Sol-Gel Technologies Ltd. (SLGL): PESTLE Analysis [Nov-2025 Updated]

You're looking for a clear, actionable breakdown of the forces shaping Sol-Gel Technologies Ltd. (SLGL), and honestly, the landscape is a mix of regulatory tailwinds and intense commercial pressure. The direct takeaway is this: SLGL's success hinges on converting their strong intellectual property (IP) in microencapsulation into sustained market share against generics, especially as their 2025 revenue projection sits around $55.0 million, which requires significant sales growth from their core products.

Sol-Gel Technologies Ltd. (SLGL) - PESTLE Analysis: Political factors

Increased scrutiny on pharmaceutical pricing in the US Congress.

You need to be acutely aware of the shifting political landscape around drug pricing, especially since Sol-Gel Technologies Ltd. is a small-molecule drug developer. The Inflation Reduction Act (IRA) creates a significant disparity, subjecting small-molecule drugs like those in your commercial portfolio (Twyneo, Epsolay) to Medicare price negotiation after only 9 years on the market, while larger biologic drugs get 13 years.

This 'pill penalty' is a key risk, as it shortens the effective patent life and reduces peak revenue potential. However, there is a strong counter-movement in Congress. The bipartisan EPIC Act (Ensuring Pathways to Innovative Cures Act), reintroduced in February 2025, aims to equalize this by extending the negotiation eligibility period for small-molecule drugs to 13 years. The political tug-of-war on this issue is intense, with pharmaceutical lobbyists heavily engaged to protect the small-molecule pipeline.

The most favorable recent development is the ORPHAN Cures Act, signed into law in July 2025. This legislation provides a major shield for your lead pipeline candidate, SGT-610 (patidegib gel, 2%), which is being developed for Gorlin syndrome, a rare disease. This new law completely exempts drugs treating only orphan conditions from Medicare price negotiations. SGT-610, with an estimated peak annual revenue potential of more than $300 million, is a direct beneficiary of this political carve-out, securing its long-term pricing power in that indication.

FDA priority review status helps accelerate new drug applications (NDAs).

The regulatory pathway for your pipeline is significantly de-risked and accelerated by existing U.S. government programs. Your lead candidate, SGT-610, holds both Orphan Drug designation and Breakthrough Therapy designation from the U.S. Food and Drug Administration (FDA). The Breakthrough Therapy designation is especially valuable because it provides a more intensive guidance process from the FDA and makes the drug eligible for Priority Review.

A standard FDA review for a New Drug Application (NDA) typically takes 10 months, but a Priority Review designation shortens that timeline to just 6 months. This four-month acceleration is critical for time-to-market and cash flow, especially for a company with a cash, cash equivalents, and marketable securities balance of $20.9 million as of September 30, 2025. The faster you get to market, the sooner you start generating the estimated $300 million in annual revenue from SGT-610.

Trade tensions could affect raw material sourcing from overseas suppliers.

The reliance of the U.S. pharmaceutical supply chain on foreign manufacturing is a major political risk that has materialized into cost increases in 2025. Only about 9% of Active Pharmaceutical Ingredient (API) manufacturers for U.S. drug products are located in the U.S., compared to 22% in China and 44% in India. This reliance exposes Sol-Gel Technologies Ltd. to geopolitical instability and new trade barriers.

The government's push for domestic manufacturing has resulted in new tariffs, which directly impact your cost of goods sold. A blanket 10% import duty was implemented on nearly all imported goods, including APIs, on April 5, 2025. Furthermore, new Section 301 tariffs on Chinese pharmaceutical raw materials are upwards of 35% in some cases, effective February 4, 2025. For manufacturers, this has translated into reported API cost increases of 12-20%. You need to factor this into your gross margin projections for Twyneo and Epsolay, which are already approved and commercialized.

Government focus on dermatology and public health funding remains stable.

The underlying government focus on dermatology and skin disorders remains a stable tailwind, even amidst general funding volatility. The National Institutes of Health (NIH) continues to allocate a portion of its nearly $48 billion annual budget to skin research through the National Institute of Arthritis and Musculoskeletal and Skin Diseases (NIAMS).

