) agreed to sell its contract services unit, Pharmaceutical Technologies and Services (PTS), to The Blackstone Group (New York, NY, 

) for roughly $3.3 billion in cash. Blackstone is acquiring the PTS businesses that develop, manufacture, and package medication and other products for the pharmaceutical and biotechnology industries. The PTS segment employs roughly 10,000 at more than 30 facilities worldwide and generates $1.8 billion in annual revenue. In another move, Cardinal agreed to acquire SpecialtyScripts Pharmacy (Fall River, MA, 

) to broaden its specialty pharmaceutical service offerings. 

) cleared the way for Hospira, Inc. (Lake Forest, IL, www.hospira.com) to acquire Mayne Pharma Limited (Melbourne, Australia, 

), a specialty injectable pharmaceuticals company, subject to the divestiture of certain overlapping products. The companies expect the transaction to be completed during the first week of February.

) was officially launched as a combined group, following the acquisition of ALTANA Pharma AG, which was completed on Dec. 31, 2006. Nycomed now will establish a new corporate headquarters in Zurich and integrate the two companies.

—Jeff Worthington, a pharmaceutical sensory analyst, launched 

), a company that partners with pharmaceutical, biotechnology, and drug-delivery companies to improve pharmaceuticals' palatability. 

) stockholders voted to approve its merger with 

). The transaction is expected to close in the first quarter of 2007.

) will focus its research and development efforts on protein-based pharmaceuticals (building on its base in diabetes, hemostasis, and growth disorders) and will out-license its programs in small-molecule products. The decision to halt small-molecule research will eliminate approximately 180 R&D jobs.

) established a foreign-owned enterprise in the People's Republic of China. The Beijing-based subsidiary will be called Peregrine Beijing Pharmaecuticals Technology Development Ltd.

) was acquired for EUR 425 million by the  management and a financial investor group composed of 

). Novasep will continue to operate through its two complementary divisions: Novasep Synthesis and Novasep Process.

), a supplier of empty two-piece gelatin and non-gelatin capsules, signed an agreement to acquire empty gelatin capsule manufacturer Pharmaphil (Windsor, ON, Canada 

) plans to sell its injectable business to Blue Acquisition Corp. for more than $82 million. 

) closed on its roughly CHF 16.6 billion ($13.3 billion) deal to acquire a majority stake in the European biotechnology company Serono (Geneva, Switzerland, 

). The integration of Serono provides Merck KGaA with a biopharmaceutical products portfolio with 2005 

 sales of around EUR 3.6 billion ($4.7 billion) and about 14,500 employees worldwide. Merck Serono S.A. will be combined with the current Merck Ethicals division and operate a division (headquartered in Geneva) of Merck KGaA's pharmaceuticals business. In the United States, the business will operate under the name EMD Serono. For efficiency reasons, the planned production facility for "Erbitux" (cetuximab) will be consolidated in Corsier-sur-Vevey, Switzerland. 

) completed its acquisition of roughly 51.5% of Matrix Laboratories Limited's (Hyderabad, India, 

) over-the-counter business in France, Benelux, Switzerland, and Greece. 

) will hold a special meeting of shareholders on Feb. 5, 2007 to vote on the proposal to sell its Bioproducts and Biopharma subsidiaries to Lonza Group AG (Basel, Switzerland, 

) has completed the sale of its branded pharmaceuticals business in Europe to Meda AB (Solna, Sweden, 

). The transaction gives Meda the regional marketing and intellectiual property rights for many of 3M's branded pharmaceuticals.

 completed its acquisition of 3M's (St. Paul, MN, 

) branded pharmaceutical businesses in the United States, Puerto Rico, Canada, and Latin America.

 officially was launched as a new company following the acquisition of 

). The name of the new company, Bayer Schering Pharma AG, was officially recorded as an entry in the commercial register on December 29, 2006, thus completing another important condition for combining Bayer's and Schering's pharmaceutical businesses. The combined pharmaceutical businesses of Bayer and Schering had 2005 proforma sales of more than EUR 9 billion ($11.7 billion). Bayer Schering Pharma AG, headquartered in Berlin, is to be managed together with Bayer's current pharmaceutical business as a division of the Bayer HealthCare subgroup. 

