Transdermal patches have come a long way since their introduction in 1979. However, unlike other pharmaceutical forms, they never achieved massive market penetration: between 2015 and 2022, the FDA approved only 84 transdermal patches out of a total of 7,239 generic products, representing just 1.2% of the total. The reason is technical — the physicochemical requirements a molecule must meet to be administered transdermally limit the universe of eligible candidates.

This article analyzes how major market players have interpreted segment dynamics over time, reflected in the increasing activity of mergers and acquisitions. The analysis is structured in four stages: the initial boom, competitive expansion, current consolidation, and perspectives for the coming years.

Context: A Segment with Declining Revenue but Stable Volume

Historical data on the global transdermal patch market shows a consistent trend: revenues have fallen more sharply than unit volume sold. This divergence reflects the price pressure generated by the entry of competitors in the generic segment, especially over the past 15 years.

This context of revenue contraction does not imply that the segment is in irreversible decline. What it does imply is that market players’ strategies have changed — and the analysis of merger and acquisition activity is the best evidence of those strategies.

STAGE 1 — The Transdermal Boom (Early 2000s)

In the early 2000s, the dominant logic was to capitalize on a pharmaceutical form with concrete advantages and sustained growth across all its variables. Both sector companies and health-focused investment funds joined this trend.

The most representative transactions of this stage include:

  • Corium International acquired StrataGent Life Sciences in 2007.
  • Apotex bought Aveva Drug Delivery Systems from Nitto Denko in 2012.
  • IBSA acquired the assets of Bouty Healthcare, a manufacturer specializing in transdermal patches, toward end of 2009.
  • Helm AG made a strategic investment in Amarin Technologies S.A. following the successful launch of the Fentanyl patch in Europe, acquiring a stake in the company.

 

The most significant transaction of the decade — and probably in the history of the segment — was Johnson & Johnson’s acquisition of Alza Corporation in March 2001 for approximately USD 10.5 billion. Alza was then the absolute leader in the segment with products such as Transderm-Scop, Duragesic, and Nicoderm, among others.

STAGE 2 — Competitive Expansion and Generic Entry

Driven by the niche’s growth at the start of the millennium, several competitors entered the market, mainly in the generic segment, seeking to capitalize on a space with low competition and high growth. The number of companies with transdermal patches in their portfolio increased by 61% in the past decade.

The most relevant transactions of this stage:

  • 2015: Teva acquired Allergan’s generics division, Actavis, for USD 40.5 billion, consolidating its presence in the transdermal segment as part of that broader portfolio.
  • 2016: Luye Pharma Group acquired the transdermal business of Swiss Acino AG for approximately EUR 245 million. This transaction represented the entry of a Chinese company into the niche and significant regional expansion. Acino was one of the most established players in the sector, being the manufacturer of Bayer’s contraceptive patch, among other products.
  • 2018: Gurnet Point Capital (GPC), a private investment firm focused on health and life sciences, acquired Corium International for approximately USD 504 million, primarily to provide the funds necessary to complete the development and approval of the Donepezil patch for Alzheimer’s treatment.
  • 2020: The spinoff of 3M’s transdermal business unit was acquired by Altaris Capital Partners for USD 650 million, creating Kindeva Drug Delivery.
  • 2020: The merger of Upjohn (Pfizer’s generics unit) and Mylan created Viatris, which became the world’s largest generic company with a range of transdermal products among its vast offerings.

STAGE 3 — Consolidation and New Horizons

In response to revenue contraction over the past decade, two types of reactions have begun to materialize in the market: consolidation of the competitive landscape through mergers of established players, and diversification of primarily transdermal-focused companies toward complementary pharmaceutical forms.

Consolidation: the European example

Two companies headquartered in Europe with significant strength in the transdermal segment stand out as consolidation cases:

  • Adhex Pharma (France): carried out a series of assertive expansion operations. In 2021, it established a strategic partnership with AMW GmbH, taking over its equipment, manufacturing, and intellectual property. A year later, it made the even more significant acquisition of Tesa Labtec GmbH, a German company with a long history in transdermal and oral film development and manufacturing. These operations consolidated Adhex as one of the main companies exclusively dedicated to these pharmaceutical forms.
  • LTS Lohmann Therapie-Systeme: in August 2022 acquired Tapemark Inc. (Minnesota, USA), expanding its North American presence and production capacity, consolidating its leadership in the segment.

