Key Questions to Ask When Ordering API Pharma Service

What criteria should drug manufacturers consider when choosing API sourcing partners?
Generally speaking, manufacturers need to think about the long-term stability of their partner. Can they offer sustained supply of a high-quality product at a competitive price and is their service flexible enough to meet your requirements?

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Quality is one of the most important factors when sourcing APIs. Drug manufacturers should be looking for partners with strong cGMP compliance records. Pricing is also important, however it’s vital to strike the right balance, namely getting the highest quality for the best price. The cheapest price is not always the most cost-effective option as non-compliant product can be costly further down the line. As such, manufacturers should prioritize other criteria ahead of the initial costs.

Companies should also consider how important the project is to their API partner and how responsive they are during the inquiry stage. This will give an indication of the level of service they can expect during drug product development and commercialization process.

For future generic molecules that are still under patents it is also important to select a supplier who can adopt the appropriate approach and handle collaboration across multiple partners, while fully respecting third party´s intellectual property rights.

What are your customers’ main concerns when deciding to source APIs from a particular supplier? 
Often the biggest concern for a CDMO’s customers is sustainability of supply. As a result, CDMOs with in-house raw materials capacity or strong links with suppliers are sought after by drug manufacturers because they can reduce the likelihood of there being shortages and ensure on-time delivery. These CDMOs also streamline supply chains, which can speed up the API manufacturing process.

For example, at Saneca we have in-house morphine extraction and as a result, we have a broad portfolio of narcotic APIs. Constant access to our own internal supply of raw materials means that we have ultimate control over our operations. This allows us to demonstrate long-term supply capabilities and also offer competitive pricing.

The pharmaceutical industry is highly regulated, particularly in markets such as the US, Australia, Japan and Europe. As such, another big challenge that companies face when sourcing APIs is ensuring their suppliers can offer high quality APIs at a reasonable price and that they can supply all the relevant documentation to ensure compliance. If an API manufacturer fails to meet any of these parameters, it can have an impact on supply to market.

What steps do drug companies need to consider when arranging to have APIs shipped to their facilities?
The first thing to consider is qualifying your supplier and determining whether it has the capacity to produce your API to the desired specifications. The best way to do this is to provide a trial quantity for testing.

The supplier also needs to provide its registration documentation in order to get included into a marketing authorization (MA) before commercial supply can be initiated. This registration documentation can be either a Certificate of Suitability of the Monographs of the European Pharmacopeia (CEPs), an Active Substance Master File (ASMF) or a Drug Master File (DMF), depending on the market for which the product is intended.

Additionally, if the API in question is an opioid, customers (or their CDMO) need to make sure that they have a controlled substance license for general handling in place, as well as arrange for import and export permits for each shipment, as these are essential for international trade with opioids.

Stability studies are also a vital part of determining the type of packaging material and transportation or shipping conditions and must be carried out as standard. All this information must then be stored in the Active Substance Master File so that it can be accessed at any time during a product’s journey through the supply chain.

Campaigning group SumOfUS and others have called on drug companies to consider the environmental credentials of potential API suppliers. What impact would this have on the way Western drug firms source APIs? 
In recent years, an API supplier’s environmental credentials have become increasingly significant for pharmaceutical firms. This means that many drug firms, particularly in the western world where the environmental impact of operations is being heavily discussed, are starting to include specific accreditations within requests for proposals (RFPs).

A growing number of customers routinely ask potential CDMOs what steps are being taken to maximize energy efficiency, reduce carbon footprint and convert manufacturing processes to incorporate greener chemistries. As a result, CDMOs seek accreditations such as the ISO qualification as a matter of course.

It is often estimated that China and India supply most (80%) of the APIs used in the West. How do you see the situation evolving over the next few years?
A lot of APIs do come from China and India; There are a large number of manufacturers located in those countries and they have access to the domestic raw material. This, combined with a mass production model, has meant that in the past there was a perception that these manufacturers were cheaper. However, we are now seeing a shift towards manufacturers in other parts of the world.

Partly, this is because higher production standards and labor costs mean manufacturers in India and China are starting to charge more for their products. This means manufacturers elsewhere, particularly in Europe, are becoming competitive alternative. In addition, the intellectual property (IP) and patent understanding is changing in India and China, which is also increasing prices.

In reality, customers should select suppliers offering the best price, not the cheapest. Only the right partner with the right equipment and well-trained staff can achieve the quality needed to supply to highly regulated markets, such as Europe and the US.

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In short, the API market is evolving. As such, it is likely we will see European suppliers, or indeed those in the US, become the go-to-choice for manufacturers, particularly for speciality APIs and those requiring careful handling.  

Narcotics are a good example of this. There are multiple chemistry steps required to produce them and their characteristics make handling them much more complex. Narcotic API suppliers originating from regulated markets with the right expertise are ideally placed to deliver these types of APIs and keep their pricing competitive. Narcotics also have stricter import export laws and that is why currently we only see a limited range of common thebaine-based and synthetic narcotic APIs being exported from India and China.

