Tuesday, Jun 25, 2024
Update At 14:00    USD/EUR 0,92  ↑+0.0002        USD/JPY 151,69  ↑+0.174        USD/KRW 1.347,35  ↑+6.1        EUR/JPY 164,16  ↑+0.143        Crude Oil 85,49  ↓-0.76        Asia Dow 3.838,83  ↑+1.8        TSE 1.833,50  ↑+4.5        Japan: Nikkei 225 40.846,59  ↑+448.56        S. Korea: KOSPI 2.756,23  ↓-0.86        China: Shanghai Composite 3.015,74  ↓-15.745        Hong Kong: Hang Seng 16.512,92  ↓-105.4        Singapore: Straits Times 3,27  ↑+0.018        DJIA 22,58  ↓-0.23        Nasdaq Composite 16.315,70  ↓-68.769        S&P 500 5.203,58  ↓-14.61        Russell 2000 2.070,16  ↓-4.0003        Stoxx Euro 50 5.064,18  ↑+19.99        Stoxx Europe 600 511,09  ↑+1.23        Germany: DAX 18.384,35  ↑+123.04        UK: FTSE 100 7.930,96  ↑+13.39        Spain: IBEX 35 10.991,50  ↑+39.3        France: CAC 40 8.184,75  ↑+33.15        

Shaping the evolution of capsules for the pharmaceutical industry for more than a century

Interview - July 7, 2021

For more than a century, two-piece hard capsules have been one of the most effective and widely-used methods of drug delivery, marked by a history of continuous evolution to meet the changing demands of the industry and consumers. As a globally leading manufacturer of two-piece hard capsules and pharmaceutical processing equipment with more than 120 years of experience, Qualicaps has and continues to play a crucial role in that evolution thanks to the pioneering innovation. We speak with president Seiichiro Matsumura, who explains how Qualicaps has pioneered the world’s first non-animal-based capsules and targeted-delivery capsule materials while also offering state-of-the art pharmaceutical processing equipment.


Japan has had the problem of an ageing population for quite a while now and it seems other countries are now also beginning to experience similar problems so in a way Japan has had a first mover advantage. What can Japan teach the world about overcoming such a problem?

This problem arose because our birth rate is very low, and our health care system is relatively good, which lengthens life expectancy. Additionally, Japanese people generally have a built-in discipline that sees them adopt relatively healthy daily habits, such as physical exercise and prudent eating habits. Together with the backing of a national health care system that does not require huge payments for medical care, these are the main factors that have created the aging population and could act as examples for other countries.


Can you tell us how the Japanese manufacturing philosophy of monozukuri has contributed to the production of unique pharmaceutical products such as yours?

For many Japanese producers, the desire to produce something unique and of high quality comes before considering profitability. It is a part of our culture, which differs from Western culture, where profitability is the fundamental driver of innovation. Japanese manufacturers take pride in getting the small details right, even if the intricacies of their efforts are not immediately noticeable.

There is a particular commitment, engagement, and passion toward inventing and producing something different, especially more intricate items like syringes, needles, and stents. Look at the shrines and temples in Nara or Kyoto. You will see remarkably complex designs and modern-day companies simply maintaining that tradition of attention to detail, regardless of the business sector in which they operate; they do it because they love it over and above financial considerations.


The capsule market is expected to grow to $3.16 billion by 2025, approximately. The demand for HPMC (hydroxypropyl methylcellulose-based capsules) has increased significantly in American and European markets as consumers turn away from animal-derived products. Can you tell us how your company is adapting to this trend?

As a first mover and innovator in this field, we are committed to expanding HPMC worldwide in addition to gelatin capsules. As you mentioned, there is more demand in the USA and Europe and in the Middle East and Asia. There is an emotional component in moving away from gelatin, an animal-based product, and HPMC may overtake gelatin as this trend continues. We have shifted our investment focus to increase our capacity to produce HPMC capsules. Our parent company, Mitsubishi Chemical, is backing us with financial support and accumulated material R&D capability for this, which shows a commitment to inventing the next generation of non-animal-based capsules.

We need a different type of new material for our capsules to target specific types of diseases. When you swallow a capsule, it goes to the stomach and breaks down due to the acid. However, some medicines or nutrients within the capsule need to travel further along the intestinal path before being released. So, by changing the capsule material, we can control the point of release in the intestinal pathway. To do this, we need to be aware of the varying pH and water content levels in different parts of the body and design the capsule using the appropriate chemicals.

