STA Pharmaceutical, the small molecule branch of WuXi AppTec, develops NCEs (APIs) for pharma and biopharma companies, providing early and late phase development and manufacture, as well as commercial manufacture. The company only develops patented drugs, and while it is not particularly well known, is currently working on more than 100 APIs (200 inclusive of intermediates). 
 
Contract Pharma spoke with Minzhang Chen, chief executive officer at STA Pharmaceutical to learn more about the company and API market trends. –KB
 
Contract Pharma: Please provide a brief background on STA Pharmaceutical and its services
 
Minzhang Chen: STA is a subsidiary of WuXi AppTec providing a small molecule pharmaceutical development and manufacturing platform serving the life sciences industry. In the past few years, the company has grown very quickly. In 2016, we opened a 39-acre fully integrated process R&D and API manufacturing facility in Changzhou, China as well as a facility to support preclinical and early phase API Process R&D and cGMP production in San Diego, CA. These add to STA’s existing FDA approved facility in Jinshan (Shanghai) and an R&D site in Shanghai. Our customer base is roughly made-up of around 90% pharma and biotech customers from the U.S. and Europe with 10% Chinese innovative drug development companies. Overall in 2016, STA accomplished more than 500 projects including 150 New Chemical Entity APIs under clinical development and more than 30 projects in Phase III or commercial production.
 
Our integrated Changzhou site is designed to advance our client’s APIs and advanced intermediates through preclinical and clinical development to global commercial launch. Upon completion, the site will employ more than 500 scientists and will add nine pilot and commercial plants with more than 1,500 m3 of reactor volume in total.  The plants will fulfill our customer’s pipeline needs, with many of the programs now entering process validation and commercialization stage, requiring us to add production capacity. In fact, since the Changzhou site opened less than a year ago, we have more than 40 active pharma customers running programs at this site, with 60 APIs and/or intermediates supporting various clinical programs, and one New Chemical Entity API already in commercial production at this site.
 
CP: What’s the company’s business model?  How does STA set itself apart from other firms?
 
MC: STA has taken the approach of working with very large numbers of pharma and biotech clients earlier in the development and R&D cycle, and staying with these partners through to commercialization. Unlike some of the other CDMOs, who try to pick up work at a later stage, our strategy is to maintain a huge pipeline of early clinical stage clients, with a view to progressing these into commercial production. So, rather than trying to back-integrate, we are helping our customers from the inception of their product through to launch. This approach has led to a steady pipeline of work entering into commercial production and also means we handled more projects in the R&D stage than other CDMOs.
 
In the last few years, our commercial manufacturing capacity need has been rising and we are now investing heavily in new manufacturing facilities to meet the demand. Another difference in our strategy compared to many of the other CDMOs, is that we are investing heavily in our own world class facilities rather than through acquisition – which, I think, is a testament to the company’s strength and confidence, new business pipeline and ability to move a large number of development projects into commercial production.
 
CP: What are some initiatives currently underway?
 
MC: STA has taken many initiatives in recent years with the aim of becoming an industry leader in “Green Chemistry”.  Our biocatalysis center now owns an in-house library of more than 500 commercial enzymes available for rapid screening.  The team successfully manufactured over 50 programs ranging from kilo to metric ton scale under cGMP using this technology.  We also built a comprehensive flow chemistry platform. To date, we’re fully equipped with various laboratory and plant scale flow chemistry systems to handle some of the most challenging or hazardous chemistries such as photochemistry, ozonolysis, cross-coupling reactions (Negishi and Kumada), reactions with sodium azide, just to name a few examples.  
 
One of the lesser-reported activities we strive to undertake at STA is to constantly improve the effectiveness of our processes, improve efficiency and reduce waste. Company-wide, in the last several years we have reduced our overall PMI (Process Mass Intensity) index by around 25% each year, and we are targeting another 20% in 2017 – which really would be quite remarkable. It’s a challenge we set for our chemists and manufacturing teams to design “greener” processes for new programs and keep improving the processes we have already developed.
 
 
CP: What is the company’s strategy for the next five years?
 
MC: The next five years is going to be a key period for both STA and the wider industry. We are going to continue to invest in enhancing the capability and capacity of our service offerings. We’ve seen increased consolidation among CDMOs, and the market is clearly moving towards providers who can offer a wide range of technical capabilities. Our core strength has been our R&D teams but increasingly we foresee a much greater volume of commercial production at the expanded STA sites. We expect to grow at over a double-digit pace for the next five years as the company fills this capacity.
 
CP: What market trends are driving API development today?
 
MC: There are a couple of notable major trends. First, the types of molecules being developed are becoming far more complicated, requiring more advanced chemistries and technologies. This is presenting good opportunities for STA as both biotech and pharma customers need experienced R&D and manufacturing teams working closely together that can deliver these new drug targets faster. CDMOs must adapt to the new paradigms in the market – speed and flexibility will be a major factor in those that fail or succeed. We also saw tightened regulatory oversight from around the globe which is reflected by the increased number of Warning Letters issued by FDA as well as the regulatory “push backs” on the Starting Materials definitions.   
 
 
CP: Are there certain regulatory/quality control issues the industry continues to face?
 
MC: What we are seeing is that customers are far more closely attuned to working with CDMOs with the highest standards of manufacturing quality and control. While cost continues to be a factor on decisions, the ability to demonstrate a proven track record of global regulatory approvals, coupled with experience in QbD and continuous improvement, are an essential component of working with an outsourced partner.
 
At STA, we have an exemplary regulatory record. We’re the first CMC platform in China that passed FDA inspection for new chemical entities. Our Jinshan API facility is also the first contract manufacturing organization in China that is approved to supply APIs and GMP intermediates for branded commercial drugs by regulatory agencies in U.S., Canada, EU, Switzerland, China, Japan, Australia, and New Zealand. Our facilities have also successfully passed quality audits by more than 100 clients worldwide since 2004. Regulatory and quality excellence remain a fundamental part of our growth strategy.