Diversification: the move toward new platforms

Revenue contraction in conventional patches has motivated some players to explore adjacent pharmaceutical forms:

  • Oral films: the most frequent move given similar manufacturing characteristics. However, this market has not experienced significant advances, with almost all sales concentrated in a single product (Suboxone).
  • Microneedle patches: more challenging option requiring significant investment. Kindeva and LTS have been developing in this space for years. LTS received USD 4.3 million from the Bill & Melinda Gates Foundation at end of 2023 for the development of contraceptive patches with microneedles.
  • Combination products: both Kindeva and LTS have diversified toward what the FDA calls ‘combination products’ (drug and medical device combinations). LTS acquired Sorrel (high-volume portable injectable technology) from Eitan Medical to expand toward large molecules and biologics. Kindeva acquired iPharma Labs (2022, respiratory inhalation drug development) and Summit Biosciences (2024, innovative nasal sprays).

Consequences and Perspectives

The analysis of merger and acquisition activity in the transdermal market reveals a maturity stage marked by divergent strategies:

  • Companies betting on future segment growth, anticipating the launch of new molecules — innovative or migrating from other pharmaceutical forms — and improvements to existing products.
  • Companies diversifying toward new technologies and pharmaceutical forms, anticipating that conventional transdermal patches may be approaching a plateau and that the industry will migrate toward new delivery platforms.
  • Companies seeking antifragile positions, positioning themselves as a necessary nexus for multiple emerging technologies regardless of which one prevails.

 

The segment’s future remains uncertain. External factors — technological advances, regulatory changes, evolution of candidate molecules — will continue to be determinant. Companies that manage to maintain strategic flexibility and continuous innovation will be better positioned to capture emerging opportunities in this rapidly changing environment.

 

For companies evaluating development, licensing, or partnership opportunities in the transdermal segment, Amarin Technologies offers over 30 years of experience navigating these market dynamics. Contact us at info@amarintech.com.ar.

 

References

FiercePharma (LTS): https://www.fiercepharma.com/m-a/novartis-offloads-share-of-lts-lohmann-to-sap-billionaire-hopp-gaining-400m

Reuters (LTS): https://www.reuters.com/article/2014/07/17/novartis-lts-idUSL6N0PS2JC20140717/

IBSA/Bouty: https://mergr.com/ibsa-institut-biochimique-s.a.-acquires-bouty-healthcare

J&J/Alza: https://web.archive.org/web/20150711220823/http://www.investor.jnj.com/releasedetail.cfm?releaseid=63833

Apotex/Aveva: https://www.lincolninternational.com/transactions/nitto-denko-corporation-has-sold-aveva-drug-delivery-systems-to-apotex/

Teva/Actavis: https://www.tevausa.com/news-and-media/press-releases/teva-receives-clearance-from-the-u.s.-federal-trade-commission-for-actavis-generics-acquisition/

Luye/Acino: https://www.streetinsider.com/Press+Releases/Luye+Pharma+Takes+a+Milestone+Step+Forward%3B+Proposed+Acquisition+of+Acinos+TDS+Business/11860930.html

GPC/Corium: https://www.corium.com/pdf/CORI_NEWS_2018_10_11_General_Releases.pdf

3M/Kindeva: https://tcbmag.com/3m-spinoff-kindeva-to-build-new-hq-in-woodbury/

AMW/Adhex: https://a-m-w.eu/en/amw-and-adhexpharma-announce-strategic-partnership-for-transdermal-delivery-systems/

Adhex/Tesa Labtec: https://www.adhexpharma.com/blog/the-addition-of-tesa-labtec-gmbh-marks-a-cornerstone-in-adhexpharmas-growth-

LTS/Tapemark: https://www.ltslohmann.com/en/press-releases/lts-takes-next-step-in-its-growth-journey-with-the-acquisition-of-tapemark-inc/

LTS/Sorrel: https://www.ltslohmann.com/en/press-releases/lts-expands-into-large-molecule-drug-delivery/

Kindeva/iPharma: https://www.startribune.com/woodbury-based-kindeva-a-3m-spinoff-acquires-ipharma-labs/600183071/

Pfizer/Mylan/Viatris: https://www.economist.com/business/2019/08/01/pfizer-and-mylan-want-to-create-a-generic-drug-giant

Forbes/J&J: https://www.forbes.com/2001/03/27/0327topnews.html