Our parent company can mass-produce the kinds of chemicals needed for this, which is one reason they acquired our company. They could see a mutually beneficial synergy between our expertise in this field and their R&D and manufacturing capability.

Various other drug delivery methods exist, like patches and nasal sprays. Is your company looking to develop or move into other such drug delivery systems?

It is a possibility in the future, but not right now. We have been focusing on two-piece hard capsule products. We would have to acquire another company if we were to adopt other systems, as developing them in-house would take too long. I am very passionate about expanding our product portfolio. Still, I would need to discuss it with our parent company to see if they wanted to expand into the healthcare segment.


You also have a business selling machines which make capsules. Is your main focus on these machine sales or the capsules themselves, and what synergies have you created between these two lines of business?

Initially, our focus was on manufacturing the machines for creating our capsules internally, but then we used the knowledge gained to produce a range of pharmaceutical equipment for filling, sealing, weighing, and printing on the capsules. So, there are clear synergies between the two businesses; one sprang from the other.

From the customers’ perspective, we represent a one-stop shop for all their capsule related needs. In the past, customers would have needed two or more different suppliers to produce a finished product. Now they only need us, so our sales and marketing strategy emphasizes this convenience and the added value of a fully integrated service.


Can you tell us more about your business and what is your competitive advantage when it comes to capsule production technology?

Our portfolio of pharmaceutical equipment is very rich because it covers almost the entire process of capsule manufacturing, from capsule filling, printing, weight checking, and final inspection. So, we provide a turnkey solution for companies wishing to manufacture capsules, and this all-in-one product offering gives us our competitive advantage.


Japan is famous for its level of R&D spending, which far outstrips the other G7 countries. Can you tell us more about your R&D strategy and are there any particular products that you'd like to share with our international readers?

Our R&D efforts have focused primarily on the new targeted-delivery capsule material, enabling the contents to travel past the stomach and into the small intestine. We have to articulate the capsule shell because the pH level is very different in the stomach and small intestine. We measure the shell’s integrity under different pH levels and make slight changes to the shell material as required.

Regarding the machine part of our business, one of our significant strengths is printing machines, and we use laser printing technology so that small capsules can be clearly branded. Such branding is vital to ensure that the capsule is traceable and a genuine product from a reputable producer. We have a patent and are the sole providers of this technology.

Printing on capsules is also useful when differentiating between different medicines and understanding when to take each; this helps people who take multiple capsules daily to identify different types of medication. Although the capsule color helps with identification, printing symbols or letters also helps convey information about the medicine and how or when to take it.


With more and more companies co-creating to enhance innovation and capacity, can you tell us how important co-creation is to your business? Are you actively looking for co-creation partners to create new capsule related technologies?

These days, pharmaceutical companies outsource certain processes in their production flows. We are a supplier that can accommodate some of these outsourced processes, namely, the supply of capsules. However, we also supply pharmaceutical equipment, which other companies use for outsourcing during their manufacturing process. Most of the equipment used by Japanese manufacturers is typically customized to optimize production capabilities. We can supply machines that perfectly fit their requirements by visiting them, learning about their processes, and designing a solution. Our clients will send us confidential data about their requirements, and we then build the best fit capability into our machines. A process cannot be optimized without this level of trust and data sharing.


One potential barrier to global expansion is the variety of regulations that exist across different regions and nations. Compliance varies in each region. How are you able to follow compliance regulations for all the overseas markets you operate in?

Following local regulations is important, of course, and the most important thing to achieve when planning global expansion compliance with Good Manufacturing Practices (GMP). That is the primary entry ticket into overseas markets. It is a baseline certification, not really seen as a competitive advantage. After achieving GMP compliance, differentiating your product in the local market is the next step.


You partnered with Mitsubishi Chemical last year. Why did that transition take place and what advantages does it bring to your company?

One of the most significant advantages is in the field of technology innovation. As I mentioned, Mitsubishi Chemical has enormous material resources and innovative processes to share. They have a digital transformation team to leverage the Internet of Things (IoT). We need to adopt a vision of how to use these digital technologies in our health capsule manufacturing process.

Mitsubishi can gather and analyze data from their worldwide production lines to optimize their processes. We can benefit greatly from such a wealth of data and resources, made possible largely through their IoT capabilities. This partnership gives us the potential to adopt cutting-edge manufacturing capabilities that most mid-sized companies don’t have.

We already had innovation, good people, and good discipline in our company, but now we can add the experience and knowledge from Mitsubishi Chemical. Mitsubishi is also committed to protecting the environment both in its manufacturing processes and in its final products. They also have the financial strength to deliver on their environmental commitments, which will also benefit our company.


