Media Coverage
Foreign Outsourcing of Development has Pitfalls
Pharmaceutical Formulation and Quality
March 1, 2010
By James M. Hamby, Ph.D. and Gary Baker, Ph.D.
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A critical task for life science companies that are developing small molecule therapeutic agents is the identification and selection of the right contract manufacturing organization (CMO) to ensure successful development, delivery, and registration of their API on time and on budget. Ideally, the necessary manufacturing expertise and infrastructure would be available in house. In today’s pharmaceutical environment, however, only the largest companies generally have the wherewithal to shoulder the huge capital expenditures needed to maintain, operate, and staff a fully integrated chemical development and manufacturing facility.
This article looks at some common pitfalls encountered when outsourcing the development and manufacture of new chemical entity (NCE) active pharmaceutical ingredients (APIs), also referred to as innovator APIs, and examines the potential hidden benefits of outsourcing innovator APIs locally rather than going offshore.
For most small and mid-sized biotech companies, outsourcing drug development and manufacturing services is an integral part of the business plan. The biotech model allows companies to focus on core competencies and “strategic advantage,” while activities requiring capital-intensive infrastructure and leveraging outside expertise of highly trained professional staff are outsourced to conserve capital, maintain flexibility, and streamline the drug development process cost effectively.
Many large pharmaceutical companies have made significant investments in offshore research and development (R&D) and manufacturing facilities, mainly in Asia, to exploit the “labor arbitrage,” leverage offshore talent, and tap into these emerging markets. In the past, CMOs were used as stopgap measures to provide capacity during short-term peaks in production demand. With the risks of R&D costs, patent expirations, lean pipelines, and increased regulation, outsourcing now plays an increasingly important role in cost-cutting strategies to improve R&D productivity.
With the risks of R&D costs, patent expirations, lean pipelines, and increased regulation, outsourcing now plays an increasingly important role in cost-cutting strategies to improve R&D productivity.
Finding the Right CMO Partner
Once a life science company decides to initiate development of a small-molecule NCE drug candidate, securing API supplies and preparing the chemical and manufacturing controls section of the new drug application (NDA) filing are often outsourced to a CMO. The challenge for the sponsoring company then becomes identifying and selecting an ideal CMO partner for the project and managing the relationship to ensure successful, efficient, and cost-effective development of the drug candidate.
International Conference on Harmonisation guidelines and U.S. federal regulations mandate that the sponsor company assume responsibility for the accuracy of all data generated, documented, and reported. Therefore, the sponsor company must ensure that data generated by a third-party CMO is of the highest quality and that the integrity of the data can be defended to regulatory agencies. It is imperative that the sponsor company effectively manage the project.
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