In the fast-changing world of pharmaceuticals new molecular entities (NMEs) are more complex than ever before and are targeted at smaller patient groups. As a result, there is an increasing trend for more products but in smaller volumes. Meanwhile, compliance requirements are extending into the non-GMP key starting material (KSM) supply chain with impurity tracking and tracing now taking centre stage. The resulting cost increases and the capacity and technology misfit, however, offer an opportunity for the more nimble CMOs. Furthermore, novel collaborative partnering models and concepts will have to be considered to make the best of the situation for the pharmaceutical industry and the patient.
Pharma innovation is accelerating through classic pharma innovators as well as emerging virtual pharma innovators but with increased focus on unmet medical need and more narrowly defined therapeutic areas – truly ‘pinpointed’ patient solutions.
New blockbuster drugs will still occur, but a new lean burn engine of growth has emerged that demands better value to cater for both an explosion in demand and customer expectation. Innovation pipelines are once again growing but with more complex molecules and lower volume indications after launch compared with the previous period.
This is having a profound effect on the future supply chain for active pharmaceutical ingredients (APIs) and their registered starting materials.
There is a larger number of clinical trial projects underway using smaller volume new chemical entities (NCEs), often involving longer syntheses compared with the previous era. This means increased complexity for those managing a larger number of projects as well as increased costs.
A parallel trend is a significant burgeoning of regulatory scrutiny on related impurities, particularly potentially genotoxic impurities (PGIs), which is now also extending into previously non-GMP KSMs – often new chemical entities themselves – requiring much more transparency and de facto GMP requirements.
One large pharmaceutical innovator confirmed that the number of patients in clinical trials in 2013 saw a three-fold increase compared with the number in trials a few years ago. Another company just ran into difficulties with the European Medicines Agency (EMA) over impurities in KSMs, which delayed its phase III programme.
An industry undergoing profound change offers opportunities for those with nimble feet and a good cost structure
An industry undergoing profound change offers opportunities for those with nimble feet and a good cost structure, linked to flexibility. Economy of scale still works, but with a dwindling blockbuster group emerging there is a certain level of capacity ‘misfit’ with the prevailing industry assets. The appetite for smaller portions or medium scale multi-purpose plants seems to offer better use of capital and more flexibility in the medium term to counterbalance mega investment, which carries great reward but also a risk of too much emphasis on the big revenue earning solution.
One pharma company recently ran into flexible capacity problems and is now seeking to outsource even GMP and API stages, which was not initially part of its sourcing strategy. The development intensity and technical support required to scale up and launch more complex molecules poses twin challenges – skill and scale availability – which will have to go hand in hand.
Smaller niche players along with a fairly stable pool of large capacity CMOs will have to rethink their practices
Ensuring compliance and change control in this web of increasing complexity will not only challenge the pharma innovators but also their current models of preferred suppliers. The myriad of smaller niche players along with a fairly stable pool of large capacity CMOs will have to rethink their practices and embrace more collaborative partner business models. This is particularly relevant to the current competitive and highly over-rated ‘one-stop-shop’ offering, which does not balance well with the supply chain reality of more than 2,500 APIs and counting with increasing complexity.
Over the past 12 months, for example, SAI has started supplying four of the top 10 CMOs, who in turn supply GMP intermediates and/or APIs to innovators. In one case, the actual ordering and supply chain is being handled directly by this CMO, whereas SAI remains under quality guidance from the end-customer.
View of Unit 2 at ICICI Knowledge Park, Hyderbad, India
Another novel development and supply agreement was signed early in 2013 for a virtual innovator company; two linked agreements were signed with two CMOs that commit both of the suppliers to develop a process in parallel towards the same NCE (a 36-step synthesis), exchange results and best practices and, afterwards, share any business equally. In addition, a joint cost target was accepted for scale-up volumes – quite unthinkable a few years ago.
Compliance on GMP and environmental/health and safety aspects is typically carried out by each pharma company, resulting in significant audit intensity at suppliers.
A new trend is the consolidation through companies such as Ecovadis. It was set up by several Fortune 500 companies to handle sustainability audits, which can then be referenced by others to avoid double costs and time. Increasingly pharma companies are also using GMP audit services of third party consultants.
Several new technologies are also being pioneered, such as continuous or flow chemistry and increasingly enzymatic conversions, which offer superior quality, cost and safety characteristics.
Unit IV, in Bidar, Karnataka, carries out cGMP manufacture of campaigns for late phase clinical trials as well as commercial products
Communication in these emerging networks requires new tools within a legal framework based on shared responsibility. Fortunately, IT and the web have been developing a range of solutions that enable networking globally and with larger groups than ever before: Facebook, LinkedIn, Twitter and a range of e-tools that companies can use for request-for-proposal, and secure e-rooms for dedicated projects. The possibility is there for developing more coherent supply-chain networks with complementary geographic and technological skills, audited by external parties aimed at a set of leading innovators.
Optimising the opportunity in this new pharma supply chain reality will require companies seeking rational partnerships that complement both technical and production skill sets and offer flexibility within a shared compliant world.
SAI has been proactive in implementing a range of investments and actions that ‘add up’. They are part of a coherent strategy that maximises customer opportunities in a quickly changing pharma landscape. It is a case of ‘mindset over matter’ for those that grasp the opportunity.
