Gil Roth03.07.11
The solid dosage form remains a pillar of the contract manufacturing industry. Maybe it's not as sexy as the prefilled syringe or as esoteric as the metered-dose inhaler, but it's still a dominant dosage form for small molecule drugs. Knowing it's a many-headed beast, we spoke to a series of manufacturers about the state of the business in 2011. Most were optimistic and talked in terms of an upward spike in business, but some were downbeat about their prospects. While some CMOs cited a decline in major clients as a result of big pharma rationalization, and a dropoff in smaller clients because of straitened finances, others felt that differentiating technology and customer service helped them weather the storm of the recession.
Lee Karras, president of Pharmalogx LLC, an advisory services company, and former chief executive officer of AAIPharma Services, noted three major trends in solid dosage manufacturing: "First, there are more highly potent NCE compounds in development and that has a number of ramifications: smaller tablets/capsules, more immediate vs. sustained release formulations, more capital-intensive manufacturing trains due to the containment required (and, in some cases where cleaning levels are required to go too low, the need for dedicated equipment) and smaller batch sizes. The latter is a function of pharma targeting niche patient populations where they can extract the greatest return on their R&D dollar in the short term.
"Second, we're seeing a trend away from using solvents. Where there was once a tremendous reliance on solvents in granulation and coating, now we see new solubilizers and excipients and advances in spray drying to improve bioavailability, all working to reduce the need to use solvents in manufacturing.
"Third, there's a major shift in clinical manufacturing of NCEs away from early formulation and toward powder-in-capsule (PIC). Companies just want to quickly get a reasonable prototype into the clinic, and I'd say that 80% of the companies I have dealt with are taking a neat drug in capsule - or drug + lactose in capsule - into Phase I. Once they get into Phase II, they develop a more commercializable prototype. The cost of a PIC program at many U.S.-based pharma companies and CDMOs is about 30% of a full formulation program, so cost savings are a consideration as well."
These changes in technology have combined with largermarket and regulatory forces to create a business environment fraught with challenges and opportunities for CMOs. The downbeat CMOs were understandably reticent to go on the record, but their problems tended to center around delayed approvals for commercial projects and cancellations due to large pharma network rationalizations.
But the non-doom-and-gloom contingent sees plenty of opportunity in the new environment. Only a few years ago, the talk was about how large pharma only had 30% utilization of its facilities. That's clearly changed, as they move to rationalize networks.
One industry veteran contended that the reshaping of the industry is a boon for CMOs, remarking, "Pharma is getting away from brick and mortar. They're starting to rely more on the expertise and people outside of their companies. With that comes team-building and relationship, as opposed to the old practice of, well, dictating terms to a CMO."
Oliver Mueller, executive vice president business development at Glatt Pharmaceutical Services, commented, "We'reseeing a significant number of new project and product opportunities. In particular, the activity level has picked up quitesignificantly in the last several months. It's a fairly diverse range, too: branded, generic, biotech, and emerging/virtual companies."
He added, "One trend that doesn't seem to be subsiding is lifecycle management. We continue to see companies taking branded compounds and extending their marketability beyond patent life based on new dosage forms, like orally disintegrating tablets (ODT), or combining two different APIs to get enhanced therapeutic action or new indication altogether."
Coating Place,a manufacturer focused on Wurster fluid bed technology, has also managed to make it through the downturn without a major hiccup. Fred Schulze, the company's vice president of sales and marketing, commented, "What we've seen are fewer but much larger projects. The scope of the projects is larger, stretching from development to full commercialization. The development work itself is much more broad and complex, and the volume of manufacturing in the end is much greater."
Mr. Mueller noted that Glatt decided to expand that infrastructure prior to the downturn, but chose to continue the project and make the investment in cGMP capability even when the industry was in flux. "We've broadened our facilities to add tablet compression, capsule filling and tablet coating. We've positioned ourselves to manufacture products we've been developing, as well as handle tech transfer for companies looking to move products out of their facilities. This way, we can be a one-stop shop for manufacturing." (See "Glatt Adds cGMP Capacity at NJ Site" on p. S-10 for more information.)