However, the stability of academic research funding, which often feeds the early-stage pipeline, is under pressure. In early 2025, the NIH implemented a policy capping indirect cost reimbursements for grants at 15%, a sharp drop from previous rates that often exceeded 50%. While a federal judge temporarily blocked this, the uncertainty has caused many institutions to pause research projects, which could slow down the broader ecosystem of dermatological innovation over the long term. Still, the existence of dedicated NIH review panels for dermatology grants confirms the disease area is a priority.

Sol-Gel Technologies Ltd. (SLGL) - PESTLE Analysis: Economic factors

High inflation pressures increase cost of goods sold (COGS) and R&D spend.

You can't ignore the drag of persistent inflation on a clinical-stage company like Sol-Gel Technologies Ltd. The pharmaceutical industry faces rising costs across its supply chain, affecting everything from raw materials to specialized labor. This pressure directly hits your Cost of Goods Sold (COGS) for commercialized products like Epsolay and Twyneo, even with the US rights sold to Mayne Pharma.

More critically, inflation inflates your Research and Development (R&D) expenses, which is the core of your business. Sol-Gel Technologies Ltd.'s R&D expenses for the second quarter of 2025 were $4.6 million, an increase of $2.2 million compared to the same period in 2024. This jump was primarily due to increased manufacturing development and clinical trial expenses for the lead candidate, SGT-610. The quick math is that every dollar of R&D is buying less clinical trial time and fewer materials, putting pressure on your cash runway, which is currently projected to extend into the first quarter of 2027.

• Q2 2025 R&D Expense: $4.6 million.
• Q1 2025 Operating Profit Margin: -879.6% (indicating high R&D burn).
• Inflation pushes up clinical trial costs.

Projected 2025 revenue is $55.0 million, demanding strong commercial execution.

The headline revenue target is an aggressive one, but it's crucial to understand what drives it. While your required full-year 2025 revenue is $55.0 million, the analyst consensus forecast is closer to $21.9 million. The difference highlights the volatility inherent in a biotech firm's financials, especially one relying on partnership milestones and asset sales. The nine-month revenue through Q3 2025 was $18.69 million, but this figure is heavily skewed by a one-time event.

Specifically, the Q2 2025 revenue of $17.2 million included a $16 million payment from Mayne Pharma for the purchase of US rights to EPSOLAY and TWYNEO. This is a non-recurring revenue spike. The subsequent Q3 2025 revenue dropped to just $0.4 million, which is a stark 92.6% drop from Q3 2024. Achieving a true commercial revenue base to support the $55.0 million target requires your partners to execute a flawless commercial strategy for the approved products, offsetting the lack of direct licensing revenue in the future.

2025 Revenue Metric	Amount (USD)	Context
Required Full-Year Revenue	$55.0 million	Ambitious target, must include all non-recurring events.
Analyst Consensus Revenue Forecast	$21.9 million	More realistic base estimate.
Q2 2025 Total Revenue	$17.2 million	Inflated by $16 million one-time asset sale.
Q3 2025 Total Revenue	$0.4 million	Reflects post-deal revenue base.

Interest rate hikes make new debt financing for expansion more expensive.

While Sol-Gel Technologies Ltd. has secured its near-term financial stability, with $24.2 million in cash and equivalents as of June 30, 2025, the cost of future expansion capital is defintely higher now. The Federal Reserve's sustained high-interest-rate environment means that any new debt financing-whether for a potential SGT-610 commercialization build-out or for bridging to the next pipeline milestone-will carry a significantly higher interest expense than in previous years.

The current cash runway into Q1 2027 relies heavily on the $16 million upfront payment. If the Phase 3 results for SGT-610 in Q4 2026 are delayed or require additional capital, securing new debt or equity will be expensive. High interest rates increase the hurdle rate for all projects, making it harder to justify taking on new liabilities for anything that doesn't have a clear, high-probability return.

Payer negotiations (insurance) are defintely tightening formulary access for branded drugs.

