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    Features

    Navigating the Shifting Landscape of Contract API Manufacturing

    What does it take for a CMO to succeed and grow in the current competitive marketplace?

    Navigating the Shifting Landscape of Contract API Manufacturing
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    Saharsh Davuluri, Joint Managing Director, Neuland Labs01.26.17
    Contract service providers need to continuously adapt to and stay ahead of the evolving needs and demands of the pharmaceutical and biotechnology industries. This is especially true for contract manufacturing organizations (CMOs), which in recent years have witnessed important ongoing changes in the key industry players and across the pipelines of Big Pharma and smaller biopharmaceutical companies alike. Other factors contributing to the shifting landscape CMOs face include innovation in drug development leading to increasingly complex chemical entities, advances in technology and techniques, and increasingly stringent regulatory requirements facing drug manufacturers.

    These evolving and emerging factors represent both challenges and opportunities for CMOs, and this important duality should not be overlooked. Meeting these challenges and taking advantage of these opportunities are critical not just for the survival of a CMO, but also for its growth and ability to thrive in this highly competitive environment.

    Outsourcing of API manufacturing
    According to the results of a small molecule outsourcing survey reported in 2016, the top activity outsourced was active pharmaceutical ingredient (API) manufacturing.1,2 A 2016 survey by Nice Insight concurred that API production was the most outsourced area for drug manufacturers.3 The survey indicated that 56% of companies outsource small molecule API clinical scale manufacturing and about one third outsource small molecule API commercial scale manufacturing.

    Trying to project and predict trends in API outsourcing is a difficult exercise at best, according to Ben Locwin of Health Science Advisors.4 The factors that drive pharmaceutical companies to increase or decrease API outsourcing are too multi-faceted, volatile, and subject to uncontrollable, external pressures. However, he notes, it is possible to identify some key trends if one focuses on particular industry subsectors. For example, for virtual and small pharmaceutical companies, “a vast majority of their API and intermediates manufacturing is done by outsourcing providers. This is also largely the case with generics manufacturing.”4 Based on the emerging biosimilars market and a growing emphasis on pricing and cost-consciousness, Mr. Locwin has projected “increased utilization of outsourcing, with the most rapid growth expected to occur beginning around 2017.”

    The two main API manufacturing business opportunities for CMOs derive from virtual and small venture-backed pharmaceutical companies, and medium-sized to large pharmaceutical companies. Beyond actual manufacturing of the API, what a CMO can contribute to these partnerships, the advantages it offers its partners, and how it can add value to a partner’s drug development and commercialization project will largely depend on the size, experience level, and capabilities of the pharmaceutical partner.

    The demand for contract services among small and virtual companies is relatively robust. These firms have few staff and limited infrastructure to pursue the development of an investigational compound beyond the research and preclinical testing phases. For start-up and virtual companies it is quite possible that this is the first time any of the participants are shepherding a drug candidate into development. Growth in the numbers of start-ups and virtual pharmaceutical companies has been the stimulus behind the evolution from traditional CMOs to contract development and manufacturing organizations (CDMOs).

    “To compete favorably in this fiercely competitive marketplace, contract services must be able to provide real value, continually anticipate the changing needs of their customers, and adjust their offerings accordingly. CDMOs with expertise in pre-formulation and formulation development, and the ability to provide clinical trial supplies and achieve seamless scale-up and transfer for commercial manufacturing have an advantage,” said Nigel Walker of Nice Insight.5

    Real gains from virtual opportunities
    Some of today’s CMOs and their CDMO counterparts offer additional competencies across the chemistry, manufacturing, and control (CMC) space, as well as well as expanded assistance in matters related to regulatory filings. The CMC department of a venture-backed pharmaceutical company may consist of just a handful of people. They will need to rely on the expertise and capabilities of an established CMO to help them take a compound through development and preclinical testing, and to complete the reports and documentation required to file for an Investigational New Drug (IND) or New Drug Application (NDA).

    With these companies, we adopt a more holistic approach based on a more interactive relationship with the client. A closer relationship that is built on trust. In essence, the chemistry that is at the core of the partnership goes beyond the lab bench and manufacturing suite. The “chemistry” between the client and CMO partner also plays a key role in determining the ultimate success of the partnership.

    First and foremost, a CMO can provide a virtual or small company guidance and assurance that the drug substance going into a formulation is completely controlled and manufactured according to the guidelines of the relevant regulatory agency, whether in the U.S., Europe, or Asia. We have found that a client will typically approach us when it has identified its clinical candidate, has a firm invention, and has filed or is ready to file an IND. The client wants to determine a few main things:
    • Can we develop a robust process to produce the API and drug substance?;
    • Do we have the ability to scale that process?;
    • Are we able to support them in documentation and filing?; and
    • Do we have the capabilities to defend the filing and respond to any queries from regulatory agencies?
    With regard to scale of manufacturing, small and virtual companies used to be more likely to seek the services of a smaller CMO initially, looking to obtain enough material to take them into early stage clinical studies. If those trials were successful, and unless the company then out-licensed the compound, it would soon discover that the small-scale CMO would not be able to supply the quantities needed for Phase II or III trials, and the company would begin the complicated exercise of transferring the process to a commercial scale supplier. That is a scenario a company would prefer to avoid. Today, we find that even small firms are more often looking to partner from the outset with CMOs that can produce commercial scale batches.