Coating Place also expanded during the downturn. "We worked diligently throughout the recession on the sales and marketing side to bring in projects," said Mr. Schulze. "We brought in a number of them in order to sustain business. At the same time, we expanded our facility by 85,000 sq. ft. and upped our staff by 30%."
Both Mr. Mueller and Mr. Schulze credited two key factors for their positive perspectives on the market: project management and specialized technologies.
Mr. Mueller remarked, "We need to look back at that notion of lifecycle management, because there are novel technologies that allow the sponsor to develop a dosage form that is different from that they've used in the past. For example, in developing an ODT with modified release or immediate release characteristic, you're often dealing with some degree of pellet technology. To that end, you need to produce starting pellet material small enough to avoid grittiness and to taste-mask effectively.
"There's a limit to mouthfeel around 300 microns, at which you get that gritty effect, so you need starting pellet material that's down around 200-250 micron level. This makes pelletized technology critical in ODT forms, and having novel technologies to enable that development has benefited Glatt."
Said Mr. Schulze, "We've been growing dramatically in the last few years. Our experience in Wurster technology is being acknowledged by big pharma." He noted that the company's 40 years of coating experience translates into a value for clients, just as the technology itself does. He remarked, "If you don't run a Wurster correctly, you'll absolutely tear the active up. You need to treat it like a science, not an art."
He also noted that large pharma companies seem to be growing more adept at managing relationships with CMOs. He said, "Part of a good outsourcing experience is having our project teams work with each other. Perhaps it's not as significant on the first project with a client, but by the second and the third, those teams get to know each other and work better together. It's a case where expectations come into alignment."
Mr. Mueller echoed those sentiments: "Clients can really benefit from a CMO's strategic location. This isn't a small issue; a sponsor must be able to visit key people at the CMO and really get a feel for their systems."
Both upbeat and pessimistic CMOs expressed concern about sponsors choosing ostensibly less expensive CMOs in the far east, but most agreed that sophisticated clients had already come around to Mr. Mueller's point about strategic location. Said one, "I still think, as it pertains to more difficult to craft development activities or manufacturing operations, there are advantages keeping it close to home, and I get the impression that sponsors understand that."
In addition to development-into-commercial projects from large and small pharma, solid dosage CMOs have another major client base to work with. As one CMO put it, "If you're in this sector, generics have to be a big part of your business. Branded projects can take five, seven, 10 years. If you get them right, generics projects can only take two or three. (Well, three or four, given how the FDA is operating on approvals.)"
Said Mr. Mueller, "One of the hallmarks of the generics industry has been its ability to move quickly; those companies are all about speed. First-to-file status is so critical for them. There's been consolidation among generics, and that's created new layers within the larger firms, but they haven't shed their need for speed."
Intertwined with that need for speed is the development of higher-end generics. Several CMOs noted that generics companies are working on more time-release and sustained-release products. Once developed as lifecycle management techniques for branded drugs, they too are seeing patent expirations, leading generics manufacturers into more complex formulations.
Mr. Schulze commented, "When you have a specialized technology like we do with Wurster technology, people come to you because they need that specialized thing. It's not easy for a generic - or a large pharma, for that matter - to simply add it to their capabilities. It's not like installing a tablet press."
Mr. Karras concurred that generics have a growing role in the CMO space, but was ambivalent about the ramifications of this trend. He said, "The major impact to CMOs will not come from directly from large pharma. With major patent cliffs at almost every major company, I think we'll see a shift where specialty and large generics players will cannibalize the market for many of the largest selling drugs. Many of these companies will require manufacturing capacity to make these products, making these companies the dominant consumers of capacity in the solid dose CMO space."
That doesn't mean it's going to be good for manufacturers. Mr. Karras commented, "Since there will be price erosion with these 'generic' contracts, the CMOs will feel the pain and their margins will decline. Only those specialty CMOs and niche CMOs that have specialized manufacturing assets will remain relatively unscathed by the margin compression."
