The discovery of new drug candidates is accelerating faster than ever before thanks to the availability of new tools for automating the laboratory processes involved, however, further development of these new chemical entities (NCEs) through the pipeline often hits a stumbling block at the formulation stage. At this point, many biopharma firms lack the infrastructure or the know-how in formulation science to bring their own products forward and are turning to third-party services firms - many who offer proprietary formulation processes - for assistance. According to a new report by market research firm Applied Data Research (ADR), much of the current focus in new drug formulations is concerned with processes that can improve the solubility of active pharmaceutical ingredients (APIs). Therefore, "issues surrounding water insolubility of active compounds have important business and market implications for new drug development," said ADR. "As a result, drug formulation technology firms are working with drug developers to help define the prescription formulations that will enter preclinical development and the clinical trial pipeline in the coming months and years." With this combined approach, it is expected that new formulation capabilities will expand the number of new NCEs that can be formulated to meet pharmacochemical thresholds. There are currently, however, only a limited number of contract formulation firms that can provide the type of specialist services that pharma firms are demanding. As a result, this corner of the market has been earmarked as a high-potential growth sector by several contract manufacturers who have been making plans to move into or expand further in this area. Dalton Pharma for example is gradually switching from being a chemical API manufacturer to become a secondary manufacturer, which involves production processes that are necessary to take a material in its bulk manufactured form and create a finished dosage form. "We have recently identified formulation services as an area of growing demand from drug companies and for this reason we have developed our manufacturing capabilities as we anticipate strong growth in this portion of the business," Peter Pekos, Dalton's CEO, told Outsourcing-Pharma.com in an earlier interview. He pointed out that secondary manufacturing, including formulation services, represents around half of the company's business and it is growing. India's Nicholas Piramal recently revealed that it will spend $50m (€38m) on enlargening its formulations services business over the next three years, part of which will be used to fund its planned assault on this area of the US market. Meanwhile, solid oral dose product specialist Almac Pharma announced in January that it has expanded its formulation facilities located at its UK headquarters to provide a wider range of services to pharma and biotech companies. The company said the investment represents a significant element of its overall future growth and will allow it to be more competitive in the formulation area. Last October Formulation development company Xcelience also announced its plan to expand its headquarters in Tampa, Florida to meet "higher customer demand."