    In contrast, larger, more experienced pharmaceutical companies are not looking for guidance on process and product development, documentation, and regulatory filing that a CMO can offer to a smaller company. They are seeking an established, reliable manufacturing partner with a proven track record that can produce the API they have developed, on time and at the scale required. They do seek support and expertise on compliance and adherence to safety and quality, even if insights on cost containment and further process development are not required.

    A CMO with particular expertise and targeted capabilities in specific areas of chemistry, process development, analytical testing, or quality control, can capture the attention of a Big Pharma company with a drug candidate ready to enter the clinic. We have benefited, for example, from offering custom manufacturing services, specializing in the synthesis and purification of peptide drugs, and developing competency in manufacturing certain types of compounds such as fluoroquinolones and deuterated molecules.

    Partnering with small and virtual companies, establishing a strong working relationship, and aligning your CMO with an API and drug candidate ready for preclinical and early stage clinical testing can put your company in a good position to continue to manufacture the product if it were to be licensed by a large company. Most outsourcing of drug substance manufacturing begins with early stage drug candidates. Currently, the shrinking research and development pipelines of Big Pharma are not only fueling the increase in mergers and acquisitions, but are also driving greater in-licensing of promising drug compounds in Phase I or II trials from small venture-backed companies. Therefore, this strategy represents an attractive route to becoming part of a large pharmaceutical company’s supply chain.

    Meeting clients’ wants and needs
    How much product development support clients’ need depends on their knowledge and experience and may vary with the complexity of the API they are developing. The move toward more stringent regulatory requirements, particularly related to genotoxicity testing and control measures, is an area in which a CMO can leverage its experience and technological capabilities. This relates more broadly to the ability to deliver improved process design and control at all scales of manufacturing. The overarching need to maximize safety and quality, while also taking into account cost containment, environmental considerations, and the demand for on-time delivery is a challenging scenario for any manufacturer, large or small.

    Participants in the 2016 Nice Insight CDMO Outsourcing Survey ranked the following criteria among the top five selection factors for an outsourcing partner: quality performance, reliability, and regulatory compliance.3 We find our clients to place the greatest emphasis on API purity and on process and product consistency from batch-to-batch, with no variation.

    When clients are ready to file an IND they are primarily focusing on three concepts:
    • Detection and identification of residual metals and a strategy to control them;
    • Detection and identification of residual solvents and a strategy to control them; and
    • Detect and identification of genotoxic impurities and a strategy to suppress them or, better yet, if possible a process that eliminates their production.
    The first two points are easier to manage as you know and can control the solvents and metals used in the manufacturing process.
    Developing proper methods is critical. This depends not only on optimizing the use of technology and appropriate techniques, but also relies on experience. People who have learned what works best and what does not, based on years of hands-on experience developing different types of processes for producing various kinds of molecules, can play an important role in the development and optimization of processes and process controls. They can also accelerate the timeline, saving money and resources.

    A working group of the International Consortium on Innovation and Quality in Pharmaceutical Development, formed in 2010, has proposed controlling impurities in early stage through Phase IIa drug substance at levels three times higher than those defined in the ICH Q3 guidelines.6 “Specifically, the early phase DS (drug substance) impurity qualification threshold is proposed to be 0.5% or 3 mg per day intake, whichever is lower, for a maximum daily dose < 2 g/day. For individual impurities that exceed the 0.5% threshold but are supported by toxicology data, an upper limit of not more than 1.0% in the DS is appropriate for early stage development.”

    Focusing on specific types of impurities, the IQ Consortium working group suggests that for chiral impurities, and any other impurity or degradation product for which the structure is known, the specification should be not more than 1.0%.6 That said, the limit of the minor enantiomer can vary based on an understanding of its pharmacological, toxicological, and metabolic activities and the likelihood that it would be eliminated during the synthetic process.

    The group proposes following recommended limits for residual metals set forth in EMA guidance, and monitoring for metals using appropriate technology, such as inductively coupled plasma (ICP)-mass spectrometry or ICP-atomic emission spectroscopy. For residual solvent control in early development, established ICH limits should be followed. “The limits may be set higher than the ICH limits if they are realistically based on the manufacturing process capabilities and if there is low toxicity potential (e.g., Class 3 solvents that form solvates with the DS).”6

    The third bullet point above, controlling for genotoxic impurities, is a bigger challenge. These contaminants can vary from product to product and lot to lot. They can derive from byproducts formed during synthesis, the amount and effects of which may change as processes increase in scale. They may require user-defined methods for quantification and individualized control measures.

