical studies. However, shorter R&D periods can substantially reduce costs and enhance project feasibility, emphasizing the importance of efficient R&D planning.

The early stage and inexperience of IMD development within the domestic industry may result in longer timelines and elevated costs. Limited domestic expertise, coupled with the complexities of clinical trials and regulatory processes, poses additional challenges. The high investment required for IMD development necessitates a strong focus on market feasibility and sales potential, particularly in a competitive landscape dominated by generic drugs.

While this study offers valuable insights into the financial feasibility of IMD development in Thailand, several limitations must be acknowledged. First, cost estimates were derived from expert feedback and prior studies, which may not fully capture the variability inherent in real-world manufacturing processes. Finally, the findings may be context specific and not directly applicable to other types of IMDs or pharmaceutical markets.

For the future direction of this research, IMDs represent an incremental innovation that can be developed in various forms, including stand-alone and combination products. Therefore, further studies are needed to assess the feasibility of developing different types of IMDs to enhance patient health outcomes and quality of life.

Additionally, the regulatory process and guidelines play a crucial role in IMD development, making it necessary to study the impact of regulatory changes on IMDs. Furthermore, the pricing and reimbursement mechanisms for IMDs remain unclear for the local pharmaceutical industry, highlighting the need for further exploration of this topic.

Conclusions

This study provides essential insights into the financial aspects of developing sustained-release IMDs in Thailand, highlighting the extensive resources and strategic planning required. These findings underscore the complexity of predicting financial outcomes due to the variability in active ingredients and market dynamics. Although the development of IMDs involves substantial investment and extended timelines, understanding these financial and operational dimensions is crucial for successful drug development. Future research should further investigate the full cost spectrum of various types of IMD approaches to enhance the financial predictability and success of these studies.