Articles

News

A roundup of company moves and positioning from the pharmaceutical and biotechnology industries and contract service providers.

Mergers, acquisitions, and restructuring

US Department of Health and Human Services

) awarded three vaccine makers a total of $132.5 million to advance their strategies for adjuvant-containing vaccines to combat the H5N1 strain of avian influenza. Under the contracts, each company will build capacity to produce either 150 million doses of the vaccine or enough adjuvant for 150 million doses within six months of the onset of an influenza pandemic. 

) each were granted five-year contracts totaling $63.3 million and $54.8 million, respectively. 

) will receive a 15-month grant of $14.4 million to complete Phase I clinical trials of its vaccine. Upon successful completion of these trials, the company will receive an additional $114 million.

) to provide chemical-development services relating to "Dendrogenine A," a potential cancer treatment.

) signed an agreement to develop and commercialize certain of Lilly's preclinical drug candidates that span multiple therapeutic areas. NPIL will design and execute the global clinical-development program, including IND-enabling nonclinical studies and human clinical trials to Phase III.

) "Mannogem," "Barcroft," "Advantose," "Effer Soda," and "Sorbitol Special" product lines for over-the-counter and prescription applications.

) to develop and supply latanoprost, bimatoprost, and travoprost abbreviated new drug application (ANDA) drug products for the treatment of glaucoma. The products will be manufactured by 

(Seoul, South Korea). Both Taejoon and Azad will complete the regulatory dossiers and will manufacture and supply the products to Akorn upon ANDA approval.

) completed large-scale synthesis and delivery to its partner 

) of an active pharmaceutical ingredient for drug candidate ITMN-191. As a result, InterMune received a $10-million milestone payment from Roche.

) entered into an exclusive worldwide license agreement with 

) for the development and commercialization of the humanized monoclonal antibody SGN-40. Seattle Genetics will receive an upfront payment of $60 million as well as potential milestone payments exceeding $800 million and royalties on annual net sales of SGN-40. Genentech will fund future research, development, manufacturing, and commercialization costs.

) signed a commercial manufacturing agreement with 

) for "AIR" inhaled insulin. Under the agreement, Alkermes will manufacture insulin powder for the system. The agreement also provides for an additional investment by Lilly for the construction and operation of a second manufacturing line at Alkermes's commercial-scale production facility. 

) to manufacture L-DOS47 bulk drug product for clinical testing in patients with adenocarcinoma of the lung. 

) to develop a generic, controlled-release drug product for the US market. 

) to supply the active ingredient, L-asparaginase, which is used in the production of Enzon's "Oncaspar" treatment for acute lymphoblastic leukemia.

The latest pacts from the pharmaceutical supply chain.

Agreements and contracts

) received a manufacturing license for its new Ravensburg Vetter South plant. The automated production facility will provide single-chamber cartridges, dual-chamber syringes and cartridges, and fill liquid and lyophilized vials.

) will invest $100 million to expand its Waltham, Massachusetts facility by 132,000 ft

 to boost infectious-disease and cancer research. The expanded facility will accommodate roughly 100 additional researchers who will join the more than 400 current discovery employees.

) introduced its new contract-manufacturing division, dermaCM (

), and its topical pharmaceutical and cosmeceutical manufacturing and development facility. dermaCM will offer formulation, private labeling, manufacturing, packaging, and fulfillment services.

), a provider of pharmaceutical research and development outsourcing services, began moving the first group of scientists to its new Tianjin research facility. The new facility complements the Shanghai research campus with 130,000 ft

) earmarked EUR 30 million to develop its fine-chemicals subsidiary Saltigo (

). The money will go toward modernizing Saltigo's plant and introducing new worktime models. A EUR 10-million multipurpose facility also is under construction.

) added supercritical fluid chromatography (SFC) to its separations services and will offer GMP separations starting April 1, 2007. Regis will offer SFC as a stand-alone service or in concert with its GMP manufacturing.

