8/14/2017 Building a Sustainable API Supply Chain | Pharmaceutical Outsourcing - The Journal of Pharmaceutical & Biopharmaceutical Contract Ser

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Articles Article Archives Building a Sustainable API Supply Chain

Building a Sustainable API Supply Chain

Posted: January 29, 2013Tweet Email Print

By: Thomas M. Eckrich, Ph.D.

Eli Lilly and Company

An active pharmaceutical ingredient (API) sourcing strategy is built upon a well-defined

manufacturing process. The keys to the strategy involve using long-term suppliers early in the
development process so that the control strategy for their manufactured material can be developed
over time and included in all supporting registration studies. From a business perspective, a CONNECT WITH US
suppliers performance during product development can also be used as a predictor of long-term
supplier success. Therefore it is essential to engage in source development at all stages of the APIs
development.

For many pharmaceutical companies, their commercial API supply comes from an
internalmanufacturing site which operates only on the registered sequence of the API and utilizes
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contracted suppliers of advanced intermediates, otherwise called API starting materials (API SM). A
API
small molecule synthesis can be thought of as a linear sequence of steps from raw materials to API,
or a convergent strategy where two or more sequences merge at a key point. Figure 1 outlines such
Active Pharmaceutical Ingredient (API)
a convergent synthesis strategy where compounds A and B represent API starting materials, which
Products and Services
according to good manufacturing practices, or "GMP 1," form the first intermediate manufactured
product, or GMP I. Regardless of a firms approach to process design or manufacturing strategy,
Supply Chain Management and Logistics
the themes and tactics revealed in this paper can apply.

This paper also addresses the staging or sequence of tactics that a pharmaceutical company uses for
process development.
There are discrete stages of FOLLOW PO
investigation during Keep up with our latest articles, news and
process development that events. Plus, get special offers and more
normally match a firms delivered to your inbox.
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risk. For example, a
manufacturing process
suitable for long-term
manufacturing is not
required atPhase I clinical development. Figure 2 presents such a stage appropriate approach. Each
of these stages also have well-defined objectives for API source development. These are described in
detail below.

Technology Identification
During early stages of clinical development, the important criteria of speed and scale of operations
may hamper a firms ability to focus resources on commercial supplier development. However, these

Selected Products
early stages are useful for determining reaction types through route screening and evaluation of
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8/14/2017 Building a Sustainable API Supply Chain | Pharmaceutical Outsourcing - The Journal of Pharmaceutical & Biopharmaceutical Contract Ser
early stages are useful for determining reaction types through route screening and evaluation of
supplier
You material
haven't qualities.
selected any products. Find products. Get Quote Compare

Screening for Commercial Sources

As development progresses, a pharmaceutical company will need to carefully consider its regulatory
strategy. At the end of Phase II, the United States Food and Drug Administration (FDA) provides the
sponsor an opportunity to declare various aspects of its evolving chemistry, manufacturing and
control (CMC) strategy, including its proposed API SMs for the method of synthesis. Therefore, the
API SMs should be determined well beforePhase III clinical development. By identifying the API SMs
early on, the sponsoring firm can include its suppliers in the supply of API for pivotal clinical studies,
as well as in the manufacture of the primary stability batches. Another advantage of discerning the
API SMs early is that the sponsor firm will have clarity regarding the degree of regulatory oversight
required for the supplier. For example, if the FDA determines that the propinquity of a sponsors
intermediate requires full GMP methods for manufacture, development of a GMP supply chain can be
undertaken prior to subsequent manufacturing of the intermediate by the Contract Manufacturing
Organization (CMO).

This scenario presents a

potential risk for the
sponsoring firm in the
event that the CMO cannot
produce its material
according to full GMP
methodology. The
sponsoring firm should
establish risk mitigation
strategies to address such
situations before they
develop.

Another aspect of the

emergingsupply chain
strategy is the identification of differing technologies for the manufacture of a common API SM.
Figure 3 illustrates this example, where dual technologies are employed for the manufacture of API
SMs A and B. Such strategies can increase supply chain flexibility, but only if each technology has
an equivalent, controlled impact on API quality. The earlier a firm incorporates such divergent
manufacturing approaches into its developing method of synthesis, the earlier it can consider the
differential impacts which need to be addressed prior to later clinical stage API manufacturing.

