With increasingly complex drug products, along with quality concerns and regulatory scrutiny, active pharmaceutical ingredients (APIs) sourcing is experiencing a shift from India and China markets back to North America and Europe. Also, as these markets have matured, perceived cost benefits are not what they once were. Being located close to customers is becoming more and more valued to help address complexities, communication, and regulatory issues.
 
Additionally, customers are looking for service providers that can offer more extensive technologies to meet complex demands for sophisticated actives and a global asset base to provide flexible manufacturing capacity.
 
Johnson Matthey Fine Chemicals, a supplier of products and services for companies developing pharmaceuticals, agrochemicals and other fine and specialty chemicals, provides an industry perspective. The company’s fine chemicals division, based in the UK, supplies APIs and intermediates. Steve Barr, vice president of business development (Europe) at Johnson Matthey discuses R&D shifts and its impact on the API industry, as well as sourcing trends. –KB   
 
Contract Pharma: What outsourcing trends are you seeing with API sourcing and pharma services?
 
Steve Barr: Overall at Johnson Matthey we see positive trends in API outsourcing. Customers are increasingly focused on their core skills of innovating enabling therapeutics for unmet medical need, and as pressures on R&D productivity and speed to market continue, establishing effective partnerships with API service providers is key to securing the necessary capacity for clinical supplies and future commercial requirements. Other developments include customers seeking broader based service providers that can offer a breadth of technologies to meet increasing complex demands for sophisticated actives and a global asset base in order to provide flexible manufacturing capacity.
 
CP: What types of product do you see an increased demand for? 
 
SB: There is increasing demand for broad-based service providers who can provide customers with an extensive range of offerings. As such, Johnson Matthey has recently acquired the Pharmorphix Solid State Services business from Sigma Aldrich. Because solid state services are an integral part of small molecule drug discovery and development, by bringing these capabilities together with our existing expertise in this space and our process development capabilities, we can provide customers with a more simplified and complete offering.
 
Many actives in development are becoming increasingly complex in order to meet more exacting requirements for selectivity and efficacy, so having strengths in complex chemistry expertise is essential to address the synthetic challenges they present, and capabilities such as chemo and biocatalyst offerings are in strong demand. Purification and chromatography are also in demand with these complex actives; conventional purification approaches may not be effective. Finally, of course many of these actives are highly potent, so having expertise in the development and production of such products in becoming a necessity.
 
CP: Are you seeing a return of API sourcing from Asia-Pac regions to domestic markets such as U.S. & UK? If so, what are the main drivers?
 
SB: Certainly this is the case, amongst a range of customer segments from small innovators to large pharma organizations; we have seen a trend for API sourcing returning to Europe and the U.S. We believe this is being driven by a number of factors. The economics have shifted dramatically and what once seemed like significant cost advantages of moving outsourced services to Asia-Pac have been rapidly eroded as those economies have matured and perceived cost benefits are not realized. We’re also finding that having assets located close to customers can be highly valued as it greatly simplifies communication and engagement, especially when products are at critical stages of clinical development. Another advantage here is regulatory concerns; having assets located where they can be readily inspected by customers and agencies provides enhanced confidence about the quality and compliance.
 
CP: What are the major supply chain hurdles experienced today? How can they be overcome?
 
SB: The speed at which products are now being developed certainly presents new supply chain challenges, introducing key decisions about when and how much development should be done according to the stages of clinical development. Again the emergence of novel classes of therapy and innovative medicine like drug conjugates requires the development of new areas of expertise and capability, new technical challenges that need to be met in a timely manner and in a way that doesn’t impede the progress of new therapies through the clinic.
 
CP: How do you help clients navigate increased regulatory hurdles?
 
SB: At Johnson Matthey we see the ability to provide creative and innovative solutions to regulatory challenges as an integral part of our offering in providing custom solutions to innovative companies. We’ve used our extensive regulatory experience to work with our customers and to develop effective ways to manage multi-filings in multiple territories for example. It’s all part of providing a holistic service offering that’s designed to broadly support customers for their CMC requirements.