Providing contract-manufacturing services is not in of itself new for pharmaceutical companies, and several large pharmaceutical
companies have well-established contract activities. As the underlying fundamentals for cost-effectively managing a manufacturing
and supply network evolve, however, these third-party services provide another way to monetize capacity and fixed assets.
The interest of Big Pharma companies in highlighting their contract-manufacturing activities was evident by the participation
of pharmaceutical companies at recent trade shows. A case in point is CPhI Worldwide, the large trade show of contract API
manufacturers and fine-chemical producers, which is colocated with the International Contract Service Expo (ICSE), which includes
contract manufacturers of finished drug products. At the recent CPhI/ICSE event held in Frankfurt, Germany, in October 2011,
the contract-manufacturing arms of several large pharmaceutical companies, both innovator-drug companies and generic drug
companies, were on display.
On the innovator-drug company side, these companies included the contract services of Pfizer (Pfizer CentreSource), Sanofi
(Commercial and External Partnership, Industrial Affairs [CePiA]), GlaxoSmithKline, Mitsubishi Tanabe Pharma (API Corporation),
Bayer (Bayer Healthcare Pharmaceuticals), Boehringer Ingelheim, Abbott, and Merck & Co. (MSD API). Generic-drug companies
at CPhI/ICSE offering contract services included Sandoz (the generic-drug business of Novartis), Teva Pharmaceutical Industries
(Teva Active Pharmaceutical Ingredients [TAPI]), Activas, and Mylan. A review of these companies' activities shows capabilities
in both API and finished product manufacturing.
For example, Pfizer CentreSource, headquartered in Kalamazoo, Michigan, is a provider of APIs and dosage-form manufacturing.
It is a supplier of fine chemicals, steroid APIs (e.g., corticosteroids and hormonal steroids), and steroid intermediates.
It also provides custom fermentation services as well as sterile manufacturing (blow/fill/seal/services) and solid dosage
manufacturing, including high-containment services.
The CMO division of Sanofi, CEPiA, provides corticosteroids, steroid diuretics, vitamin B12, cardiovasculars, analgesics,
anti-inflammatories, antihistamines, antibiotics, prostaglandins, and opiods (morphine and codeine salts). The company has
expertise is multistep custom synthesis, steroid chemistry, prostaglandins chemistry, enzymatic conversions, synthesis of
high-potency compounds, peptide and protein chemistry, micronization, and large-scale chromatography. The contract arm uses
Sanofi's chemical, fermentation, and biotechnological facilities in France, Germany, Italy, Hungary, Eastern Europe, Singapore,
On the API side, Bayer Healthcare Pharmaceuticals uses several plants for its contract activities. Its supply center in Bergkamen,
Germany, is Bayer Pharma's major facility for the production of intermediates, active ingredients, and bulk pharmaceutical
chemicals for steroid hormones through chemical and microbiological synthesis. It also has a micronization plant in Berlin-Charlottenburg,
another API plant in Elberfeld, Germany, and a second major chemical facility for hormone and steroid production in Orizaba,
On the API side, the contract-services arm of Boehringer Ingelheim provides contract manufacturing of biologic-based APIs,
chemical APIs, and fine chemicals. On the biologics side, a key offering is its BI Hex high-expression system for monoclonal
antibody production. The company recently launched a new program, "Lean-to-Clinic," which consists of streamlined work packages
and which speeds up cell-line development, Phase I process development, and preclinical and clinical supplies from mammalian
Although small relative to the revenues generated by drug sales, the contract-manufacturing activities of pharmaceutical companies
can contribute positively to a company's bottom line. For example, TAPI, the contract manufacturing arm of Teva Pharmaceutical
Industries, the largest generic-drug company, generates approximately $640 million in annual third-party sales, according
to company information. The contract-services arm operates through 21 production plants, which includes the company's major
manufacturing facility in Israel.
Through its acquisition of a controlling interest in Matrix Laboratories in 2007, the generic-drug and specialty pharmaceutical
company Mylan gained a position in API manufacturing. Based in Hyderabad, India, Mylan Laboratories (the former Matrix Laboratories)
has several operating units, including a network of API and intermediate manufacturing facilities in India and China.
1. P. Van Arnum, "API Outlook," Pharm. Technol. Sourcing and Management
8 (1), online,
http://www.PharmTech.com/PTSM, Jan. 12, 2012.