Developing Commercial Sources

Additional criteria can be incorporated into the supply chain development during later stages of API
development. Determination of the sustainability of a CMO for the firms material supply is highly
important; in situations where a longer-term supplier leaves the business, a pharmaceutical firm
could be left with a supply shortage. A CMO must have a strong value proposition for the work in
which it is engaged. This is revealed by its ability to profitably leverage their assets and personnel
for income growth and profitability. Therefore, financial diligence of suppliers is a primary concern
for the pharmaceutical client.

Additional sustainability characteristics may require diligence over a period of time. Observations of
a CMOs performance through clinical development are excellent indicators of long-term supplier
sustainability. For example, a CMOs problem solving capability can be observed when there is a
process upset. In such situations, it is instructive to note the degree of independence the CMO
brings to the solution of the problem. Likewise, when material quality problems are observed, it is
important for the pharmaceutical
company to recognize if the CMO
noted the issue or if it was found
later in the supply chain. Its
important also to ask if the causes
were related to process issues,
maintenance and repair issues or
other recurring sources of variability. Were deliveries on time, and did the CMO provide oversight for
the shipment of their development batches? When difficulties are identified in these areas, the
pharmaceutical company needs to address them with the supplier and determine if such issues
represent a long-term concern.

Another strong indicator of long-term reliability is the methodology used by a CMO to ensure supply
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8/14/2017 Building a Sustainable API Supply Chain | Pharmaceutical Outsourcing - The Journal of Pharmaceutical & Biopharmaceutical Contract Ser
Another strong indicator of long-term reliability is the methodology used by a CMO to ensure supply
to their customers. CMOs must demonstrate the ability to use principles of manufacturing science in
their routine manufacturing operations. Items of commerce made by large, usually continuous,
operations are designed for intrinsic quality control. However, pharmaceutical intermediates in many
cases are relatively new items of commerce, manufactured by batch processes and may carry
substantial risk of special cause variability during manufacturing start-up and early commercial
supply. A CMO must be able to demonstrate its ability to look for sources of variability in their
processes, determine the root causes and eliminate them. The pharmaceutical company should use
an appropriate degree of diligence to determine if the CMO uses tools such as Statistical Process
Control and root cause analysis in its daily operations.

Another area of supply chain risk is the supply of alpha raw materials. A diligent pharmaceutical firm
will understand its API supply chain from alpha raw materials through to the API itself. It is not
uncommon for there to be only one source of an alpha raw material and the pharmaceutical
company needs to have a strategy to deal with this risk. Risk mitigation tactics for this situation
include using more than one technology basis for a key intermediate (i.e., different synthesis routes
with differing raw materials), developing long-term inventories of key materials, and using differing
raw material sources through different intermediate suppliers. Regardless of the tactics, the
pharmaceutical company must use robust planning to prevent supply shortages.

Supply chain sustainability also requires regular discussions between the pharmaceutical company
and the CMO. Many companies establish intercompany management teams where even modest
levels of commercial involvement are concerned. The size, structure and meeting frequency of such
intercompany teams is dependent upon the issues, the shared value, and the changes being
managed. However, regardless of the magnitude of transactional business, both the pharmaceutical
company and CMO have a value proposition for the collaboration; when managers from each
company acknowledge the health of their collaboration on a regular basis, a stable and reliable
relationship will exist. The best relationships exist where personnel with equivalent responsibilities
at each firm are in contact with each other with some regularity. Typical management structures are
tiered by design. The first level of the design is a project team working at the technical level. During
clinical development the companies should form a project team, including a project manager, and
chemists and engineers from each company who determine goals and objectives and measure
outcomes for their process. During commercial supply, the need for a project team may end; in most
cases materials sourced from stable manufacturing processes can also be managed by procurement
and account representatives for the pharmaceutical company and CMO, respectively.

The second level of engagement, depending on the degree of financial interaction of the companies,
would be a joint management team (JMT). The JMT involves the technical, quality and procurement
managers from each company periodically reviewing the collaboration. Normally a JMT would be
formed for a collaboration which is based upon multiple project interactions. The pharmaceutical
companys criteria for the JMT could include quality and on-time delivery, technical performance, and
cost, while the JMT members from the CMO would be concerned about customer satisfaction,
volume, and potential new business. Another important responsibility of the JMT is to remove
roadblocks for the project teams.