    Earlier emphasis on toxicity testing
    Regulatory agencies are scrutinizing drugs extremely closely and, in particular, taking a hard look at genotoxicology data. Drugs that may have been approved 20 years ago are being rejected today, often because of toxicity risk. As recently as a decade ago, validation of drug batches for toxicity testing was not required for early stage clinical testing, whereas now the focus on toxicity testing and control has shifted further upstream in development, with toxicity validation performed even for Phase I batches. For virtual and small pharmaceutical companies in particular, a CMO can provide valuable guidance in genotoxicity testing and control.

    One key area in which CMOs can guide and educate small companies is phase-appropriate development and the design and implementation of purity and toxicology studies as a drug candidate moves from the preclinical and analytical phases of development into and through clinical trials. The importance of developing an API to the right extent at the right phase of development does not always receive the recognition it deserves. The purity of Phase III or commercial material needs to be as high as it can be, and it needs to be manufactured consistently at that level of quality. However, material for preclinical studies need not be as pure as for clinical studies. Based on the initial toxicology data, for the first Phase I trials (first in healthy human subjects), the innovator may have some flexibility with known impurities. As the phase of clinical development progresses, the limits on impurities will increase to ensure consistent improvement in the product purity profile (i.e., improvement in impurity profile). 

    An experienced CMO can perform process optimization that leads to higher purity of the API and increased efficiency of production as the process and product move closer to and through the clinic and on to commercialization. We establish specific controls for genotoxic impurities typically as a drug candidate approaches or is in Phase II trials. We tend to focus more closely on residual solvent levels and set appropriate limits during Phase II or III studies. A virtual or small company can benefit from partnering with a CMO that is familiar with and has proven experience with phase-appropriate development, as evidenced by a successful track record with multiple different compounds, having worked with regulatory review panels, and having helped multiple companies successfully take their drug products through the review process.

    Building quality into the process
    As stated, quality is a top priority for companies outsourcing small molecule API manufacturing.3,7 Quality needs to be built into a process and product from the ground up. That is the concept underlying the Quality by Design (QbD) approach to process development. Earlier this year, for example, we set up a QbD lab that allows us to analyze all aspects of a process at laboratory scale and to identify anything that could be a concern as the process is scaled from gram to kilogram to metric ton scale and could potentially jeopardize the regulatory filing. Such variables might include reaction parameters that impact product yield or purity, genotoxicity data, or factors that affect the environmental impact of the process. The increased focus on minimizing the environmental footprint of a process and product has fueled growing interest in green chemistry.

    Investment in the infrastructure and technology needed to develop, define, and implement analytical methods and process monitoring and control techniques at lab scale is highly worthwhile. You will end up saving time, costs, and valuable resources. You will also make it possible for your clients to file better regulatory documentation. QbD offers the opportunity to do process optimization at lab scale, experiment with different solvents and reagents, identify and suppress or eliminate byproducts and impurities, and establish cost-efficient methods to minimize and dispose of hazardous waste and other environmental concerns.

    Conclusions
    Recognizing and responding to the changing needs and demands of the pharmaceutical industry for outsourcing of API development and manufacturing is crucial for a CMO to succeed and grow in the current competitive marketplace. Keeping abreast of innovation, advancing technology, and the evolving regulatory landscape is also essential to maximize product safety and quality, ensure continuous process improvement capability, and help clients avoid potential pitfalls and accelerate their path to regulatory approval. 

    References
    1. Industry Standard Research. “Small molecule API contract manufacturer quality benchmarking report.” January 2016. Available at www.isrreports.com
    2. Shanley A. Surveys examine outsourcing trend. Pharm Technol 2016 1(Suppl):32-33.
    3. Kuehn S, Challener CA, Branch E, et al. Future pharma partner models — outsourcing trends in API development & manufacturing. Amer Pharm Rev July 2016. Available at www.americanpharmaceuticalreview.com (Last accessed December 2016).
    4. Locwin B. API and intermediate outsourcing trends. Contract Pharma October 2015. Available at www.contractpharma.com (Last accessed December 2016).
    5. Walker N. Nice Insight outsourcing trends in 2016. Amer Pharm Rev March 2016. Available at www.americanpharmaceuticalreview.com (Last accessed December 2016).
    6. Zhang S, Coutant M, O’Connor D, et al. Early development GMPs for small-molecule specifications: An industry perspective (part V). Pharm Technol 2012;36(10). Available at http://www.pharmtech.com/early-development-gmps-small-molecule-specifications-industry-perspective-part-v (Last accessed December 2016)
    7. Shanley A. Specialty markets and services drive API growth. Pharm Technology 201640(3):26-30.
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