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    Columns

    Newsmakers: Bill Mitchell

    PCI Pharma Services’ CEO talks trends

    Newsmakers: Bill Mitchell
    Tim Wright, Editor03.07.17
    Bill Mitchell, president and chief executive officer of PCI Pharma Services, has spent nearly his entire career in pharmaceutical packaging, now serving his second stint at the company. From its beginnings in 1971 as Packaging Coordinators Inc. (PCI), the company has been at the forefront of providing pharma packaging services. In 1996 it was acquired by Cardinal Health and Mr. Mitchell hopped on board shortly thereafter. A few years in, he became president of the Cardinal/PCI contract services division until 2006 when he left the company just before it was sold off to The Blackstone Group and became Catalent Pharma Services.

    In 2012, while serving as the chief executive of Clondalkin Group’s North American pharma packaging operations, Frazier Healthcare bought the Catalent business and tapped Mr. Mitchell to lead the initiative. He took the helm and the organization was rebranded again as Packaging Coordinators Inc.

    Subsequent acquisitions followed—AndersonBrecon (2013), Penn Pharma (2014) and Biotec Services International (2014)—and in late 2015 the company rebranded as PCI Pharma Services, integrating the acquired companies into a comprehensive end-to-end CMO/CDMO serving a worldwide customer base from its 14 facilities across the U.S. and Europe.
    Most recently, in August 2016 PCI was acquired by Partners Group, which culminated an active five-year period during which time Mr. Mitchell oversaw substantial growth, guiding the organization’s evolution into a full service CMO/CDMO.

    He talked recently with Contract Pharma about the company’s growth strategy as well as several key market trends shaping the pharma outsourcing industry.         —Tim Wright


    Contract Pharma: It’s been a year and several months since the company rebranded as PCI Pharma Services. How has the transition been from a contract packaging business to a full service CMO/CDMO?
    Bill Mitchell: Well many of us at PCI, including myself, were at the company back when we were owned by Cardinal Health. I actually was at PCI from 1997 to 2006. At the time we were a CDMO similar in size to where we are now, with the core business being contract packaging. In the early 2000s we started a clinical supply business in the U.S., the UK and Germany. We also had a manufacturing business in Germany for a number of years. So operating in the CDMO space wasn’t new to us. It was actually the view that I had of the business when I came back in 2012.

    When Frazier acquired the initial assets from Catalent and brought me back onboard, the plan was really to focus on the core contract packaging business and grow it through a combination of acquisition and organic growth. While we focused on the strength of the core packaging business we were also looking to expand into what I call logical adjacencies. Initially we expanded into the clinical business and then the high potency manufacturing business when we acquired Penn. We’ve continued with this same strategy all the while looking for assets that are global in nature. The customer base that we deal with tends to want to have companies that have a footprint not just in the U.S., but in other major global markets as well. That has been our strategy from day one and we continue to pursue it.

    CP: How have you seen the industry change from your first stint at PCI, and since your return as chief executive in 2012?
    BM: The overall rise in pharmaceutical outsourcing has been bolstered by the trend towards strategic outsourcing. During my first tenure here we were really just a tactical partner to our customers. For example, in the case of a product launch, a Big Pharma plant manager would be tasked with finding a partner capable of turning around say a million bottles per month for 12 months. In that sense the market was very transactional and tactical in nature.

    Nowadays drug companies are increasingly looking to select CMOs in a more strategic and inclusive fashion, relying on preferred suppliers in an integrated supply model or increasingly a virtual supply model heavily reliant on specialized CMOs. With continued merger and acquisition activity in the pharmaceutical segment, coupled with large-scale vendor reduction initiatives, this trend is increasing. Pharmaceutical and biotech companies have communicated quite forcefully their desire to partner with leading service providers who can offer a multitude of development and commercialization services.

    We have been very fortunate to be present for much of the dialogue around strategic outsourcing with our clients. It is really an industry shift as they reconcile their market competitiveness and identifying what is core to their business.

    CP: Where will PCI focus its growth initiatives?
    BM: We have three business segments. Commercial packaging is our largest segment with a strong historic prominence in the market as one of the largest packagers worldwide in terms of size. Then we have our clinical services and supply business, which we’ve only been operating for 6-7 years. During that time, we’ve grown to become one of the top 5 clinical supply companies in the world. Lastly, we also have our manufacturing business, which is primarily focused on high potent drug manufacturing.

    While there are quite a number of companies getting involved in high potent manufacturing and formulation development, we’re not aware of any of our competitors in the contract space who have the type of containment manufacturing facility we have at our disposal. It was engineered in such a way so as to be very similar to the capabilities that some of the Big Pharma companies carry in-house.

    So those are the three segments of our business and we will continue to look to grow these organically and through acquisition. The high potent manufacturing segment is one we’re looking very hard at to expand.

