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LGM Pharma’s chief executive talks industry trends and the company’s continued growth as a provider of tailored API and CDMO services.
September 5, 2024
By: Tim Wright
LGM Pharma is a provider of API sourcing and drug product contract development and manufacturing solutions to the pharmaceutical, biotechnology, and compounding pharmacy industries. It assists clients in managing all phases of the drug product development process, from API sourcing through to commercialization. Established in 2007 with headquarters in Boca Raton, FL, and additional facilities across the U.S., LGM Pharma has expanded its reach and capabilities to serve a diverse client base with a portfolio that includes over 2,500 APIs catering to various therapeutic categories. Beyond API sourcing and distribution, LGM’s end-to-end solutions include technical support, regulatory assistance, and custom synthesis, as well as advanced logistics, quality management systems, and comprehensive supply chain solutions. In this Q&A, Contract Pharma talks with LGM Pharma’s CEO, Prasad Raje, about current industry trends, including the growing demand for innovative drug formulations, the impact of regulatory changes, and the challenges posed by global supply chain disruptions. Prasad shares insights on how LGM Pharma plans to stay ahead of the curve through strategic investments in cutting-edge technology, a commitment to quality and compliance, fostering strong partnerships with key industry players, and an agile approach to adapting to market dynamics. Contract Pharma: What are some of the key areas of innovation that LGM Pharma is focused on, and how do these align with global pharmaceutical trends? Prasad Raje: After 30 years in the pharmaceutical industry, one thing is clear—you must evolve. The market demands it. Therefore, instead of focusing only on simple solid dosage forms or liquid solutions, we are embracing newer manufacturing technologies and are developing and manufacturing complex drug products i.e., orally disintegrating tablets, high drug loaded dry and liquid suspensions, etc. We’re continuously investing in high tech instrumentation and machinery to enhance manufacturing efficiency. Because in the future, it’s all going to be about how efficient you are. Prices need to come down, and the entire healthcare system is pushing in that direction, so manufacturers like us must adapt. We’re on it. On the innovation front, by sourcing active pharmaceutical ingredients (APIs), we’re staying current. Let me give you an example: we can integrate into your supply chain in the biologics arena. Biologics are on the brink of a patent cliff, like what happened with generic small molecules a couple of decades ago when everyone rushed to invest in the generic industry. That’s why we’re sourcing APIs—it’s a clear strategy. One area where we’re highly active in now is oligonucleotides, peptides, GLP-1s, vaccine adjuvants, and monoclonal antibodies. We all know drugs like Humira are coming off-patent, and companies are already gearing up to work on them. We’re establishing relationships with those manufacturers to ensure we have the sources ready for customers when they come to us. Because we source APIs, customers also turn to us for biologics APIs. That’s one way we’re staying involved. Another area where we’re participating, which is truly remarkable, is through the 505(b)(2) regulatory pathway. It’s gained popularity and continues to be relevant. At any given time, we’re involved in nearly 100 projects. These projects often involve APIs that are already known but are being reformulated for better delivery, repurposed for different therapeutic uses, or combined for new therapeutic applications under the 505(b)(2) pathway. We’ve been part of these innovative approaches through that division. In fact, in the last year, we’ve even taken on a couple of projects where we’re handling the drug formulation and trial materials for clients. These are just some of the ways we’re staying innovative and keeping pace with industry trends. CP: What are some company highlights from the past 12 months? Prasad: We’ll be announcing this soon, but we’re in the midst of a significant capital expenditure (CapEx) rollout across all our facilities. This ties back to the question about staying current with industry changes. When we acquired an older business, we quickly realized that we needed to update the machinery and workflows to support new expansions. So, as we expand our capacity, we’re taking the opportunity to make these necessary upgrades. Let me give you an example. When we bought the business, we never anticipated the potential in one area—a Texas site that had been producing suppositories for 15 years. That segment has quadrupled in the past two years, driven by customer demand, especially in women’s hygiene health, which is growing so fast that we were struggling to keep up. To meet this demand, we’re adding specific machines to double our capacity. This all started with a company that came to us for a single development project, and today, that