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As a bio/pharma API sourcing partner there are two straightforward questions we hear from clients:

1. When we can receive the API in the quantity we desire?
2. What will be the cost?

Our answers to these two questions are invariably the same: it depends.

While disappointing as far as answers go, it’s also the correct one. Answering those two questions will always require more information than most companies expect – and the scope of that information is sometimes eye-opening for newer sourcing and procurement professionals. The fact is, there are many factors that come into play when you engage with drug substance suppliers, and all of them must be taken into consideration.

The key thing pharma execs must remember is that everything hinges on the business case. Yes – of course there are API or intermediate suppliers who will shrug and say, “an order is an order…sure we’ll fill it.” But there are fewer of those than you may think. Drug substance manufacturers will likely ask a litany of questions before they consider entering into a supply agreement. They need to ensure this relationship makes sense for their business.

In smaller and virtual biopharma companies, the answers to supplier questions may be difficult to come by. In virtual or very early-stage companies (think “two brains and a molecule”), some supplier queries have answers, but the company may not want to share them…either with the sourcing company or the potential supplier. In other cases, the project may not have matured knowledge-wise to a point where long-range projections are available.

API Sourcing Questions You Need to Be Prepared to Answer

A sourcing partner like LGM will ask you questions beyond ‘when’ or ‘how much.’ We aren’t being nosy. We promise! But any supply relationship we create for you, or you form on your own will likely depend on your answers…and your willingness to answer.

With that said, here are some of the topic areas a supplier will want to explore when considering whether to participate in your drug project.

The Basics

1. What’s the indication?
2. What’s the drug’s route of administration?
3. Will the API or drug substance require any special handling or transport, or pose any other kind of logistics challenge?
4. How complex is the chemistry? How developed is it? What is the basic approach (antibody drug conjugate, a deuterated small molecule, a peptide via solution phase synthesis)?

Beyond the basics, there are some broader topic areas a supplier will want to explore. Here are 5 more areas API manufacturers want to explore before you become a client.

5. Non-GMP Research or GMP Clinical Material?
   Will you initially need any non-GMP material for research or experimental purposes, or will you only want GMP material? Non-GMP material will clearly cost less, and may offer opportunities to find an API supplier that isn’t FDA inspected, or doesn’t work with as many GMP substances.Timing comes into play, as well. If you will be transitioning from non-GMP to GMP material in short order or will need additional GMP material in the next few months, then it is worth the extra investment to find a longer-term supplier upfront.Generally, it is not wise to begin a project with a non-GMP supplier only to realize they will not be able to support you when higher quality materials are necessary.

6. Geography
   Which markets will you be targeting? Some suppliers may have only specific geographies available for purchase, due to prior exclusivities or other agreements they already have in place.Aside from any exclusivities or restrictions, the target geography is important because it indicates which regulatory standards will apply during manufacture. Will APIs need to comply with US Pharmacopoeia, for example, or meet EU EMA, US FDA or other global standards?Geographically speaking, your suppliers need to match the requirements of your current and future target markets.

7. Regulatory Pathway
   The regulatory pathway you will be choosing for your drug candidate will have a big impact on supplier selection and availability. For example, pursuing an NDA has different requirements (and a much longer pathway) than a 505(b)(2) or an OTC compound.Generic and OTC APIs have their own challenges. While there are many more suppliers, margins are very low, and volumes matter.

8. Quantity
   Speaking of volumes mattering…they really As a biopharma company you may be looking for security of supply but remember suppliers are looking for security of revenue.A one-off RFQ for an R&D quantity of a difficult-to-make API will have fewer takers…and most will be requesting projections, forecasts and timelines for future quantities.You may need 100 grams for R&D and evaluation, but what’s your plan? When will you need quantities for submission batches? What is your high-level estimation of what you will need at kg scales? How many metric tons?

   This is what the manufacturer wants to get to…a situation in which they have a long-term relationship build around a commercially viable compound. If they will be allocating resources and manpower to this drug substance, they want to manage their business risk as much as possible.

9. First, Primary or Secondary Source
   Suppliers will want to know whether you are looking for the initial source of a drug substance, or a primary or secondary supplier. It isn’t uncommon for companies to be reluctant to disclose they already have a source – or whether they are evaluating a second source for savings, quality improvements, or to build risk mitigation into their supply chain.As a sourcing partner to biopharma companies, we’ve run into situations where not knowing this upfront led to problems. In one particular case, we approached a manufacturer for a quote only to be told they had been working with the company directly as the primary supplier for nearly four years!

The Answers We Don’t Have Can Make a Difference.
We know molecules – and we know how to find them for biopharma companies. Much as suppliers will want to know answers to some key questions, when we have this information we can better refine our lists of potential suppliers and zero in on the best solution for our drug company clients.

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