Dose Manufacturing Capacity Growing in Low-Cost Countries

FDA approvals renew the threat of competition from India and China.
Aug 02, 2007
Volume 31, Issue 8

Jim Miller
Whether contract dose manufacturers in the United States and Europe face serious competition from manufacturers in India, China, and other low-cost countries is an ongoing debate within the contract manufacturing organization (CMO) industry. Some recent supply-base developments are likely to add fuel to the debate.

In India, Strides Arcolab (Bangalore) announced approval by the US Food and Drug Administration (Rockville, MD) for its sterile manufacturing facility in Bangalore. The facility has capabilities for liquid and lyophilized vials, prefilled syringes, and sterile powders. Shasun Chemicals and Drugs (Chennai) received FDA approval for its solid- dose manufacturing facility in Puducherry; the facility had previously received approval by the United Kingdom's Medicines and Healthcare products Regulatory Agency (MHRA). In addition, Shantha Biotech (Hyderabad), a manufacturer and marketer of vaccines, completed a $6 million investment in new vial-filling capacity. The expansion includes three lines with combined capacity of 250,000 vials per day. That facility is not yet FDA approved.

Strides, Shasun, and Shantha intend to use their facilities to manufacture proprietary products. However, like most Indian generics companies, all have active contract manufacturing businesses, including active pharmaceutical ingredients (APIs) and dose manufacturing. So the three sites potentially represent additional capacity for the CMO market.

Generally speaking, pharmaceutical manufacturers in India and China that have received approval by FDA or a European Union regulatory agency have used that entrée to export generics to those countries rather than pursue manufacturing contracts. Proprietary generic APIs and finished-dose products provide better margins, especially given the current cost advantages of Indian and Chinese manufacturers, and offer greater predictability and control. In fact, companies like Strides, which a few years ago was thought of primarily as a contract manufacturer, have transitioned themselves to generics companies through acquisitions and internal development of abbreviated new drug applications.

For the most part, Indian companies that have wanted to become major players in contract manufacturing and packaging in the United States and Europe have pursued that strategy by acquiring assets there, rather than depending on facilities at home. A recent example is the acquisition of contract injectables manufacturer HollisterStier Laboratories (Spokane, WA) by Jubilant Organosys (Noida, India). Previous examples include Shasun's acquisition of the Rhodia Pharma Solutions business from fine chemical company Rhodia (Paris); the acquisition of pharmaceutical chemical manufacturer Carbogen Amcis (Bubendorf, Switzerland) by Dishman Pharmaceuticals & Chemicals Limited (Ahmedabad, India); and Nicholas Piramal's (Mumbai) acquisitions of Avecia's fine chemical assets and Pfizer's Morpeth site, both in the UK. Those acquisitions reflect an understanding that, given the pharmaceutical industry's relatively recent exploration of offshore sourcing opportunities, proximity to the customer and operating in an environment in which the customer is comfortable are more critical considerations than price alone.

European CMOs look east

While Indian and Chinese manufacturers are using their home country manufacturing assets primarily for generic exports, some European CMOs are looking to establish contract manufacturing operations in low-cost countries. Custom Pharmaceuticals (Hove, UK) announced plans to build its solid-dose manufacturing facility in the export zone of Jinan, Shandong province. Custom hopes to export vitamin tablets to Europe from the site by the end of 2007 and to receive approval for regulated products from the MHRA by mid-2008 and from the FDA by mid-2009. Processing capabilities in the 100,000-ft2 facility include fluid-bed drying, granulation and high-shear granulation. A planned expansion will create capacity for 4.5 billion tablets as well as capabilities for hard-shell capsules and packing into shelf-ready packaging.

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