With advanced technologies and a focus on project management, some solid dosage CMOs appear poised for a bright future.
Catalent Acquires Lyopan Technology
Catalent Pharma Solutions has entered into a license agreement with Pantec AG for the exclusive worldwide development rights to the Lyopan fast-
dissolve technology for healthcare products. The acquisition provides Catalent with new oral dose capabilities, potentially enabling the delivery of improved, compliance-enhancing treatments across a broad range of applications, including central nervous system drugs, allergy medications, and dosage forms for pediatric and geriatric populations, as well as prescription and OTC products.
"We are pleased to add the Lyopan technology to Catalent's oral dose technology offering, which will enable us to provide our pharmaceutical partners with an enhanced choice of drug delivery technologies to improve the performance of their treatments," said Ian Muir, Ph.D., president, Modified Release Technologies for Catalent. "The Lyopan technology is ideally suited to deliver a wide dose range of active pharmaceutical ingredients in a fast-dissolve tablet. These are key considerations for situations where patient adherence, ease of swallowing and lack of access to water are important issues to address."
Lyopan is a technology for development and manufacture of fast-dissolve lyophilized tablets. Lyopan requires significantly less water than existing technology, reducing energy consumption, sublimation and drying time. The technology also offers the potential for improved taste-masking capabilities and may increase the range of drugs and consumer products that can be used in a fast dissolve dosage form.
Glatt Adds cGMP Capacity at NJ Site
Glatt Pharmaceutical Services has added new commercial scale cGMP contract manufacturing capacity at its 86,000-sq.-ft. facility in NJ for tablet and capsule production. Added production capabilities include high shear wet and fluid bed granulating/drying, tablet compression and pan coating, Wurster HS pelletizing and coating, CPS technology direct pelletizing, oven tray drying/curing, blending, milling, sieving and QC. Additional capabilities include organic solvent or aqueous and DEA controlled substance (CII CV).
"We've made this investment in commercial scale operations in order to provide our clients the speed-to-market and high quality standards demanded in today's competitive market," said Oliver Mueller, executive vice president business development, Glatt Pharmaceutical Services.
Gil Roth has been the editor of Contract Pharmasince its debut in 1999. He can be reached at gil@rodpub.com
Lee Karras, president of Pharmalogx LLC, an advisory services company, and former chief executive officer of AAIPharma Services, noted three major trends in solid dosage manufacturing: "First, there are more highly potent NCE compounds in development and that has a number of ramifications: smaller tablets/capsules, more immediate vs. sustained release formulations, more capital-intensive manufacturing trains due to the containment required (and, in some cases where cleaning levels are required to go too low, the need for dedicated equipment) and smaller batch sizes. The latter is a function of pharma targeting niche patient populations where they can extract the greatest return on their R&D dollar in the short term.
"Second, we're seeing a trend away from using solvents. Where there was once a tremendous reliance on solvents in granulation and coating, now we see new solubilizers and excipients and advances in spray drying to improve bioavailability, all working to reduce the need to use solvents in manufacturing.
"Third, there's a major shift in clinical manufacturing of NCEs away from early formulation and toward powder-in-capsule (PIC). Companies just want to quickly get a reasonable prototype into the clinic, and I'd say that 80% of the companies I have dealt with are taking a neat drug in capsule - or drug + lactose in capsule - into Phase I. Once they get into Phase II, they develop a more commercializable prototype. The cost of a PIC program at many U.S.-based pharma companies and CDMOs is about 30% of a full formulation program, so cost savings are a consideration as well."
These changes in technology have combined with largermarket and regulatory forces to create a business environment fraught with challenges and opportunities for CMOs. The downbeat CMOs were understandably reticent to go on the record, but their problems tended to center around delayed approvals for commercial projects and cancellations due to large pharma network rationalizations.
But the non-doom-and-gloom contingent sees plenty of opportunity in the new environment. Only a few years ago, the talk was about how large pharma only had 30% utilization of its facilities. That's clearly changed, as they move to rationalize networks.
