Pharma and biopharmaceutical supply chains continue to grow more complex & global. The process of sourcing active pharmaceutical ingredients (APIs) and intermediates has also become more challenging.
In 2018, ISR Reports looked at how experience and capacity impact small molecule API outsourcing. Among the findings, about 25% of respondents indicated their company lacked the capacity and the necessary experience to manufacture a drug API. Such factors have driven demand for API outsourcing partners.
Today, faced with rising global trade disputes, choosing the right contract manufacturing organization (CMO) is more difficult than ever – and the consequences of successful supplier selection can be monumental.
While this is true of nearly the entire pharma industry, the challenges confronting smaller & virtual pharma companies are particularly demanding. Most of these smaller companies lack the necessary resources and skillsets to make well-informed choices.
Yet virtual pharma has become a key player in the drug development industry. An article in PharmTech speaks to their specific needs:
“Virtual companies are developing about half of all the pharmaceuticals in the development pipeline now, but their needs are very different from those of more fully integrated pharma companies, which have well-defined procurement organizations to support the spend around outsourcing. Virtual pharmaceutical companies are more susceptible to fluctuations in the capital market than most mid- to large-sized pharma companies.”
Large & Small Pharma: Different Approaches to Sourcing
Pharma companies – no matter the size – need qualified manufacturers who can meet a given drug candidate’s requirements. Pharma sourcing is geared towards identifying a supplier who can appropriately scale in-line with a project’s development needs.
The similarities between large pharma and smaller or virtual companies, however, end here. Large pharma such as Merck & Pfizer do not approach pharma sourcing in the same way a small startup pharma would.
One word: resources. Most Pharma MNCs have sourcing, procurement, and/or logistics specialists. These departments are familiar with the target market, and are capable of identifying and evaluating supplier capabilities. They also have an existing network of suppliers and typically well-established global relationships.
Another key difference (and thus a challenge for small pharma): name recognition. Larger pharma firms command the attention of suppliers. An inquiry from a global Big Pharma company is obviously handled much differently than inquiries from small or virtual companies with few resources (especially, and perhaps most importantly, financial resources).
This difference in name recognition, especially for smaller pre-commercial firms, can greatly impact the response (and the timing of the response) a company is likely to receive. Coupled with the need for smaller API quantities in early stages of development, a startup company isn’t likely to attract the same amount of attention a later-stage project – or a larger company – would typically receive.
7 More Sourcing Challenges of Small & Virtual Pharma
What other API sourcing challenges do smaller pharma & biopharma companies face? Here are 7 more areas that you’ll need to think about during your search for an API supplier.
- Cost Controls
The drug industry is facing intense pricing pressures, and manufacturing cost controls have become mission critical during supplier selection.
- Appropriate DMFs
The presence of a Drug Master File (DMF) is a critical determining factor when selecting an API supplier. In fact, the lack of a DMF is instantly disqualifying. But you will need to proceed with caution. The DMF isn’t an end-all-and-be-all consideration. Just because a manufacturer has a DMF for a particular API doesn’t always mean they are the best source of that API.
- Regulatory Experience & Track Record
Identifying and evaluating contract pharma providers with excellent regulatory track records demands significant due diligence. A key component of this is strict adherence to relevant GMPs, coupled with a quality-focused mindset. Equally as important, however, is finding a supplier whose regulatory capabilities match the company’s planned commercialization path. An FDA-inspected facility will not benefit a company seeking to reach the EU market, and vice versa (though, in certain geographies, this is no longer the case due to the recent mutual recognition agreement between the EMA and the FDA).
- Capacity Across Development, Scale-Up and Manufacturing
Access to API manufacturers who match the projected development and commercialization paths is critical to ensuring timelines can be met. Transferring projects from a CRO to a CMO (or from one CMO to another) inevitably introduces delays, as the number of tech transfers increases. You’ll need to identify providers capable of manufacturing at subsequent scales.
- Accidental Sourcing Specialists
Let’s face it: in small – and especially virtual – pharma companies, your team members tend to wear multiple hats. While an individual may have expertise in some aspect of the drug development process – whether legal/IP, formulation, CMC, quality assurance or process chemistry – they aren’t necessarily the best option to handle API sourcing.
Lead times can vary from CMO to CMO, and from phase to phase. Timelines have a direct impact on the bottom line, with drug launch delays costing $1-15 million per day. Different stages often dictate different timeline needs. For example, at the earliest stages of development, drug companies need small quantities of an API quickly. At later stages, other considerations beyond lead time often come into play.
- Logistics & Distribution
Supply chain logistics and distribution – typically not considered the most ‘exciting’ aspects of the pharma industry – are mission critical. Logistics risk management has taken on even greater importance in the era of rising tariffs and the growing risk of trade disruption. But even the more mundane aspects of pharma supply chain logistics – including filings, forms, etc. – require significant knowledge and experience.
Common Misconceptions of Drug Supply Chain Sourcing
One way in which smaller companies address these 9 challenges is by using an API sourcing firm. There is, however, a perception that pharma/biopharma API providers (of which LGM Pharma is one) tend to be expensive, and that working directly with a manufacturer – wherever they may be located globally – is cheaper and ultimately faster. Unless you have staff with the expertise to manage and analyze the criteria discussed above, this perception of API sourcing is not true.
In fairness, identifying suppliers of a particular API isn’t necessarily difficult. But culling the list of suppliers to find the right API manufacturer match for you is a much more complex process – involving identifying partners who meet specific expertise, quality, regulatory, capacity, timeline and importation criteria.
API sourcing firms such as LGM often have inside knowledge of each manufacturer’s capabilities, improving the likelihood of a successful project outcome. More importantly, LGM manages the entire supply chain process on your behalf – from API supplier identification through the often-complex and tedious importation and FDA clearance processes for finished APIs.
The value of having a trusted API sourcing partner becomes even more evident when your projects involve multiple, staged API supply arrangements. Initial development, for example, may be driven by the need for a reliable supplier who can provide small quantities of an API with rapid delivery timelines. Later-stage development or commercialization may demand a different supplier capable of meeting quality and capacity benchmarks, with the requisite regulatory capabilities for a particular country.
Contact LGM Pharma to learn more about how a sourcing partner can help your company, and to discuss your API sourcing needs.