The largest collaborations should consider a steering team arrangement. Steering teams typically
involve executive management from both companies. In addition to the measures tracked by the
JMT, the Joint Steering Team (JST) would track the overall health of the relationship and focus on the
future of the collaboration through mutually beneficial project forecasts (pharmaceutical company)
and capability investments (CMO). The healthiest collaborations would have a JST where members
are on a first-name basis with each other.

The timing for establishing the interfirm management structure varies with scope, but should be
underway a few years before commercial supply begins. This timing gives each management group
the opportunity to understand and appreciate the needs (Pharmaceutical company) and capabilities
(CMO) brought to the relationship, and ensure a smooth transition from the development site to the
manufacturing site.

Investing Towards Goals: Validation and Long-term Supply

Validation campaigns represent the pivotal experiment to support a suppliers inclusion as an initial
supplier of materials for the commercial API. As such, planning for a CMOs participation in the
validation campaign starts much earlier in the development process. It is important to consider the
impact of a suppliers materials on validation criteria, such as critical parameters [2]. Further, the
validation campaign may be performed in the final manufacturing equipment. Therefore, the
campaign may involve a technology transfer from a developmental facility into the commercial

supply facility. The suppliers approach to technology transfer should be evaluated and the
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8/14/2017 Building a Sustainable API Supply Chain | Pharmaceutical Outsourcing - The Journal of Pharmaceutical & Biopharmaceutical Contract Ser
supply facility. The suppliers approach to technology transfer should be evaluated and the
pharmaceutical company should provide input regarding the technology transfer criteria and timing.

Supplier Continuation
A pharmaceutical company is obliged to utilize a documented practice for supplier selection,
including technical diligence and quality audits, to reduce risk during the development of their
product and comply with GMPs. During commercial supply of a pharmaceutical API or intermediate,
on-going quality audits take place. It is also valuable to include a review of the suppliers overall
qualifications from time to time. While a JMT could provide the intention of such qualification
continuity, the approach may not be as clear-cut as it was for a new product or during a quality
audit. For example, technical diligence performed in the first year of a supplier client arrangement
will be outdated within a few years. While a well-designed process may run effectively and provide
consistent quality results over many years, the personnel and capabilities of the firms development
division can change dramatically. A good approach for the JMT or JST would be to periodically review
several areas of the relationship to ensure the mutual value proposition is maintained. For example:

Financial stability Dunn and Bradstreet reports should be reviewed periodically. JMTs may also
want to review shareholder reports.

Organizational stability New personnel or departures for each company; organizational changes
and the strategic intent of such changes should be examined.

Quality and SHE compliance Periodic audits of each area of a suppliers operations should be
undertaken and action plans used to address and close significant gaps. A review of the CMOs audit
performance overall, including regulatory body inspections should be performed.

Capability assessment Firms should perform a periodic review of the suppliers capabilities and
determine if these capabilities match the evolving requirements of the Pharmaceutical company.

Annual Product Review A detailed review of a CMOs process performance should be carried out
at least annually.

Ensuring of a reliable pharmaceutical supply chain begins with a well designed process and proper
material and supplier selection, and is sustained through on-going stewardship of the client
supplier relationship. Taken together, these steps will provide a satisfactory business arrangement
where each company can expect many years of successful business dealings.

References
1. Global Sourcing Strategies: Building a Sustainable Advantage, presented at ChemOutsourcing,
Long Branch, NJ, 11 September 2012.

2. Kevin D. Seibert. Shanthi Sethuraman, Jerry D. Mitchell, Kristi L. Griffiths and Bernard McGarvey,
The Use of Routine Process Capability for the Determination of Process Parameter Criticality in
Small-molecule API Synthesis, Journal of Pharmaceutical Innovation, 3 (2), 105-112, 2008

Dr. Eckrich studied chemistry at Purdue University, receiving a BS in chemistry in 1979. He

earned a doctorate in chemistry from Harvard University in 1984, studying with Professor E. J.
Corey, the 1990 Nobel Laureate in chemistry. Tom has worked for Eli Lilly and Company since
graduating from Harvard, starting out as a chemist working in the area of antibiotic research.
In 1992, Tom became manager of chemical process development at Lilly, and has since held
various leadership positions in chemical development, including the position of managing
director of Lillys European Development Centre in Brussels, Belgium. Tom is a member of the
American Chemical Society, the American Institute of Chemical Engineers, has published 10
scientific papers and holds three patents.

Tom is currently a member of Lillys Chemical Product R&D leadership team with responsibility
for external sourcing and source development.

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