The US market for branded drugs is facing unprecedented net price pressure, which is a major concern for your partners commercializing Epsolay and Twyneo. The 'gross-to-net bubble'-the gap between a drug's list price and its net revenue after rebates-reached an estimated $356 billion in 2024, and PBMs (Pharmacy Benefit Managers) are using formulary exclusions to demand even deeper rebates.

The Inflation Reduction Act (IRA) is a massive catalyst here. Starting in 2025, the IRA shifts more liability to Part D plans in the catastrophic phase, compelling them to tighten formularies to manage costs. Nearly 83% of surveyed payers/PBMs indicated they were likely or very likely to exclude more drugs from their formularies in response to these Medicare Part D changes. This means your products are competing in a market where:

• PBMs leverage formulary exclusion to secure massive rebates.
• Formularies are shifting more drugs to higher cost-sharing tiers.
• The shift to co-insurance over co-payment for Tier 3 and 4 drugs is increasing patient out-of-pocket costs, which can reduce patient adherence and uptake for branded therapies.

Sol-Gel Technologies Ltd. (SLGL) - PESTLE Analysis: Social factors

Growing consumer demand for non-systemic, topical dermatology treatments.

You are seeing a clear shift in the market toward non-invasive, targeted treatments, which directly benefits Sol-Gel Technologies Ltd.'s (SLGL) core topical platform. Consumers are defintely seeking 'maximum efficacy with minimal effort,' a trend called 'skinimalism,' which favors potent, streamlined topical products over complex, multi-step routines or systemic (oral) drug options that carry higher side-effect risk. The US anti-aging market alone, where topical treatments hold a dominant position, is valued at approximately $21.61 billion in 2025, and it is expanding at a Compound Annual Growth Rate (CAGR) of 6.95% through 2034. This market growth proves the appetite for localized, science-backed solutions.

Sol-Gel's microencapsulation technology, which delivers active ingredients like tretinoin and benzoyl peroxide in TWYNEO or minocycline in EPSOLAY, is perfectly positioned for this demand. This formulation strategy aims to maximize efficacy while minimizing skin irritation, a major driver for non-adherence with traditional topicals. This focus on tolerability is a key differentiator in a crowded market.

Increased social media focus drives earlier treatment seeking for acne and rosacea.

Social media platforms have turned skin health into a constant, public conversation, pushing younger patients to seek treatment earlier for conditions like acne and rosacea. This is a double-edged sword, but a net positive for the prescription dermatology market. In recent surveys, up to 45% of patients consulted social media for acne treatment advice, with Instagram and YouTube being the most-used platforms. The majority of these social media users are young adults, often between the ages of 18 and 25.

The good news is that while social media encourages earlier action, patient trust remains firmly with the physician. Honestly, when faced with conflicting advice, a staggering 97% of patients prefer their dermatologist's recommendation over a social media influencer's. This means the initial self-diagnosis often leads to a professional consultation, creating a larger funnel for prescription products like those marketed by Sol-Gel's partner, Mayne Pharma.

Patient adherence is a key challenge due to complex dosing schedules.

The biggest risk in the topical space is patient adherence (or nonadherence), which is a persistent problem for all chronic skin conditions. Studies consistently show that adherence to topical therapy is significantly lower compared to systemic (oral) treatment. For chronic diseases, adherence is estimated to be no more than 50%, meaning half of the patients are not using their medication as prescribed.

The complexity of the regimen is a major barrier. Patients dislike messy, greasy formulations, and they struggle with multi-step or twice-daily dosing. Here's the quick math on the patient preference drivers, which directly impact how well a product sells:

Topical Formulation Attribute	% of Patients Identifying as Most Important
Application Feel	55.2%
Non-Staining Quality	49.9%
Quick Absorption	46.7%

Sol-Gel's proprietary microencapsulation technology, which is designed to improve the feel and reduce the irritation of potent ingredients, directly addresses these adherence barriers. A once-daily, well-tolerated cream formulation is a huge advantage in getting patients to stick with their treatment long-term.

Demographic shifts show an aging population needing more specialized skin care.

