Space Pharmaceuticals -- The "New Scenario" of Commercial Spaceflight

The space economy over the past decade has resembled two main businesses: sending things into space (rockets and infrastructure) and selling signals back from above (satellite communications). Morgan Stanley takes a step further: as reusable rockets lower the “cost of going to space,” commercial opportunities may expand from “launch” to “production,” with pharmaceuticals being the most promising to lead the way.

According to WindTrader, Morgan Stanley analyst Adam Jonas stated in a recent report that space pharmaceutical manufacturing is becoming commercially feasible due to reusable rockets reducing launch costs by approximately tenfold. Varda Space is a pioneer in this field — designing and launching spacecraft to produce drugs in low Earth orbit, utilizing microgravity environments to create high-purity drug crystals impossible to produce on Earth.

The report explains that the logic behind space pharmaceuticals is straightforward: in microgravity, drug crystals grow more uniformly, with fewer defects and higher purity. In 1998, insulin crystals cultivated during the STS-95 shuttle mission were on average 34 times larger than those on Earth, with defect levels reduced by a factor of seven.

Varda successfully completed its first commercial mission in 2024, bringing back crystals of the HIV drug Ritonavir from orbit. The company has raised $328 million, with the latest round led by Natural Capital and Shrug Capital, including investors like Peter Thiel and Founders Fund. They plan to achieve near-monthly return frequency by the end of 2028, having completed five missions so far, with a sixth scheduled for March this year.

However, the path remains fraught with obstacles: the FDA has yet to establish approval processes for space pharmaceuticals, unit economics models are unverified, and commercial mass production will require launch frequencies of weekly or even daily.

Space Manufacturing: Industry depends on “elevator” becoming cheaper

The report provides an engineering rationale for “why talk about space manufacturing now”: reusable rockets are akin to elevators, having already reduced launch costs per kilogram by about ten times (Falcon 9 roughly $2,000–$4,000 per kg).

If next-generation, larger, more thoroughly reusable launch vehicles continue to improve economic viability, they could push “doing something in space” from a scientific demonstration to a profitable business — not just pharmaceuticals, but also materials, computing power, energy, mining, and defense.

But the report also clearly delineates boundaries: even with cheaper launches, many space manufacturing activities remain hindered by regulatory complexity, process control, recovery chains, and demand validation. The reason it hasn’t been commercialized for decades isn’t lack of interest, but the long chain and numerous steps involved.

Why pharmaceuticals might be the first to emerge: microgravity has clear benefits for “crystal quality”

Varda does not develop new drugs or create new drug molecules. Its business model is to produce high-purity, high-density versions of existing drugs for large pharmaceutical clients.

Morgan Stanley notes:

Most drugs, especially tablets, are made from tiny drug crystals. The shape and quality of these crystals directly affect dissolution rate, absorption efficiency, stability, and manufacturability. On Earth, gravity-driven convection, sedimentation, and mixing interfere with crystal growth, leading to uneven sizes and high defect densities.

The microgravity environment in low Earth orbit nearly eliminates convection and sedimentation, allowing more orderly crystal growth. Research aboard the International Space Station by Merck shows that crystals of pembrolizumab (Keytruda), a cancer drug, cultivated in space could enable a switch from intravenous infusion to simple injection. Some drugs trap impurities within their crystal lattice during crystallization, increasing toxicity risks, but slower, more uniform crystallization in space can facilitate impurity separation.

This logic corresponds to three potential benefits outlined in the report: first, increasing API purity and density; second, improving drug stability, shelf life, and bioavailability; third, pushing certain dosage forms or delivery methods into new options.

Winnebago spacecraft: a one-meter-diameter space factory

Varda’s method for screening candidate drugs involves using a hypergravity crystallization platform (a large centrifuge) on Earth to alter effective gravity, observing how changes affect nucleation and crystal growth, thus quickly identifying drug molecules sensitive to gravity.