) completed an expansion to its sterile parenteral manufacturing facility in Greenville, North Carolina. The expansion adds a clinical-trial materials manufacturing suite that is capable of manufacturing large- and small-molecule liquid and lyophilized products. 

A roundup of manufacturing and service expansions for January 2007.

Expansions

 as senior manager of aseptic operations. Tyson recently served as operations manager for Eisai's parenteral production facility in Raleigh, North Carolina. The company also promoted 

) on Feb. 1 as executive vice-president. Jonas will lead clinical development, preclinical development, regulatory affairs, and quality assurance and compliance at Isis.

) announced the creation of the Office of the Chief Medical Officer as well as two important staff changes at the agency. Deputy Commissioner 

 will step into the newly created position of chief medical officer. In this post, she will collaborate with FDA Commissioner 

 to plan, organize, direct, staff, coordinate, control, and evaluate the agency's scientific and medical regulatory activities "to achieve the mission of FDA," according to an official FDA announcement. In addition, the agency named 

 as its deputy commissioner of operations and chief operating officer.

), a developer and manufacturer of high-performance pressure-sensitive adhesives, tapes, specialty coatings, films, and laminates, promoted 

 to the position of president. Bennett succeeds 

 who was the company's president and CEO for more than three years and will remain a member of the board of directors.

). Luken will be responsible for the company's worldwide operations, including sales activities and production sites for liquid and powder packaging, solids packaging, and solids and semisolids processing equipment in Italy, Germany, and Switzerland

to senior vice-president of biochemical manufacturing, 

 to senior vice-president and general counsel, and 

to senior vice-president of the global supply chain. The company also promoted 

 to vice-president of planning, distribution, and logistics.

was terminated as CEO and chairman of the board of 

). The company's board of directors has begun the search for a permanent replacement for Goldberg. Meanwhile, 

, senior vice-president of business development, will act as the interim CEO. 

 chief executive officer. Sheares joins the company from Merck & Co., Inc., where he was president of US human health.

 International Pharmaceutical Excipients Council of the Americas

) announced the results of its recent executive committee elections. 

 was elected vice-chair of science and regulatory policy. 

were elected executive committee members. They will all serve through Dec. 31, 2008.

 president of its board of directors. Shedlawski is principal of commercial operations at Wyeth Consumer Healthcare. He has been a member of the northern New Jersey chapter of APICS for more than 21 years and served as the chapter's president in 1991.

). Robin was previously president and CEO of Sirna Therapeutics and also held positions at Berlex Laboratories. 

 vice-president of commercial development and operations. Capone previously worked for Trimeris, Inc., where he was senior vice-president of commercial operations.

People

)announcement earlier this month-that it would reduce its workforce by 10%, close three manufacturing facilities, rationalize research and development (R&D) operations, and restructure its US pharmaceutical operations-is further evidence of the cost pressures being placed on the pharmaceutical majors as they seek to improve new product development and contend with growing generic competition for certain products. Pfizer's plan continues a strategy of refining its supply-chain management as it focuses on reducing internal manufacturing capacity and aligning capacity with future growth. As Pfizer and other pharmaceutical companies undergo this process, medium growth is expected for the US and global pharmaceutical markets in 2007, and US pharmaceutical production and trade is slated for moderate growth in the near term. 

Pfizer leads the way in supply-chain reform


Pfizer's recent restructuring effort is expected to save the company $1.5–2 billion by the end of 2008. Pfizer plans to generate cost savings through site rationalization in research and manufacturing, streamlined organizational structures, staff-function reductions, increased outsourcing, and procurement savings. The plan follows Pfizer's "Adapting to Scale Initiative," a multiyear productivity program launched in the first quarter of 2005, designed to save the company $4 billion by 2008. 

In its most recent effort, Pfizer will continue to consolidate its worldwide manufacturing operations with the closure of two additional manufacturing sites: Brooklyn, New York and Omaha, Nebraska. The company also will pursue the sale of a third site in Feucht, Germany, subject to consultation with works councils and local labor law. With these moves, Pfizer will have reduced its global network of manufacturing plants from 93 in 2003 to 48 by 2008. 