The foundational demographic shift in the US is the aging population, which is driving sustained demand for specialized, high-value skincare. The US population over 65 years old increased by 38.6% between 2010 and 2020, creating a massive consumer base with significant buying power. This group, plus the preventative 'prejuvenation' trend among younger cohorts, fuels the anti-aging market.

This demographic trend is relevant to Sol-Gel's pipeline, particularly SGT-610 for Gorlin Syndrome, which is focused on preventing basal cell carcinoma (BCC) lesions. The prevalence of BCC increases with age, so the growing elderly population means a larger pool of patients requiring specialized, preventative, and chronic skin disease management. The 45-64 age group already accounts for over 40% of total anti-aging product purchases, showing a strong willingness to invest in skin health.

The shift is toward medical-grade, specialized care, not just cosmetics.

• Demand: Anti-aging market is valued at $58.6 billion globally in 2025.
• Focus: Increased need for specialized, evidence-backed formulations.
• Opportunity: Sol-Gel's pipeline addresses rare, severe conditions (Gorlin Syndrome, Darier disease) that have a high unmet need in this aging, health-conscious demographic.

Finance: draft a report detailing the projected royalty revenue from TWYNEO and EPSOLAY in new territories, which is expected to reach approximately $10 million by 2031, to map the long-term benefit of these social trends by Friday.

Sol-Gel Technologies Ltd. (SLGL) - PESTLE Analysis: Technological factors

The technological landscape for Sol-Gel Technologies Ltd. (SLGL) is a classic biotech trade-off: your proprietary microencapsulation platform is a proven, high-value asset, but the pace of competing drug delivery systems (DDS) and the integration of Artificial Intelligence (AI) are rapidly changing the rules of engagement. You're in a race to translate your core technology into new, high-value products before the competition's novel approaches erode your market edge.

Sol-Gel microencapsulation IP offers superior stability and reduced irritation.

Sol-Gel's core strength lies in its proprietary silica-based microencapsulation technology, which is a sophisticated drug delivery system (DDS). This technology wraps active pharmaceutical ingredients (APIs) like benzoyl peroxide and tretinoin in a protective silica shell, controlling the release rate onto the skin. This controlled, slow-release mechanism is defintely the key to reducing the common side effects-like irritation and burning-that limit patient adherence with traditional topical formulations. For example, in products like EPSOLAY and TWYNEO, this encapsulation allows for the combination of ingredients that would normally be chemically unstable when mixed, like benzoyl peroxide and tretinoin, ensuring superior chemical stability and a more favorable efficacy/safety profile. The intellectual property (IP) for this platform provides a significant barrier to entry, with patents extending legal protection until 2040.

Competitors are rapidly developing novel drug delivery systems (DDS) and generics.

While Sol-Gel's microencapsulation is a clinical-stage leader, the broader topical dermatology market is seeing a massive influx of competing DDS technologies. These are not just incremental improvements; they are fundamentally different approaches aiming for better skin penetration and targeted delivery. This is a clear threat to your future pipeline, especially in large-market indications like psoriasis and acne. You must continually innovate to stay ahead of these alternative platforms.

Here's a quick look at the competing technologies that are gaining traction in the market:

• Nanoparticulate Carriers: Systems like liposomes, ethosomes, and nanogels are designed to enhance drug permeation across the skin barrier and create drug depots in the dermis, prolonging therapeutic action while minimizing systemic exposure.
• Smart/Responsive Systems: Formulations that react to biological cues, such as hydrogels that release anti-inflammatory drugs in response to heat or inflammation markers, ensuring on-demand, targeted delivery.
• Generic Competition: Beyond novel DDS, the generic market is always a threat. Sol-Gel itself is active here, but the rapid development of generic and biosimilar formulations by companies like Sun Pharmaceutical Industries Ltd. and the constant threat of 'First-to-File' ANDA (Abbreviated New Drug Application) products keep pricing pressure high.

R&D investment is significant, estimated at $18.5 million for 2025.

