Fine Chemicals
need to excel at “design for manufacturing” tax strategies manufacturing has traditionally and Portugal were on line. Together with
concepts and methods to ensure afforded them. building block manufacturers this product
compatibility – in this respect pharma has a mobilised 1,000m
3
of reactor capacity. Within
long way to go.
new partnerships
four years, continuous improvement and
The US FDA has opened the door to
Today not many contractors can offer this
competition had reduced the API’s price
a new paradigm of eff_i ciency in terms of
value proposition and, similarly, big pharma
per kilo to levels generic f_i rms would balk
development and manufacturing, whether
companies do not realise how much they
at. Agouron was later taken over by large
this is in the production of an API or of a
will need to change to be able to capture
pharma and API production was brought
tablet. “Quality by Design” (QbD) now makes
these benef_i ts. Focusing on small-molecule
in-house.
6 Sigma and lean manufacture a practical
new product introductions, going forward
reality; process analytical technology (PAT)
there will have to be signif_i cant consolidation looking east or west?
and parametric release allow trending,
of the API industry because few such f_i rms A current trend in pharmaceutical f_i ne
eliminating dead time from samplings and
currently have suff_i cient production capacity chemical manufacturing seems to be a
analysis, and avoiding rejections, deviations
to truly serve the API needs of any large geographical shift eastwards – even Lonza
and reprocessings. So expect a step change
pharma player. is building small molecule manufacturing in
in pharma manufacturing: far greater
China. Yet if Merck & Co and AstraZeneca
scientif_i c understanding of the process, with
Ireland, unfortunately, has
are going to entrust their next launch to
signif_i cantly higher investment in process
anyone they will prefer the API to be made
chemistry, data collection and sophisticated
allowed its cost base to spin
in a familiar setting. Irish facilities have not
process automation. The introduction of car out of control, probably in
received a warning letter since the mid-
industry production techniques and great
1990s. Cork has the highest density of API
part because the magnitude
innovation in the f_i ne chemicals industry
producers anywhere in the world (mostly
itself, such as Britest,
6
will result in dramatic
of tax-savings dwarfed plant tax-driven captive manufacturing for US
reductions in per kilo cost, in operating costs
operating costs
and Japanese large pharma), but even
of plant, in costs to build and improvements
after stripping out the tax effects (about
in speed and f_l exibility and reduction of
two-thirds of the export value) and the
inventories.
Contractors and pharma companies manufacturing ineff_i ciencies of captive
This shift is contingent on pharma
are still discovering QbD,
7
and few have manufacture (about 50%), Ireland is still as big
manufacturing ceasing to be captive and
supported QbD f_i lings. But to do this, and to as China or India (see Table 1).
instead becoming mostly contracted out. It
capture all the possible value, large pharma Today there are virtually no contract
is the test of the market, and the demands
must become a more creative purchaser and manufacturers in Ireland, mostly the result
of powerful customers, that will drive the
it needs to establish true partnerships with of big pharma buying up their plants in the
API industry to consolidate, specialise and
API suppliers. Relationships need to be long heyday of the 1990s. Ireland, unfortunately,
excel at compliant but low-cost manufacture.
in term and wide in scope, starting at the has allowed its cost base to spin out of
The savings large pharma is looking for are
process development stage, with IP captured control, probably in part because the
not related to lower labour costs or lower
in ways that contribute to a tax-favourable magnitude of tax-savings dwarfed plant
overheads driven by lower HSE standards.
structure when it comes to manufacture, that operating costs. The reality is the current cost
In the world of new product introductions,
will have to take place in the usual places. base is tough for contractors.
large pharma will be facing an acid-test.
Forging such relationships requires major Although Ireland has a talent pool that
Will big pharma look to have its cake and
changes in mindset. We are talking about cannot be ignored, what remains to be seen
eat it too? For new product introductions,
very close and long-term collaboration, data is whether its stakeholders, from Ireland’s
companies will not compromise on standards.
integration and a level of transparency that is Industrial Development Agency (IDA) to the
They will expect to speak at their usual
currently unknown within big pharma itself trade unions, will confront the cost issues,
scientif_i c level with contractors, and they will
– creative solutions require a high degree working with contract manufacturers to
seek to verify compliance with high standards
of trust. provide their industry with a new lease of
of quality, GMP, HSE and ethics. Yet they
Small pharma companies have shown life. Buyers will be asking whether custom
will also want to avoid capital investments
how this can be done. Almost 10 years synthesis producers in Ireland can offer APIs
and expect a low (and constantly lowering)
ago, Agouron saw the FDA approve its HIV to the usual Cork standards at Indian prices.
cost-of-goods-sold. They will want someone
protease inhibitor NDA in a few months, Yet the telling factor will be, for instance,
else to keep their inventories and they will
and a 20-ton API forecast became a 100-ton what David Smith, AstraZeneca’s executive
want just-in-time delivery. And yes, they will
per year manufacturing challenge. Within 12 vice-president of operations, expects the
still want to be able to take advantage of the
months of approval, API plants in Japan, Italy right price to be.
Table 1: Geographical shift in manufacturing
For 2007 ($ billion) Actual pharma Tax ef_f ect Manufacturing API in % Finished form in %
exports netted out inef_f_i ciencies netted out
Ireland 34 11 6.5 – –
Singapore 11.5 5.5 2.8 – –
China 6.5 6.5 6.5 90 10
India 6.5 6.6 6.5 30 70
Source: Ireland’s Industrial Development Agency (IDA)
8
, Singapore’s Economic Development Board (EDB)
9
, PricewaterhouseCoopers
10
116
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