As part of an ongoing effort to cut down on bureaucracy and reduce management layers, Pfizer says it has eliminated many unnecessary committees and cross-functional teams and is in the process of cutting at least three to four layers of management in its pharmaceutical, R&D, and manufacturing divisions, as well as company-wide support functions.

) decision earlier this month to lay off 250 employees at its Tippecanoe manufacturing site in Lafayette, Indiana in response to excess capacity in the company's small-molecule API operations. It also is stopping construction of a planned insulin-manufacturing plant in Prince William County, Virginia. The company expects to meet growth in insulin demand with existing sites and new insulin capacity that is being built in Sesto, Italy. These moves, along with Eli Lilly's earlier decision to close its manufacturing site in Basingstoke,United Kingdom, are based on current capacity needs and an assessment of the future mix of products in the company's portfolio, which includes further penetration of biotech-based products.

To support production of its biotech-based products, specific investments include an expansion to Eli Lilly's site in Kinsale, Ireland to manufacture active pharmaceutical ingredients (APIs) for future biotech products. In addition, Lilly will expand its Indianapolis parenteral operations so that the site can convert the biotech APIs made in Kinsale into their final dosage forms. Both expansions are part of a $1.5-billion investment in the company's biotechnology capabilities announced over the past five years. These expansions follow the recently completed $1-billion expansion of Lilly's Puerto Rico manufacturing operations, which includes new bulk capacity for "Humalog" (insulin lispro [rDNA origin] injection). 

Other recent manufacturing restructuring in the pharmaceutical industry includes that undertaken by 

 ), which in late December agreed to transfer three European plants to the Temmler Group (Marburg, Germany), a pharmaceutical company and contract manufacturer, as part of a move to reduce the number of its production sites. Astellas will transfer to Temmler the bulk assets of its plants in Munich, Germany and Klinge, Ireland and all stocks of Produzioni Farmaceutiche Carugate S.r.l. Astellas had announced earlier (in its mid-term five-year management plan, ending in fiscal year 2010) a plan to reduce the number of its production sites from the current 18 (nine in Japan and nine outside of Japan) to around 10. Astellas was formed in 2005 following the merger of Fujisawa Pharmaceutical Co., Ltd. and Yamanouchi Pharmaceutical Co., Ltd.

) is continuing with its plan for a new supply strategy, first announced in November 2005. The plan is designed to create a global facility network that uses Merck's internal manufacturing capacity combined with external partners' manufacturing capabilities, uses lean manufacturing principles, and seeks to sell or close five manufacturing sites and two preclinical sites by the end of 2008. 

Pharmaceutical market growth moderates in 2007


The pressure on pharmaceutical companies to save costs and improve their supply chains comes as growth in the global pharmaceutical market is expected to moderate. In 2007, the global pharmaceutical market is expected to grow at 5–6%, compared with growth of 6–7% in 2006, according to 

).The global pharmaceutical market is expected to reach of value of $665–683 billion in 2007. In the United States, 2007 market growth is forecast to slow to 4–5%, compared with 6–7%  in 2006. (Growth is measured in constant dollars to avoid the influence of currency-exchange rates, and sales are calculated at the ex-manufacturer level).

The need for the pharmaceutical majors to adjust their manufacturing strategy may be seen in the growth patterns of the global pharmaceuticals market, with projected higher growth for biotechnology-based products and generic drugs. In 2007, biotechnology products are expected to grow at 13–14% and the generic drug market at 10–11%, according to IMS. In 2007, marketed products with a value of more than $16 billion will likely lose patent protection, which follows $23 billion of products that lost protection in 2006. Generic drug penentration is particularly keen in the US market, where several key brands valued at $10 billion will lose patent protection in 2007, following the patent expiry of $19 billion in branded products in 2006.

