International relationships are evolving rapidly. In this time of constant change and uncertainty, pharmaceutical outsourcing, while still offering many benefits, may also carry added risk — unless the outsourcing partner operates a highly integrated global network, has manufacturing locations in key growth markets and brings decades of experience to the table.
New Paradigm for International Trade
International relationships are undergoing significant change, and the following issues have particularly affected the pharmaceutical industry:
- Brexit: The UK will be leaving the European Union (EU) in March 2019, whether the two governments have reached an exit deal or not. With negotiations stalled and only a few months remaining, the likelihood of a hard (no-deal) Brexit has risen dramatically. In that event, no regulations or guidelines will be in place for the import/export of pharmaceutical materials (raw materials, building blocks, advanced intermediates, active pharmaceutical ingredients [APIs], drug products and medical devices) for clinical and commercial use. Drug makers have been asked to extend their stockpiles of medicines by at least six weeks to ensure uninterrupted supply.1
- New Tariffs: Tariffs implemented by the Trump administration in the United States against long-term allies have unsettled long-established international relationships and raised questions about future collaborations, though most economists see the impacts on the U.S. economy as limited.2 Compounding the issue is the U.S. withdrawal from various international treaties, including the Paris Climate Agreement and the Iran nuclear deal (Joint Comprehensive Plan of Action).
- The U.S.–China Trade Battle: The United States and China have been engaged in atrade battle for much of 2018, with each country placing increasing tariffs on a wide range of goods. While once again the macroeconomic impacts on both countries are anticipated to be minimal,3 the implications for international relations across other issues and with other countries remain uncertain.
Growing Requirement for In-Country Production
The growth of the global pharmaceutical market has been driven largely by the rise of emerging markets, including Brazil, Russia, India, China and South Africa (BRICS) and Mexico, Indonesia, South Korea and Turkey (MIST). These countries combined now account for approximately 20% of global pharmaceutical sales, with drug sales expanding enough to double in just five years.4
Access to these new markets is essential to ensuring consistent future growth. Many of these countries recognize the potential value they represent to drug manufacturers and wish to also benefit. To do so, they are requiring some level of local manufacturing.5 In some cases, countries are offering incentives for localization, such as higher reimbursement rates or favored status in the tender process. In others, only locally produced drugs will receive public reimbursement. The latter is the case in Russia (with its Pharma 2020 plan) where only drugs on the Vital and Essential Drugs List that are produced in the country receive government reimbursement.5
Requirements can be related to all aspects of the value chain, including research and development, clinical trials and commercial production activities (drug product manufacturing and packaging). Some have requirements on the portfolio level (if a production process is localized for one product, then all products can be sold in Indonesia and China, for instance), while others apply on the product level (Brazil requires local production for any product sold in the country, even if this rule seems to be softened a bit lately).6
Drug substances are becoming more complex, requiring a broader range of specialized chemistry and bioprocessing capabilities.
Complexity on the Rise
Rising complexity is not limited to changes in international trade and global manufacturing challenges. Drug substances are becoming more complex, requiring a broader range of specialized chemistry and bioprocessing capabilities. Biologic drugs, from monoclonal antibodies to next-generation cell and gene therapies, are beginning to dominate the pharma pipeline. The limited solubility and bioavailability of many new small-molecule APIs require more advanced drug delivery solutions. All new drug products must assure convenience and ease of administration to support improved medication adherence (while also deterring abuse and preventing the introduction of fraudulent products). These issues must be addressed at a time when pressure to reduce costs and accelerate new drug development are mounting.
Quality expectations are also increasing. Many pharmaceutical manufacturers in emerging markets7 — as well as some in the United States and Europe (particularly facilities producing injectable products) — have received warning letters from various regulatory agencies due to quality and cGMP compliance issues. The U.S. Food and Drug Administration is also shifting from a focus on compliance to an emphasis on quality culture. The agency has introduced new voluntary quality metrics programs and encourages the use of tools and technologies (design-of-experiment [DoE], quality-by-design [QbD], continuous manufacturing, etc.) for quality to be designed into processes from the start.
Access to basic raw materials is also being affected. For instance, in an effort to reduce pollution and improve the country’s manufacturing base (Blue Sky Initiative), the Chinese government has shuttered approximately 4000 facilities in the last 12 months alone.8 As a result, supplies of some basic materials have become increasingly limited, which will impact pharmaceutical intermediate and API producers that do not have comprehensive sourcing strategies in place.
Managed with an Established Global Network
Relying on outsourcing partners may seem to be a risky proposition. However, collaborating over the long term with an embedded organization with decades of experience in the pharmaceutical industry — and an integrated, global network of facilities covering all aspects of the drug development life cycle — can help guarantee quality and facilitate access to growing markets.
Servier offers contract development and manufacturing services for drug substances and drug products across 11 sites throughout France, Spain, Italy, Ireland, China, Russia, Poland, Egypt, Morocco and Brazil. In areas where we do not have our own facilities, we have established relationships with reliable partners. This global network is embedded within the Servier Group, a global pharmaceutical company with more than 60 years of experience and a presence in 148 countries. All of our CDMO services leverage the Servier Group’s knowledge, quality culture and support functions (regulatory, supply chain, finance, etc.).