The Morgan Stanley report details Varda’s W-series (nicknamed “Winnebago”), a free-flying orbital processing and return system. Weighing about 300 kg, mission durations range from weeks to months, designed to withstand reentry speeds over 25 Mach.

The system consists of two parts: a 1-meter-diameter reentry capsule housing the manufacturing payload, which returns to land under parachutes; and a satellite bus providing in-orbit power, communication, attitude control, and propulsion, including deorbit positioning before reentry.

Why so small? Because it only produces active pharmaceutical ingredients (API), which typically constitute a small part of the final drug delivered to patients. Producing APIs in space doesn’t require large volumes to be commercially relevant. Smaller batches also allow pharma clients to iterate and optimize production repeatedly. The compact design enables the spacecraft to ride share on Falcon 9 missions, crucial for reducing launch costs and enabling high-frequency flights.

Five missions: from validation to acceleration

The progress outlined in the report is more about “getting the closed loop running smoothly” than about drugs already being on the market.

• W-1 (June 2023–February 2024): in-orbit crystallization of Ritonavir and recovery, a key validation of the business model; the return capsule lands at the Utah test and training range in the US.

• W-2, W-3 (2025): beyond manufacturing payloads, adding hypersonic/reentry-related payloads from the Air Force Research Laboratory, with recovery sites including Koonibba Test Range in Australia.

• W-4 (starting June 2025): beginning to use a self-developed satellite platform for longer-duration in-orbit experiments (drugs and semiconductor processes).

• W-5 (November 2025–January 2026): completing reentry and recovery on January 29, 2026, and achieving the first full cycle of “orbit operation to return capsule recovery” using its vertically integrated satellite platform.

On the regulatory front, the report mentions Varda has obtained FAA Part 450 reentry permits (expanded to operational licenses through 2029), enabling more routine return missions; the company also publicly aims for nearly monthly reentries by 2028, with more aggressive long-term goals (weekly or even daily). The next W-6 mission is tentatively scheduled for March 2026.

The real challenges: unit economics, launch frequency, process stability, and FDA factory oversight

The “four major constraints” listed in the report are almost all about logistics and compliance:

• Uncertain unit economics: launch, in-orbit operations, and reentry costs per kilogram remain high, relying on “high-value density” products to be profitable; whether they can reach profitable scale is unproven, and may require significant capital before seeing substantial revenue.

• Dependence on high-frequency launches: revenue is strongly tied to how much physical output can be brought back each time; to grow, high-frequency, reliable launches and recoveries are essential.

• Process control difficulties: vacuum, temperature variations, radiation, and microgravity all make process stability and repeatability harder; even successful experiments require repeated iterations to resemble industrial production.

• FDA approval and CGMP inspection challenges: the report explicitly states that there are no current FDA approvals for “space manufacturing” of human drugs. Based on existing logic, they still need to follow standard NDA pathways with clinical data to prove safety and efficacy; how CGMP inspections would be conducted once factories are in orbit is complex—lawyers speculate remote assessments similar to those used during the pandemic might be needed, but for Varda’s mode of operation—weeks or months in orbit before recovery—may require entirely new approaches.

The core message of the report is quite simple: the space economy doesn’t necessarily have to be forever just about “sending things up” and “transmitting signals down.” Once launch costs drop, recoveries become routine, and regulatory pathways are established, pharmaceuticals could be among the first industries to turn “space manufacturing” from a scientific story into a business report. Varda is just the fastest example of closing the loop so far.

All this exciting content comes from WindTrader.

For more detailed analysis, real-time insights, and frontline research, join the **WindTrader Annual Membership**.

![](https://img-cdn.gateio.im/social/moments-f6c401e201-647e9d8d03-8b7abd-d8d215)

Risk Disclaimer and Terms of Liability

Market risks exist; investments should be cautious. This article does not constitute personal investment advice and does not consider individual users’ specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions herein are suitable for their particular circumstances. Invest at your own risk.