    CP: Why is the high potent space an attractive area to invest in?
    BM: Markets for oncology and central nervous system (CNS) disorder drug products, for example, are growing somewhere in the mid-teens in terms of units over the next five plus years. So there’s significant organic growth potential there. We feel that there is an underserved portion of the market, particularly with Big Pharma companies that are trying to outsource those products, but can’t find a partner in the contract space with the right capabilities. This is why we invested in our engineered facility solution. Most companies in the high potent space are performing this kind of manufacturing with employees using personal protective equipment. Our answer is not that. Our answer is an engineered solution that doesn’t expose our employees to the negative aspects of the high potent manufacturing process and at the same time reduces cross-contamination. It’s really designed for smaller batches. Most oncology drugs and CNS type products typically require smaller batch sizes, so that’s what we have in our facility. We can produce anything from a clinical investigative medicine batch size up to commercial projects.

    CP: What about the need for speed to market? How has this expedited drug development and what kinds of pressures does this impose on service providers?
    BM: The pharmaceutical industry is under tremendous pressure to reduce the development time for bringing therapies to successful commercialization, while at the same time reducing costs and optimizing clinical trial study effectiveness. With increased regulatory scrutiny and increased internal diligence, reports suggest the industry is trending negatively over a ten-year period in total development time to market. Pharmaceutical and biotech companies have begun to rethink their pipeline development strategies and tactics for clinical study execution, leveraging outsourced service providers and adopting new logistical models. Studies are increasingly being executed in broader global regions and emerging market locations with the objectives of reducing costs and to find treatment naïve patient populations to complete clinical trials faster.

    PCI is actively investing in its geographic presence for clinical trial supply. We opened a new 93,000 square foot state-of-the-art North American supply chain logistics facility for investigational medicines in Rockford, IL, in 2014. We also expanded our European center of excellence for secondary packaging and clinical logistics in Bridgend, UK, along with expanded third party depot partnerships to provide coverage in 37 countries across all regions. In addition, PCI is expanding its center of excellence for clinical scale drug manufacturing in Tredegar, UK. 

    CP: How is the clinical supply chain evolving?
    BM: The dynamics for successful execution of clinical trials are rapidly evolving. The new models being developed and executed in the clinical supply chain allow sponsor companies more flexibility in supply and the opportunity to be more nimble in preparing and executing studies. Activities such as late-stage customization, pooled supplies and just-in-time labeling provide substantially more leverage to direct supplies on-demand. Our expert staff and the substantial investments we have made in infrastructure across our North American and European operations allow us to provide our clients with a more dynamic supply model. Also having the specializations in cold chain and ultra cold chain infrastructure across our supply network ensures clients have a safe and robust supply network to reach their investigator sites around the world.

    PCI’s investments in this area include buildout of cold chain supply, including controlled room temperature (CRT) at 15-25°C and cold chain at 2-8°C and -20°C, as well as ultra cold chain at -40°C and -80°C, and industry-leading specialization for cryogenic temperatures down to -196°C, both in the U.S. as well as in Europe for the expanding market for cell and gene therapies currently in clinical investigation. This includes the development of technologies for end-to-end status tracking and supply chain visibility. PCI’s cold chain supply is further complemented by its highly specialist capability to support controlled substances, including Schedule II medicines and Schedule III-V medicines.

    In expanding its drug development and clinical trial drug manufacturing presence, PCI has made a number of key investments over the past 24 months including site expansions, the addition of roller compaction technology, and the addition of specialized Xcelodose drug-in-capsule technologies. PCI’s drug manufacturing center-of-excellence provides both broad solid oral dose, powder, liquid and semi-solid capability for general medicines, as well as industry-leading specialization in fully contained manufacture of highly potent compounds. PCI’s Tredegar site was recognized by ISPE as a Facility of the Year and has pioneered industry best practices for development and safe handling of these specialized therapies.

    CP: What are the latest trends in drug delivery technology?
    BM: The rise of biologics and the pending acceleration of biosimilar approvals continues to change drug delivery technologies in the pharmaceutical industry. In addition to traditional oral solid dosage forms, therapies are increasingly biologically derived and require specialized end-to-end handling to ensure safety and effectiveness. IMS data shows biologics represent 37% of all pipeline drugs in clinical development. In addition there are 50 distinct biosimilars currently in development. Biologic therapies are also increasingly migrating from clinical or institutional administration to in-home administration, driving growth in consumer-oriented delivery forms such as prefilled safety syringes, custom autoinjectors and pen-style devices.

    We have really been out in front of the changing market for packaging services. The growth in biologics and parenteral delivery forms has required that we invest heavily in cold chain infrastructure to ensure the appropriate handling of these valuable medicines. Such growth has also driven our investment in highly specialized lines to support rapidly advancing delivery mechanisms such as traditional vials, as well as newer advances such as prefilled safety syringes, and complex assemblies such as engineered injectable devices. Advances in delivery technology warrant very sophisticated solutions from an automation and inspection perspective.