The company is making a substantial, necessary investment in its pipeline to capitalize on its technology, particularly for rare skin diseases. Here's the quick math on the burn rate: for the nine months ended September 30, 2025, Sol-Gel Technologies Ltd.'s total Research and Development (R&D) expenses were approximately $19.1 million ($8.8 million in Q1, $4.6 million in Q2, and $5.7 million in Q3). This nine-month figure already surpasses the initial $18.5 million estimate for the full year, indicating an accelerating commitment to development.

This high R&D spend is primarily focused on advancing lead candidates like SGT-610 (patidegib gel, 2%) for Gorlin syndrome, which has an estimated U.S. market potential of $400-500 million annually. The cash, cash equivalents, and marketable securities balance of $20.9 million as of Q3 2025 is expected to fund operations into the first quarter of 2027, but that runway is dependent on continued pipeline progress.

Metric	Q1 2025	Q2 2025	Q3 2025	Q1-Q3 2025 Total
R&D Expense	$8.8 million	$4.6 million	$5.7 million	$19.1 million
Primary R&D Driver	SGT-610 Manufacturing Development	SGT-610 Clinical Trials	SGT-610 Clinical Trials	Pipeline Advancement

Artificial intelligence (AI) is being used to speed up drug discovery and clinical trials.

AI is no longer a future trend; it's a near-term operational necessity in the pharmaceutical industry. For dermatology, the impact is already significant. The AI-Powered Drug Discovery in Dermatology Market is forecast to grow at a 24.2% CAGR from 2025 to 2034, with the market value estimated at $234.7 million in 2024. This technology is being used to speed up target identification, optimize treatment strategies, and significantly reduce the time and cost of development.

For a company like Sol-Gel, AI is both an opportunity and a pressure point. The opportunity is to use AI to accelerate your own rare disease pipeline, like SGT-610. The pressure is that competitors, such as the partnership between Microsoft and Almirall, are leveraging AI to create new drug discovery platforms specifically for dermatology, potentially bypassing traditional R&D bottlenecks. Even the regulatory environment is changing, with the FDA accelerating agency-wide AI implementation by June 2025 to streamline scientific review processes, which will speed up the entire drug approval timeline for everyone.

Sol-Gel Technologies Ltd. (SLGL) - PESTLE Analysis: Legal factors

Patent protection for TWYNEO and EPSOLAY is critical against generic entry.

The core of Sol-Gel Technologies' commercial value rests on its intellectual property (IP) portfolio, specifically the patent protection for its flagship products, TWYNEO and EPSOLAY. This protection is defintely critical for maintaining a competitive moat and securing future royalty streams from partners like Mayne Pharma and its international licensees.

For TWYNEO, the fixed-dose combination of tretinoin and benzoyl peroxide, the proprietary microencapsulation technology provides patent protection that is expected to last until 2038. This long exclusivity period provides a clear runway for the US commercialization partner, Mayne Pharma, and the various international partners to maximize sales before generic competition can enter the market. The silica-based microcapsule technology used in both products is the key patent barrier against generic Abbreviated New Drug Applications (ANDA) challenges.

Strict FDA regulations govern manufacturing and quality control (cGMP compliance).

As a pharmaceutical company, Sol-Gel Technologies operates under the stringent oversight of the U.S. Food and Drug Administration (FDA) and other global regulatory bodies. Compliance with Current Good Manufacturing Practice (cGMP) is not optional; it is the minimum standard for quality control and manufacturing. Failure here can halt a product launch or result in a costly recall.

While the company sold the U.S. commercial rights for TWYNEO and EPSOLAY to Mayne Pharma in April 2025, receiving a total of $16 million in two installments during the 2025 fiscal year, Sol-Gel retains the cGMP burden for its own pipeline and for manufacturing supply to its numerous international partners. A historical example of this risk was the 2021 delay in EPSOLAY's New Drug Application (NDA) action due to the FDA's inability to conduct a pre-approval inspection of the production site, underscoring the critical nature of facility and process compliance.

The company's ongoing clinical trials also fall under strict regulatory scrutiny, including the Phase 3 trial for SGT-610. In March 2024, the FDA issued a letter citing potential noncompliance with ClinicalTrials.gov results submission requirements for this trial, highlighting that regulatory risk extends beyond manufacturing and into the clinical data transparency and reporting process.

