The space race is extending into the pharmaceutical sector. A growing number of companies are moving drug research, development, and manufacturing into low Earth orbit, leveraging the microgravity environment to overcome the physical limitations of terrestrial pharmaceutical production. A new space-based pharmaceutical industry is rapidly taking shape.

Currently, companies like Varda Space Industries and SpaceMD have established commercial operations in orbital manufacturing. Major pharmaceutical giants such as Eli Lilly and Bristol Myers Squibb are also participating in collaborative testing. Meanwhile, early crystal growth experiments conducted by Merck on the International Space Station have already led to FDA approval in 2025 for a subcutaneous injection formulation of its blockbuster drug Keytruda, providing the most compelling proof-of-concept for the entire industry.

This trend is driven by the spillover effects from the increasing maturity of commercial space infrastructure. Morgan Stanley predicts the space economy could surpass $1 trillion by 2040. While several industries, including semiconductors and fiber optic cables, can benefit from space research, experts indicate that pharmaceuticals may be the sector to experience disruptive change most rapidly.

For investors, the commercialization path for this field is advancing from the laboratory stage towards scaled production. However, the regulatory framework, the cost of return logistics, and infrastructure continuity following the retirement of the International Space Station remain key variables constraining the industry's acceleration.

The Pharmaceutical Value of Microgravity: Why Manufacture Drugs in Space?

Drug development on Earth has long been constrained by gravity. In terrestrial environments, sedimentation causes heavier particles to sink, while convection leads to the stratification of hot and cool liquids. These mechanisms continuously interfere with the uniform growth of drug crystals.

Professor Phil Williams, a biophysicist at the University of Nottingham, explains that in space, the absence of gravity allows scientists to cultivate more uniform, higher-quality crystals. Crystals grown in low Earth orbit are consequently more predictable and have fewer defects.

Improvements in crystal uniformity directly impact a drug's deliverability.

Williams clarifies that when crystals vary in size, smaller ones fill the gaps between larger ones, increasing the liquid's viscosity. Viscosity dictates how patients absorb a drug—high-viscosity biologics typically require thick needles and lengthy hospital infusions. By reducing viscosity, complex therapies can be reformulated into fine-needle, painless injection types. Furthermore, more stable drugs can be stored without the need for deep-freeze air transport, significantly reducing financial and environmental costs.

Merck's Validation: From Space Station Experiments to FDA Approval

The commercial logic of space-based pharmaceuticals has received initial validation through Merck's endeavors.

In 2014, Merck conducted crystal growth experiments on the International Space Station to study the effects of microgravity on drugs, including its top-selling cancer drug, Keytruda. Keytruda is a lab-synthesized antibody that initially required patients to receive intravenous infusions over several hours in a hospital.

Ultraviolet imaging from the space experiments showed that antibodies cultivated in orbit formed a highly uniform, stable, and easily soluble mixture. Merck subsequently found a method to replicate these conditions on Earth, ultimately developing an injectable formulation that requires only minutes for administration, which received FDA approval in 2025.

This case demonstrates that the value of space research lies not only in orbital production itself but also in its ability to enhance and inform terrestrial pharmaceutical manufacturing processes.

Two Commercialization Paths: Divergent Strategies of SpaceMD and Varda

Regarding commercialization models, SpaceMD and Varda represent two distinct strategic choices.

SpaceMD is a dedicated subsidiary established last year by aerospace and defense technology company Redwire, focused on commercializing drug products developed in space. Its core technology is PIL-BOX—an automated miniature laboratory designed specifically for crystallizing proteins in orbit. SpaceMD CEO John Vellinger stated that the company has launched 54 PIL-BOX units, tested 37 drug compounds, and collaborated with partners including Eli Lilly and Bristol Myers Squibb.

"We only need a tiny amount of crystal... We've demonstrated we can replicate this crystal for five generations," Vellinger said. "We have drug candidates, we have space-proven hardware, and we have royalty agreements." He noted that the ultimate goal is to utilize space to develop promising drug compounds that have been shelved due to crystallization errors or instability.

Varda, in contrast, is betting on continuous orbital production, having developed a 300-kilogram autonomous manufacturing satellite equipped with a dedicated re-entry capsule. The company recently completed its sixth capsule flight, launched aboard a SpaceX Transporter-16 mission. Varda President and Co-founder Delian Asparouhov explained that active pharmaceutical ingredients (APIs) are highly concentrated, meaning even small payloads can hold significant commercial value—the crystalline API required for the Pfizer COVID-19 vaccine for 450 million patients could fit in a two-gallon milk jug.

United Therapeutics recently announced a collaboration with Varda to explore using microgravity to improve treatments for lung diseases. Asparouhov stated that partners do not need to purchase a spacecraft; "They just give us a drug, and we give them back a better drug."

Persistent Bottlenecks: Return Logistics, Space Station Retirement, and Regulatory Hurdles

Despite promising prospects, the commercialization of space-based pharmaceuticals faces multiple structural obstacles.

Logistics costs are a primary bottleneck. Asparouhov pointed out that while the space industry has established a robust supply chain for launches to orbit, the return chain remains narrow and expensive. Existing return spacecraft designed for crewed missions, such as SpaceX's Dragon, prioritize safety as the primary engineering goal and are not suited for high-frequency, low-cost commercial manufacturing logistics.

The impending retirement of the International Space Station also introduces uncertainty. Both Varda and SpaceMD believe long-term reliance on this government-operated research platform is unsustainable. "Once you're dependent on a government-run research lab... there's no clear path to commercialization," Asparouhov said. "You're subject to the vagaries of geopolitics... a space station half-run by the U.S. and half-run by Russia."

On the regulatory front, the UK earlier this year became a pioneer in formally recognizing that patients could benefit from higher-quality, space-manufactured drugs and established a related market access pathway. The UK Space Agency is also funding startup BioOrbit for feasibility studies. BioOrbit is exploring a scalable system for the crystallization and manufacturing of biologic drugs in space and recently hired two executives from Redwire: Molly Mulligan as President and Ken Savin as Chief Scientific Officer.

Regarding the industry's long-term form, Williams maintains a cautious stance. He anticipates that the future mainstream model will involve manufacturing small-batch research samples in space and then replicating the processes on Earth, rather than large-scale production in orbit. "Whether that's viable is the key question," he said. "It's very exciting science and technology... but I'm not as optimistic about its future as they are."

The Road Ahead: Commercial Space Stations and the Vision of Orbital Industrial Cities

With the International Space Station's retirement approaching, industry participants are already planning alternative infrastructure. SpaceMD is establishing partnerships with commercial low Earth orbit destination operators like Vast and StarLab.

Varda plans to increase its flight frequency to seven missions next year and eventually introduce a fully reusable vehicle about ten times the size of its current model, gradually shifting towards a model of fixed in-orbit infrastructure, with small spaceplanes transporting raw materials back and forth.

Asparouhov outlines an even grander vision: "Once we can economically justify having people in orbit doing this kind of production activity, we might be able to justify 10 people, 100 people, 1,000 people, and at some point build the first industrial city in low Earth orbit."

This vision remains a considerable distance from reality. However, from Merck's FDA approval to Varda's sixth flight, the commercialization of space-based pharmaceuticals is advancing with measurable steps.