company has 23 products on the shelves at Walmart, CVS, and Walgreens, among others. We now manufacture at least four or five high-volume products for them on a commercial scale. What began as a single development project has evolved into a strategic relationship, thanks to our ability to demonstrate speed, agility, and scientific expertise in getting the formulation right. This partnership has grown the business many times over from where it started. That’s just one example. We’ve also started collaborative development on five or six new products, and we’re very excited about these because they’re unique and not currently available on the market. These are the kinds of opportunities we’re pursuing. We’re not simply investing and hoping they will come—they’re already coming to us with something unique, and we’re growing alongside these businesses. That’s our strategy moving forward. CP: How has the integration of new technologies transformed operations at LGM Pharma, and what technological advancements are you most excited about? Prasad: We initially expanded our analytical capabilities in response to customer demand, as well as our internal needs. We didn’t want to rely solely on third-party labs for certain analytical tests. Instead, we aimed to build in-house capabilities while keeping a third-party backup for added security. In drug development, no matter which regulatory path you’re on, speed is everything. So, we decided to bring some of these techniques in-house. We ended up almost doubling our analytical physical footprint because the demand and growth were so significant. Being a commercial manufacturer, we train our analytical chemists in a commercial environment before they move into third-party analytical work. We already had a robust quality system and training programs in place. All we needed to do was expand our internal capacity. We leveraged this growth to add more services that we previously relied on third-party labs for—like X-ray diffraction, ICP-MS, and sterility testing, as well as all the testing required for finished product work. Bringing these capabilities in-house has not only streamlined our own production cycles and improved efficiency but also allows us to offer a comprehensive range of analytical testing services to other customers. Whether it’s for NDA, OTC, or even nutraceuticals, we’re equipped to handle it. In fact, we recently signed a large deal with a nutraceutical company, where we’ll be providing daily sample pickup and drop-off services. These are the kinds of initiatives we’re getting into now. CP: Considering recent global disruptions, what strategies has LGM Pharma implemented to enhance supply chain resilience and ensure product availability? Prasad: I love discussing this because it’s such a hot topic post-COVID, but the truth is, this was our business model even before the pandemic. Back then, it wasn’t as well-received by customers as it is today. Now, when we talk about our strategy, it resonates much more. So, let me share some of what we do. First, we spend a lot of time on sourcing, especially on the API side. Our team invests significant on-the-ground time with manufacturers—not just handling paperwork, but really getting to know the manufacturers. We make it a point to understand the ownership, the company culture, their expansion plans, and their expertise. This is all critical. We document everything about these manufacturers and keep it in our database. The reason is simple: when customers come to us, and speed and agility are crucial, we’re in a position to guide them. We help them identify long-term partners for their drug development. It’s vital to choose a partner who can support the drug from the R&D stage through to commercial manufacturing, not just someone who can quickly supply an R&D sample for early-stage work. This long-term relationship is crucial, and it’s reflected in the multiple supply chain agreements we now have. We’ve been involved from the early phases, sometimes five, six, or seven years ago, and now, as these projects move into commercial stages, we’re still a key part of the supply chain. Our involvement in educating the customer has been a significant factor in that. When it comes to supply chain resiliency, we strongly encourage having multiple suppliers. It’s not always easy, but it’s critical as you move into the later stages of development to qualify more than one manufacturer. Geography is also important. We help our customers find suppliers in different regions and on different continents. Internally, we support the supply chain through our Kentucky warehouse, where we maintain safety stock for long-term customers. We work closely with them, even storing their material in the U.S., thanks to our GMP storage facility. And if they need testing, we have them send samples to our California facility for analytical testing. This is how we ensure a robust and reliable supply chain for our customers. CP: Are there any other issues, or challenges, on the supply chain side of the business that have you concerned? Prasad: There are two key issues that stand out, and the