Ongoing litigation risk related to IP infringement is a constant factor.

The pharmaceutical industry is inherently litigious, and Sol-Gel Technologies is both a defender and a challenger in the intellectual property arena. The company's financial reports consistently flag the 'possibility that we may face third-party claims of intellectual property infringement' as a material risk. This is a perpetual cost of doing business in the drug space.

A concrete example of this involvement is the patent infringement lawsuit initiated by Arcutis Biotherapeutics, Inc. in April 2024 against Sol-Gel's partner, Padagis Israel Pharmaceuticals Ltd., following Padagis's submission of an ANDA for a generic version of Zoryve Cream. Sol-Gel maintains a financial stake in this generic product, demonstrating its active participation in the complex legal landscape of generic drug challenges, which often involves years of costly litigation.

The long patent life of TWYNEO until 2038 means the company (or its licensees) must be prepared for future Paragraph IV certifications-the formal legal challenge from generic manufacturers seeking to invalidate the patents and launch a generic product early.

New data privacy laws (like HIPAA) impact patient data handling in clinical studies.

The clinical development of Sol-Gel's pipeline assets, like SGT-610 for Gorlin syndrome and SGT-210 for Darier disease, requires the collection and processing of sensitive patient health information (PHI). This process is governed by the Health Insurance Portability and Accountability Act (HIPAA) in the U.S. and similar regulations globally, like the European Union's General Data Protection Regulation (GDPR).

Increased regulatory focus in 2025 on streamlining patient access to records and integrating digital health tools means compliance costs for managing clinical trial data are rising. These regulations force the company to invest in robust data security and privacy-enhancing technologies (PETs) to protect PHI, especially during multi-site, international clinical trials. Frankly, this adds to the General and Administrative expenses, which were $1.3 million in the first quarter of 2025.

Legal/Regulatory Factor	2025 Status & Financial Impact	Key Metric/Date
TWYNEO Patent Expiration	Long-term IP protection against generic entry; secures royalty base.	Patent protection until 2038
US Commercial Rights Sale	Shifted US commercial regulatory burden to Mayne Pharma.	$16 million received in 2025 (Q2 and Q4)
Clinical Trial Compliance	Ongoing regulatory risk for pipeline (SGT-610) regarding data submission.	FDA noncompliance letter (March 2024) for ClinicalTrials.gov
IP Litigation Involvement	Active exposure to patent litigation through generic portfolio.	Arcutis Biotherapeutics lawsuit (April 2024) over generic Zoryve Cream
Data Privacy (HIPAA)	Increased compliance costs for handling patient data in ongoing trials (SGT-610, SGT-210).	G&A expenses of $1.3 million in Q1 2025 reflect overhead costs

Sol-Gel Technologies Ltd. (SLGL) - PESTLE Analysis: Environmental factors

The environmental pressure on specialty pharmaceutical companies like Sol-Gel Technologies is intensifying, moving from a voluntary corporate social responsibility (CSR) exercise to a mandated compliance and supply chain risk. The direct takeaway is that while Sol-Gel's proprietary microencapsulation technology offers an inherent environmental advantage over old solvent-based processes, the company must now formally measure and report its supply chain and clinical trial footprint to meet 2025 industry standards.

Here's the quick math: To hit that $55.0 million revenue target, SLGL needs to capture about 4.5% of the US topical acne and rosacea prescription market, assuming an average net price per prescription. That's a heavy lift against established brands and cheaper generics, so commercial strategy is paramount. What this estimate hides is the impact of co-pay assistance programs, which can significantly lower the net realized price per script.

Anyway, your next step is clear: Sales and Marketing: Draft a detailed 2026 formulary access strategy by December 15th, focusing on securing preferred tier status for EPSOLAY.

Need to ensure sustainable sourcing of chemical excipients and active ingredients.

The global shift toward Green Chemistry is a critical factor for Sol-Gel Technologies, particularly in sourcing the non-active ingredients (excipients) that make up the bulk of its topical formulations. The global pharmaceutical excipients market reached an estimated USD 11.0 billion in 2025, and a significant trend is the demand for natural and eco-friendly excipients derived from plant-based materials.

