Informex 2013: Bright outlook for US API manufacturing

07:16 AM | February 22, 2013 | Rebecca Coons in Anaheim

Drug companies looking for speedy turnaround and strong intellectual property (IP) protection for active pharmaceutical ingredient (API) production are moving away from low-cost emerging market firms, lifting prospects for US-based producers, according to attendees of Informex, currently underway in Anaheim, CA. 

“Cost is an important factor and always will be,” said Aslam Malik, president of Ampac Fine Chemicals. “But customers are looking at other attributes, like communication, the legal system, the culture, the service offering. All of these, put together, are starting to factor into the equation more than before.”  

As biopharma and small biotech firms grow into midsize companies with wider R&D capabilities and manufacturing needs, the industry has transitioned into a healthier mixture of smaller and larger firms, Malik adds.

Executives said they are seeing more situations where clients feel as though the risk level to bringing the final stages of API production to Asia is too high and are bringing later-phase activities back to the United States, where IP protection is more certain.

This trend is especially prevalent among emerging biopharma companies. “They are less apt to send their baby offshore,” said Brian Scanlan, president and CEO, Cambridge Major Laboratories. “That one molecule may be their entire valuation. The smaller the company is and the fewer assets that [it has], the more likely that [it] will be looking to the US for production.”

Scanlan said some customers early in development want speed and quality—where US producers have an advantage—and increasingly view cost as secondary. “They want to hit their timeline and get through the gates quick.”

Drug companies are also particularly keen to expedite development because the FDA has “opened the floodgates” in terms of issuing more approvals than in the past, said Guy Steenrod, CEO and principal, Irix Pharmaceuticals. “That helps accelerate the overall business," he added. “When there were only 10 or so approvals [a year], that was not a great time for anyone in the business.”

API manufacturers can also offer value beyond product delivery, including the development of new synthesis routes that could improve the sustainability profile of the process and help shore up IP. “If we can take something that is 20 steps long and knock it down to 6, that makes a drastic difference [from a sustainability standpoint] and provides additional IP protection that customer may not have had otherwise,” Steenrod said . 

Green chemistry is an increasingly important trend in API manufacture and benefits both customer relationships and the bottom line. For example, Ampac Fine Chemicals developed a solvents recycling initiative with the state of California. Cambridge Major instituted a sustainability program a year ago, a move that Scanlan said was good for its relationship with Big Pharma companies. Walt Shaw, president of Avanti Polar Lipids, said Avanti has developed ways to replace chromatography steps with crystallization and precipitation, lowering chloroform needs.

Executives noted, however, that green chemistry has its limits. “Everyone would like to be green, but sometimes you need a halogenated solvent,” said Stephen Munk, president and CEO, Ash Stevens.

Steenrod said there has been a push to remove the use of reagents from API manufacture because of environmental concerns, but adds that the amount of solvent involved is tiny compared to that needed by the large-volume industrial chemical producers.