Led by turnaround in its steroids business, Pfizer CentreSource (PCS, Kalamazoo, MI) is optimistic about its performance in 2007 and prospects for 2008.

"2007 has been a good year, particularly in our steroids business, which has been hurt by difficult pricing margins over the last several years," says Michael J. Kosko, president of PCS.

PCS is an operating unit within Pfizer Global Manufacturing (PGM), the manufacturing arm of Pfizer. PCS provides third-party contract manufacturing services and products to other pharmaceutical companies. PCS consists of two businesses: contract manufacturing of dosage-form products and fine chemicals.

PCS sees upswing in steroids business

Given increasing cost-competition in the steroids market, PCS embarked on a new strategy in 2006 by deciding to outsource part of its steroid production to Asia through manufacturing pacts with Shanghai Pharmaceutical (Shanghai) and ScinoPharm (Shan-Hua, Taiwan)

Under the pacts, Pfizer is transferring the late-stage processing of 18 steroid APIs and intermediates to Shanghai Pharmaceutical and ScinoPharm over the next several years, beginning with certain commodity steroid APIs. Pfizer will continue to do the early-stage bioconversion operations at its plant in Kalamazoo, Michigan. PCS will also have parallel quality control testing of the APIs produced at the Asian manufacturing facilities and then at an external shadow laboratory. In addition to overseeing quality issues, PCS will file all drug master files and maintain distribution and marketing responsibilities of the products.

Shanghai Pharmaceutical and ScinoPharm are both adding manufacturing capacity to implement the PCS projects.

"We are pleased with the progress of these projects," says Jeffrey W. Frazier, PCS's vice-president of global marketing for fine chemicals. The first two products from the pacts will be progesterone and hydrocortiscone.

Shanghai Pharmaceutical plans to run validation lots in the fourth quarter 2007 and begin production in the first quarter 2008 for its first product and to begin production of another product in the first quarter of 2008.

For ScinoPharm, the scope of the original project has changed, explains Frazier. The order in which specific product transfers will occur hs been rearranged, but technology-transfer activities will begin in Taiwan starting in 2008.

Underlying market fundamentals and PCS's strategy to outsource is beginning to reap its rewards. "Our steroids business performed very well in 2007, and we see 2008 as another strong year," says Frazier.

Part of the turnaround is related to higher pricing of steroid products from China stemming from several factors: the reduction of the rebate in China's value-added tax, exchange-rate variance, and rising prices for diosgenin, a key raw material used in many steroids produced in China, explains Frazier.

Strong demand for fermentation business

In addition to the upswing in its steroids business, PCS is also experiencing healthy demand for its fermentation services. "We offer third-party fermentation services from our facilities in Kalamazoo, and we are seeing strong demand for these services,"says Frazier.

Pfizer's active pharmaceutical ingredients facility in Kalamazoo, Michigan, is a large multipurpose, pharmaceutical chemical and fermentation facility. It is Pfizer's largest API facility and produces fine chemicals for use in Pfizer's drugs products as well as products for PCS. The site includes people involved in the administration, production, support, and development of APIs and intermediates.

PCS's fermentations services process development expertise in culture improvement, fermentation process optimization, and commercial-scale manufacture. It also offers a number of complementary downstream capabilities ranging from cell separation and crystallization to vacuum evaporation and sterile packaging.

Sterile manufacturing on the rise

PCS is broadening its position in sterile manufacturing. PCS provides contract manufacturing of solid and sterile dosage forms at facilities throughout Pfizer's internal manufacturing network, a function served as part of PGM's strategy to fully optimize its manufacturing capacity. PGM's sterile-manufacturing operations are in Kalamazoo, Michigan, Puurs, Belgium, and Dublin, Ireland.

"Our capacity for sterile manufacturing has increased, helping to meet demand from both the large pharmaceutical companies and biotech companies," says Carlos R. Fernandez, PCS's director of marketing for global contract manufacturing.

PCS proceeds with Feucht divestment

PCS is also on track with its plans to divest its Feucht, Germany, manufacturing facility and the related PCS-Feucht business unit. The PCS-Feucht business unit targets specialty APIs and solid-dose manufacturing, including high-containment drug product manufacturing for potent compounds.

Pfizer is currently evaluating potential buyers for the unit and expects to complete the divestment by the fourth quarter of 2007, says PCS's Kosko. "We have had a strong level of interest from both financial and strategic buyers and are on track with our plans to sell the facility by the end of 2007," he says.