One industry veteran contended that the reshaping of the industry is a boon for CMOs, remarking, "Pharma is getting away from brick and mortar. They're starting to rely more on the expertise and people outside of their companies. With that comes team-building and relationship, as opposed to the old practice of, well, dictating terms to a CMO."
Oliver Mueller, executive vice president business development at Glatt Pharmaceutical Services, commented, "We'reseeing a significant number of new project and product opportunities. In particular, the activity level has picked up quitesignificantly in the last several months. It's a fairly diverse range, too: branded, generic, biotech, and emerging/virtual companies."
He added, "One trend that doesn't seem to be subsiding is lifecycle management. We continue to see companies taking branded compounds and extending their marketability beyond patent life based on new dosage forms, like orally disintegrating tablets (ODT), or combining two different APIs to get enhanced therapeutic action or new indication altogether."
Coating Place,a manufacturer focused on Wurster fluid bed technology, has also managed to make it through the downturn without a major hiccup. Fred Schulze, the company's vice president of sales and marketing, commented, "What we've seen are fewer but much larger projects. The scope of the projects is larger, stretching from development to full commercialization. The development work itself is much more broad and complex, and the volume of manufacturing in the end is much greater."
Mr. Mueller noted that Glatt decided to expand that infrastructure prior to the downturn, but chose to continue the project and make the investment in cGMP capability even when the industry was in flux. "We've broadened our facilities to add tablet compression, capsule filling and tablet coating. We've positioned ourselves to manufacture products we've been developing, as well as handle tech transfer for companies looking to move products out of their facilities. This way, we can be a one-stop shop for manufacturing." (See "Glatt Adds cGMP Capacity at NJ Site" on p. S-10 for more information.)
Coating Place also expanded during the downturn. "We worked diligently throughout the recession on the sales and marketing side to bring in projects," said Mr. Schulze. "We brought in a number of them in order to sustain business. At the same time, we expanded our facility by 85,000 sq. ft. and upped our staff by 30%."
Both Mr. Mueller and Mr. Schulze credited two key factors for their positive perspectives on the market: project management and specialized technologies.
Mr. Mueller remarked, "We need to look back at that notion of lifecycle management, because there are novel technologies that allow the sponsor to develop a dosage form that is different from that they've used in the past. For example, in developing an ODT with modified release or immediate release characteristic, you're often dealing with some degree of pellet technology. To that end, you need to produce starting pellet material small enough to avoid grittiness and to taste-mask effectively.
"There's a limit to mouthfeel around 300 microns, at which you get that gritty effect, so you need starting pellet material that's down around 200-250 micron level. This makes pelletized technology critical in ODT forms, and having novel technologies to enable that development has benefited Glatt."
Said Mr. Schulze, "We've been growing dramatically in the last few years. Our experience in Wurster technology is being acknowledged by big pharma." He noted that the company's 40 years of coating experience translates into a value for clients, just as the technology itself does. He remarked, "If you don't run a Wurster correctly, you'll absolutely tear the active up. You need to treat it like a science, not an art."
He also noted that large pharma companies seem to be growing more adept at managing relationships with CMOs. He said, "Part of a good outsourcing experience is having our project teams work with each other. Perhaps it's not as significant on the first project with a client, but by the second and the third, those teams get to know each other and work better together. It's a case where expectations come into alignment."
Mr. Mueller echoed those sentiments: "Clients can really benefit from a CMO's strategic location. This isn't a small issue; a sponsor must be able to visit key people at the CMO and really get a feel for their systems."
Both upbeat and pessimistic CMOs expressed concern about sponsors choosing ostensibly less expensive CMOs in the far east, but most agreed that sophisticated clients had already come around to Mr. Mueller's point about strategic location. Said one, "I still think, as it pertains to more difficult to craft development activities or manufacturing operations, there are advantages keeping it close to home, and I get the impression that sponsors understand that."