Now that you are under the Mitsubishi umbrella, what is your mid-term strategy? What kind of targets are you looking at as the company looks to expand?

The most important thing in our current strategy is to standardize our manufacturing process globally. Even though we’ve been providing high quality products to customers, particularly through our Japanese team, individual sites overseas are optimizing their production lines. We need to look more closely at these overseas sites and bring them up to Qualicaps’ level of quality.

Instead of looking at sites one by one, we ultimately need a standardized approach to quality. Levels of quality can vary according to local regulations, but we want to achieve uniformly high quality across our worldwide sites based on our Japan experience and know-how. Therefore, at each site, you need to customize machines, train the staff, and instill new mindsets because cultural approaches to production can vary; we want our workers to adopt the Qualicaps approach to quality. Once we establish this kind of methodology we will undoubtedly do well globally, so that is the number one strategy right now.

We want to be like Toyota; wherever they operate, consumers know they will get Toyota’s well-known high level of quality. To help achieve this, every time we build a new production line, say in Spain or the US, we usually send our people from Japan to train the local workers. Our teams typically stay for three to six months until the local staff is 100% up to speed on Qualicaps and they understand the high levels of quality expected.

Since the COVID pandemic, however, we have not been able to do this. We have used video conferencing as a workaround, but this method has some limitations, making it ultimately unsustainable in the long run. We send our people to client sites so that the knowledge and skill required to achieve our aims are not explicit knowledge but implicit knowledge.

Our Japanese trainers cannot fully articulate the skills required in a written document, so we have situations where, for example, a Spanish operator reads and follows our document accurately but still cannot reproduce the exact project plan needed. It's to do with adopting intuitive feelings toward our methodology, which is very hard to articulate in a written document. We need our staff visit in person if we are to standardize the process quickly. I dream that we will find a way, perhaps using AI, to encapsulate our approach to the Qualicaps quality process that can be communicated without the need for our staff to travel overseas.

We need to find this new communication method before one of our competitors because this traditional Japanese mindset toward quality greatly increases the capability of an organization and ensures sustainability. For example, some of our amazing staff have been working in the field for 20-30 years and can touch a capsule and tell the approximate humidity inside the gelatin capsules around 14%. You cannot teach that kind of ability by sending written documents, so we must ensure and sustain this level of know-how. It’s a challenge for many Japanese companies, including ours, to find a way of passing this implicit kind of know-how to future generations.


You’ve opened sites in the US, Spain, Romania and more recently in Brazil. Can you tell us more about the reasons you selected these international sites?

There are several benefits. Global manufacturers, pharmaceutical companies, and other big employers typically use the hedging strategy of using two suppliers instead of one. In contrast, we provide an all-in-one service, offering a standardized Japanese quality product with global delivery. This is why we have sites in countries that have large pharma-related companies. The US, Europe, and Japan are the three main drivers of pharmaceutical production globally, so we need sites to cover those markets. In contrast, we were looking for a reasonable cost structure for Brazil, so Brazil became a candidate.


And as you look to further expand internationally, what strategy will you be adopting? Will you be doing joint ventures, more company acquisitions or will you just open up more offices or production facilities?

By looking at the pharmaceutical and nutrition market, we see it is expanding globally. Asia is our primary target, from the pills and nutrition perspective, as it has large populations growing by an average of around 7%-8%, some even more than that.

If we could, we’d like to build additional sites somewhere in Asia. Again, the challenge posed by COVID has greatly changed people’s mindsets, but having operations in Asian countries close to Japan makes them easier to manage.

From our perspective, there is a lot of possibility for market growth. The Asian workforces tend to be reasonable and respectful toward Japanese companies and people, so I think it would be good to invest further in the region.

Furthermore, the recent COVID situation has highlighted national security risks and the need for countries to establish and maintain their domestic capability to produce pharmaceutical products. Japan is already the leading domestic supplier of capsules, so Asian expansion also makes sense from that perspective.


What are your dreams for the company over the next 2-3 years and what would you like to have accomplished in that time?

Within two years, I hope that the global standardization of Qualicaps products will be complete and effective. We hope our brand will become recognized, not just domestically but also globally.

We hope that customers will consider us to be the best choice of partner and come to consult about optimizing our product and the great material from which it’s made. Together, we can find the best way to suit their purposes, ensuring high quality products and stable supplies for their customers. This is my big vision.