Integrated Operations for Reduced Risk and Accelerated Time to Market
Servier’s services include clinical and commercial manufacture from lab to pilot through scale-up to marketed product manufacturing. Our global quality systems management (QSM) infrastructure proactively assures the implementation of quality assurance/quality control (QA/QC) best practices at all of our facilities, resulting in the implementation of the same quality and management systems and advanced technologies, including assay and validation techniques and systems, across the entire network.
- Quality: Servier takes a holistic approach to quality, bringing people, process and policy together to create an efficient, agile QA/QC culture. We rely on a proactive quality system review (QSR) process and have a “right first time” ethic. Our global quality infrastructure is augmented by the use of a QbD approach. All of our facilities meet GMP requirements and are approved by the FDA and the EMA.
- Regulatory support: At Servier, regulatory affairs (RA) is considered an operational activity on the same level as our development, analytical and manufacturing groups. Our RA team is aware of the specific requirements of different regulatory agencies, and we have strong, collaborative working relationships with all. All sites within the company are kept up to date with new guidelines. One person follows a client project from start to finish, leading to the more efficient development of high-quality regulatory dossiers and optimal regulatory strategies.
- Serialization: Servier expects approximately 80% of the markets we serve to have serialization/aggregation regulations in place by 2021. We have taken a centralized approach, having established a corporate-level serialization team in 2014 to develop a centralized track-and-trace solution. An organization is in place to maintain the system at all sites in our global network. The system is versatile enough to allow for compliance with different countries’ serialization schemes for full compatibility and connectivity with client systems. It addresses the need for both serialization of individual product packages and aggregation of those packages into larger bundles.
Servier is committed to continuous improvement, from quality to operational excellence to advancing capabilities. Between 2016 and 2018, Servier invested €250 million in its global services network. Some of our latest advances are as follows:
- Preparative chromatography: In October 2018, we launched our new preparative chromatography service, dubbed InnoPreP™, which leverages the more than 30 years of experience our team of experts has in this field. The service encompasses the capability for either continuous processing using simulated moving bed (SMB) or 6-column batch chromatography at lab to industrial scale and can reduce time to market by as much as three months. Our preparative chromatography infrastructure at our Bolbec site has been expanded to include a dedicated 500-m2space that includes a high-containment area for the handling of highly potent compounds, down to OEB 5.
- Flow chemistry: Continuous manufacturing is an alternative technology enabling the design of optimal processes for a wider array of processes. Flow chemistry expertise resides within Servier’s Innovative Technology Department, which works closely with experts in chemical development, and we are also developing our own flow chemistry systems. The 100-mL plugged-flow reactors allow effective development in a design that is readily transferable to the industrial scale, allowing rapid commercialization of optimized processes. We already have one dedicated, industrialized flow chemistry process that delivers approximately 200 tons/year of advanced intermediates.
- Highly potent capabilities: In addition to our new capability for preparative chromatography of highly potent compounds, Servier recently expanded capacity for the production of OEB 5 final drug products in a dedicated unit in the network.
- Biologics facility: Servier is constructing a new ~ €50 million facility for the production of monoclonal antibodies and cell therapies at our Gidy, France site. A portion of the plant will be dedicated to projects conducted in collaboration with universities. The first bioproduction batches are scheduled for 2020.
- Capacity and capability expansions: Servier is currently adding a production unit at our facility in Tianjin, China at a cost of ~ €50 million. The Biogaran subsidiary of Servier Group acquired Nigerian drug maker Swipha in 2017. We also added granulation equipment and an encapsulation machine at our site in Egypt. In Russia, we recently made a €3.5 million investment in a new encapsulation machine and tablet press.
- Wnuk, Piotr.“UK’s drug supply contingency plan for hard Brexit.” Pharmaphorum.com. 4 Sep. 2018. Web.
- Torry, Harriet.“Most Economists See Tariff Effects on U.S. Economy as Limited.”The Wall Street Journal.13 Sep. 2018. Web.
- Tappe, Anneken.“5 things about a U.S.-China trade war that might surprise investors.”MarketWatch.17 Sep. 2018. Web.
- Tannoury, Maya, Zouhair Attieh.“The Influence of Emerging Markets on the Pharmaceutical Industry.” Current Therapeutic Research. 86: 19–22 (2017).
- Bessiere, Renaud.“Russian Pharma Market Offers Great Potential for Local Manufacturers.”Pharma’s Almanac.15 Sep. 2017. Web.
- “Localization: An Emerging Requirement of a Global Pharma Strategy.” ATKearney. n.d. Web.
- Sharma, E. Kumar.“USFDA delivers strong message to pharma companies on quality culture & data integrity.”Business Today. 6 Dec. 2017. Web.
- Mullin, Rick. “Drug chemical makers brace as China cracks down on pollution.”Chemical & Engineering News.96: 23–25 (2018).