In addition to development-into-commercial projects from large and small pharma, solid dosage CMOs have another major client base to work with. As one CMO put it, "If you're in this sector, generics have to be a big part of your business. Branded projects can take five, seven, 10 years. If you get them right, generics projects can only take two or three. (Well, three or four, given how the FDA is operating on approvals.)"
Said Mr. Mueller, "One of the hallmarks of the generics industry has been its ability to move quickly; those companies are all about speed. First-to-file status is so critical for them. There's been consolidation among generics, and that's created new layers within the larger firms, but they haven't shed their need for speed."
Intertwined with that need for speed is the development of higher-end generics. Several CMOs noted that generics companies are working on more time-release and sustained-release products. Once developed as lifecycle management techniques for branded drugs, they too are seeing patent expirations, leading generics manufacturers into more complex formulations.
Mr. Schulze commented, "When you have a specialized technology like we do with Wurster technology, people come to you because they need that specialized thing. It's not easy for a generic - or a large pharma, for that matter - to simply add it to their capabilities. It's not like installing a tablet press."
Mr. Karras concurred that generics have a growing role in the CMO space, but was ambivalent about the ramifications of this trend. He said, "The major impact to CMOs will not come from directly from large pharma. With major patent cliffs at almost every major company, I think we'll see a shift where specialty and large generics players will cannibalize the market for many of the largest selling drugs. Many of these companies will require manufacturing capacity to make these products, making these companies the dominant consumers of capacity in the solid dose CMO space."
That doesn't mean it's going to be good for manufacturers. Mr. Karras commented, "Since there will be price erosion with these 'generic' contracts, the CMOs will feel the pain and their margins will decline. Only those specialty CMOs and niche CMOs that have specialized manufacturing assets will remain relatively unscathed by the margin compression."
With advanced technologies and a focus on project management, some solid dosage CMOs appear poised for a bright future.
Catalent Acquires Lyopan Technology
Catalent Pharma Solutions has entered into a license agreement with Pantec AG for the exclusive worldwide development rights to the Lyopan fast-
dissolve technology for healthcare products. The acquisition provides Catalent with new oral dose capabilities, potentially enabling the delivery of improved, compliance-enhancing treatments across a broad range of applications, including central nervous system drugs, allergy medications, and dosage forms for pediatric and geriatric populations, as well as prescription and OTC products.
"We are pleased to add the Lyopan technology to Catalent's oral dose technology offering, which will enable us to provide our pharmaceutical partners with an enhanced choice of drug delivery technologies to improve the performance of their treatments," said Ian Muir, Ph.D., president, Modified Release Technologies for Catalent. "The Lyopan technology is ideally suited to deliver a wide dose range of active pharmaceutical ingredients in a fast-dissolve tablet. These are key considerations for situations where patient adherence, ease of swallowing and lack of access to water are important issues to address."
Lyopan is a technology for development and manufacture of fast-dissolve lyophilized tablets. Lyopan requires significantly less water than existing technology, reducing energy consumption, sublimation and drying time. The technology also offers the potential for improved taste-masking capabilities and may increase the range of drugs and consumer products that can be used in a fast dissolve dosage form.
Glatt Adds cGMP Capacity at NJ Site
Glatt Pharmaceutical Services has added new commercial scale cGMP contract manufacturing capacity at its 86,000-sq.-ft. facility in NJ for tablet and capsule production. Added production capabilities include high shear wet and fluid bed granulating/drying, tablet compression and pan coating, Wurster HS pelletizing and coating, CPS technology direct pelletizing, oven tray drying/curing, blending, milling, sieving and QC. Additional capabilities include organic solvent or aqueous and DEA controlled substance (CII CV).
"We've made this investment in commercial scale operations in order to provide our clients the speed-to-market and high quality standards demanded in today's competitive market," said Oliver Mueller, executive vice president business development, Glatt Pharmaceutical Services.
Gil Roth has been the editor of Contract Pharmasince its debut in 1999. He can be reached at gil@rodpub.com