    CP: How is the rise of specialized medicines driving growth?
    BM: The FDA has adopted policies encouraging drug companies to develop therapies for unmet needs and rare diseases, resulting in the majority of new drug approvals of specialized medicines over the past two years. In 2015 almost half of all new drug approvals were for orphan disease indications. These new medicines are often supporting very targeted patient populations, further bolstering a trend towards smaller batch sizes, high value medicines and smaller production campaigns. PCI’s operations have recognized this growing industry trend and adapted to meet the new market requirements. 

    In our contract packaging business we have seen a general trend towards reduced batch sizes and more modestly sized campaigns in comparison to years past. We continue to focus our operations and equipment across all delivery forms to support more nimble, flexible operations; easier changeover; and operational efficiency. This focus is evidenced in our recent investments at both our Philadelphia and Rockford commercial packaging centers of excellence, where we have added significant bottling and blistering capacity employing these new adaptable configurations.

    The advances in the areas of both cell therapy and gene therapies have further implications on the frontier of specialized medicines. PCI has supported advanced therapeutic medicinal products in development, traditionally with specialized ultra cold chain infrastructure in the UK and now the recent announcement of investment in complementary capability in the U.S. The sites feature specialized cryogenic storage and handling with temperatures ranging to -196°C.

    CP: What about the advent of serialization and PCI’s response?
    BM: Perhaps the hottest trend in the pharmaceutical industry is meeting the requirements of the Drug Supply Chain Security Act (DSCSA) legislation in the U.S. in 2017 and subsequent requirements in the EU’s Falsified Medicines Directive (FMD). Considerable resources and investment are being directed at enabling the infrastructure to support the serialization requirements, with considerable concern across the industry about the readiness of pharmaceutical companies to comply by November 2017. PCI has been actively serializing for over five years and is well positioned to support clients in meeting the DSCSA requirements, as well as those for emerging markets such as China, South Korea, Brazil, and others. We offer serialization services at locations both in the U.S. and in Europe.

    The advent of serialization has long been in development, starting with early investigation into RFID technologies and of course the legislation developed in the State of California. PCI has been involved in serialization for a significant time, giving us a tremendous base of knowledge from which to build out our capacity and expertise. With years’ worth of experience in providing commercial serialized medicines to domestic and emerging markets, we have been valuable partners for our clients as they develop their own global serialization and anti-counterfeiting strategies. In addition, we have substantially invested in serialization infrastructure to support the significant demand we anticipate in 2017 and beyond. We have a three-phase investment we’re going through currently (see sidebar on previous page).

    CP: What influence are emerging markets having on the global pharmaceutical industry?
    BM: Data from a recent McKinsey report illustrates the growth potential of providing medicines to global emerging markets. Spending in overall emerging markets has now overtaken the EU’s five economies—Germany, France, Italy, the UK, and France—in pharmaceutical spending and has a total market size of $281 billion. Between 2015 and 2020 emerging markets are expected to account for $190 billion in sales growth. PCI’s global business reflects this trend, currently supporting medicines destined to more than 100 countries around the world. Global market and regulatory requirements, cold chain logistics, and emerging market-specific serialization requirements have led pharmaceutical companies to rely more than ever on specialist service providers for knowledge and expertise. One way PCI supports its clients within the EU is through an extensive group of expert qualified persons (QP), providing regulatory and quality insights to ensure best practice compliance and supply chain safety.

    Now, more than ever, medicines are increasingly complex. With therapies increasingly high value in nature and increasingly potent, our customers have very specific needs for controlled temperature storage and logistics, as well as specialized packaging barrier requirements for sometimes extreme environments; market-specific regulatory and labeling requirements; and for knowledge of the various import/export regulations worldwide. Drug companies really trust in our knowledge and specialization in supporting their products destined to these global markets. We aim to be a seamless extension of their global supply chain and play a very consultative role in their market success.

    CP: What’s the next key trend?
    BM: The bar keeps getting raised in terms of regulatory and quality compliance. On the CDMO side, the better we are at assuring regulatory and quality compliance the more likely we’ll see continued growth in this industry. Years back there was always this belief that pharma would outsource, but at the time they didn’t feel comfortable that service providers had the proper capability. So they held onto their in-house manufacturing and packaging operations. Now with the trend of larger organizations on service provider side that are well financed and well invested, pharma now feels much more comfortable developing long-term partnership programs. As a result we’ve started to see more and more customer companies selling off or shutting down their own in-house capabilities in packaging in oral solid dosage type manufacturing and even a bit on the biologics side of it. So moving forward I think that the continued growth of outsourcing is most exciting. We see incredible opportunity in the future. 
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