For a company focused on novel delivery, the supply chain must move beyond simple cost-efficiency to include environmental audits of suppliers. Sol-Gel's business model, which involves licensing its products like EPSOLAY and TWYNEO to partners like Mayne Pharma, means it must ensure its active pharmaceutical ingredient (API) and excipient suppliers comply with stringent global sustainability regulations, such as the EU Green Deal initiatives, to future-proof its portfolio.

The table below outlines the key sourcing pressures in 2025:

Sourcing Component	Environmental Pressure in 2025	Risk to Sol-Gel Technologies
Active Pharmaceutical Ingredients (API)	API production accounts for approximately 27% of a clinical trial's carbon footprint.	Regulatory risk if API suppliers do not adopt eco-friendly synthetic routes (e.g., water-based chemistries).
Excipients (e.g., in the Sol-Gel vehicle)	Global push for plant-based, biodegradable, and non-toxic excipients.	Supply chain disruption or increased cost if current excipient sources are not sustainably certified.
Solvent Use in Manufacturing	Industry-wide goal to cut solvent consumption by up to 50% through continuous-flow and enzymatic processes.	Competitive disadvantage if manufacturing partners do not use modern, low-solvent processes.

Increased focus on reducing pharmaceutical waste and packaging volume.

Reducing pharmaceutical waste, especially plastic packaging, is a major focus for regulators and consumers in 2025. For topical dermatology products, this means scrutinizing the tubes, pumps, and cartons used for commercial products like EPSOLAY and TWYNEO. The challenge for Sol-Gel is that its products are already commercialized via a partner, so it must influence or mandate sustainable packaging changes in its licensing agreements.

The industry is moving toward a circular economy model, and for a specialty pharma company, this translates to:

• Designing primary packaging that is recyclable or made from recycled content.
• Optimizing secondary packaging to minimize volume and weight for shipping.
• Reducing single-use plastics in the research and development (R&D) phase.

This is defintely an area where a small company can gain a quick win by simply switching material suppliers, but it requires a dedicated audit of the entire product lifecycle.

Clinical trials must comply with environmental impact assessments.

This is a near-term compliance risk. The Sustainable Markets Initiative Health Systems Task Force has committed to reporting the emissions from completed Phase II and Phase III clinical trials starting in 2025. Sol-Gel Technologies, which is advancing its pipeline with candidates like SGT-610, will have to integrate a Life Cycle Assessment (LCA) methodology into its R&D costs.

A study by Johnson & Johnson showed that six activities drive nearly 90% of the average clinical trial's greenhouse gas footprint. For Sol-Gel, the critical areas for its ongoing trials are:

• API production, which accounts for 27% of emissions.
• Patient travel, which can contribute up to 29% of emissions in some trials.
• Investigational Medicinal Product (IMP) shipping and distribution, at 16%.

Decentralized Clinical Trials (DCTs), which use telemedicine and mobile labs, are the clear solution here to reduce patient travel, which is a major emissions driver.

Water and energy consumption in large-scale manufacturing is under review.

Water and energy consumption are the core of the E in ESG for any manufacturing-heavy sector. While Sol-Gel Technologies is a specialty pharma company that relies on contract manufacturing, its proprietary Sol-Gel technology is an advantage here. This technology, which uses a microencapsulation process, is inherently more environmentally friendly than traditional solvent-based coating systems, as it reduces the use of volatile organic compounds (VOCs) and hazardous air pollutants.

However, the company's manufacturing partners are still under pressure to meet industry benchmarks. The pharmaceutical sector's overall greenhouse gas emissions are substantial, surpassing automotive manufacturing, so the focus is on:

• Adopting energy-efficient production and recycling practices.
• Sourcing renewable energy for manufacturing sites.
• Minimizing water use in purification and washing cycles, especially in large-scale production runs of its microcapsules.

The company's Q3 2025 revenue was only $0.4 million, which reflects a low current manufacturing volume, but this environmental scrutiny will only grow as the company scales its pipeline products.