first is drug shortages. We’re all aware that drug shortages are causing real problems, with patients ultimately suffering as a result. Given the current state of manufacturing capacity, it’s going to be very challenging to reduce dependency on India and China, especially in the generic drug industry. The generic industry heavily relies on these countries for API manufacturing, and increasingly, even drug product manufacturing is dependent on India, and to some extent China. This dependency isn’t going away anytime soon. So, we’re focusing on how we can mitigate these challenges by positioning ourselves as supply chain “experts.” We actively monitor and manage the supply chain, which became especially crucial during COVID, and now we’re continuing to address drug shortages post-pandemic. I believe there’s a real need for a drug shortage program that provides more flexibility for those who want to help address these issues. Regulatory bodies need to offer more support because, right now, if a shortage lasts six months or a year, it’s hard to make a business case for addressing it. Patients suffer during that time, but if it takes a year to develop and get approval, who’s going to invest in that? That’s the core challenge. The second issue is the pricing pressure in the generic industry, which is driving manufacturing to lower-cost markets. It’s a tough problem to solve. We’re seeing a two-tier system where the FDA recognizes that the innovation and branded drug markets are high-priced, while the generic market operates at very low prices. While we may feel good about the low prices, it’s leading to more manufacturing capacity moving overseas to places like India and China due to cheaper labor. If this trend continues, we’ll see even more reliance on these countries, making the supply chain less resilient and further away from home. CP: What current regulatory issues are having an impact and what steps are you taking to navigate them effectively? Prasad: Well, the DSCSA really changed the way we approach the supply chain, didn’t it? Now, even the pedigree of APIs is crucial. That’s something that has really evolved. When LGM was formed five years ago and the new management team, including myself, came on board, we had to completely overhaul the quality management system. We also needed to build a new culture that’s very different from before. You have to rethink your entire approach to GMP and consider the importance of every single step. Here’s a classic example: when New Harbor Capital acquired the business and brought in a new team, there was only one person in quality, and that person wasn’t even close to where the actual GMP activities were happening. Now, in the supply chain division, we have four quality people, including a director of quality, a corporate head of quality, and a quality person at every location where supply chain activities occur. That’s a huge shift, and we’re making significant investments in this area. A robust quality management system is essential, so we’ve put a lot of time and effort into that. On the manufacturing side, things were already in good shape, but we’re still investing in technology. We’ve integrated master control, tied everything together in SAP, and built an infrastructure that moves goods in a compliant manner—from testing materials to manufacturing to releasing pallets. We’re investing in all the infrastructure needed to ensure that when the biotech investment comes back around, we’ll be ready to meet that demand quickly. CP: What do you perceive as the best growth opportunities for LGM Pharma moving forward? Prasad: It’s crucial that we stay involved in the small molecule space while it’s stable. If you look at the number of approvals, even in the New Drug Application (NDA) domain, the FDA’s new drug approvals show that small molecules still play a major role. That’s why it’s important for us to excel in this area. At the same time, we’re planning to add certain capabilities driven by customer needs. But we’re not just looking to add new capabilities, we want to master them. Our management team’s focus has been clear: rather than trying to be everything to everyone, we aim to be the best in class at what we offer. That’s both a challenge and an opportunity. When you excel and deliver for customers, they stick with you for the long term, and that’s the key to our future. One sector we’re exploring organic growth is in fill-finish services—we see significant potential here. Another area we’re exploring is biologics testing because we believe it’s an area ripe for growth—but again, we want to be the best in class when we do it. That’s our priority. We’re already investing heavily in this, with commitments of $3-4 million dollars, and we plan to continue investing to ensure we’re operating efficiently. Moving forward, our vision is straightforward: we don’t want to be everything to everybody. Businesses often make that mistake. Instead, we want our customers to feel that they’re truly partnering with a smart, best-in-class company, as our tagline says.
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