The geographic balance of the pharmaceutical market continues to shift away from the United States toward emerging markets, defined as countries with a 

 gross national income of less than $20,000. These countries now  represent 17% of the global market, but will contribute 30% of growth this year, according to IMS. Growth in the emerging markets is offsetting the slower growth coming from the US market, which will contribute about 36% of total market growth in 2007, significantly less than the 54% it contributed five years earlier. 

Emerging markets, including China, India, Brazil and Turkey, grew more than 10% in 2006 and will do so again in 2007, largely because of their growing economies and broader access to medications, according to IMS. Growth in China will be 15–16%,  and the market size will reach $15–16 billion in 2007. In general, locally manufactured generics dominate these markets. 

US pharmaceutical production expected to rebound in 2007


While US pharmaceutical market growth is expected to moderate in 2007, US-based production of pharmaceuticals (finished products) is expected to rebound in 2007, with growth of 5.0%, according to the 

), a trade association representing US-based chemical manufacturers. In 2008, growth is projected to be 4.5%. These growth patterns reverse a slowing trend in the US output of pharmaceuticals. In 2006, US output of pharmaceuticals declined 1.1% and increased only 1.0% in 2005, 2.8% in 2004, and 2.2% in 2003, according to the ACC. This pattern of slowing growth seen earlier in the decade followed a strong performance in US output of pharmaceuticals, which grew 6.5% in 2002 and 7.6% in 2001 (see Table 1).  

Table 1: US pharmaceutical production (actual and forecast)

While US output of pharmaceuticals has varied over the past decade, global production of pharmaceuticals has increased at a fairly constant pace and is expected to continue to grow moderately. In 2007, global output of pharmaceuticals (finished products) is expected to increase 3.3% and 3.5% in 2008, according to the ACC. These increases are on par with growth of 3.9% in 2006, 3.0% in 2005, 3.8% in 2004, and 3.9% in 2003. The pattern of moderate growth in global output of pharmaceuticals from 2003–2006 followed recent peak growth of 6.8% in 2002 and 8.6% in 2001 (see Table 2). 

Table 2: Global Pharmaceutical production (actual and forecast)

US pharmaceutical trade deficit escalates


While US production of pharmaceuticals is expected to increase moderately in 2007 and 2008, the United States faces escalating trade deficits in pharmaceuticals. Between 1995 and 2005, US exports of pharmaceuticals increased 280% and in 2005 reached $25.5 billion (see Table 3), according to the ACC.

Table 3: US pharmaceutical exports (in $ million)

 During this same period, US imports of pharmaceuticals increased 582% reaching $39.5 billion in 2005 (see Table 4), giving the United States a negative balance of trade in pharmaceuticals of nearly $14 billion in 2005. The United States has experienced a trade deficit in pharmaceuticals since 1997, when it was $547 million and which has steadily escalated since then (1) (see Table 5). 

Table 4: US pharmaceutical imports (in $ million)

Table 5: US pharmaceutical trade balance (in $ million)


On a value basis, US shipments of pharmaceuticals reached $160.4 billion in 2005, according to the ACC. This continued an upward trend on a value basis for US shipments of pharmaceuticals, which reached $157.5 billion in 2004 and $150.7 billion in 2003 (see Table 6). Overall growth prospects are 1.3–6.0 times gross domestic product, according to the ACC (1).

Table 6: US pharmaceutical shipments (in $ million)

 Shipments measure the nominal value of products shipped from manufacturing facilities as reported by the Bureau of Census. It includes total sales minus imports and plus exports. Pharmaceuticals include prescription and over-the-counter drugs, 

 and other diagnostic substances to monitor human and veterinary health, bacterial and virus vaccines, toxoids, serums, plasma, and other biological products.

 On a global basis, pharmaceuticals (finished products) represented 25% of chemical shipments or $648.4 billion in 2005, again continuing an upward trend. In 2004, global pharmaceutical shipments were $618.1 billion and $554.0 billion in 2003 (1). 

Global Feature

Pfizer's restructuring plan provides yet another example of new supply-chain strategies by the pharmaceutical majors, which involve rationalization of manufacturing facilities and cost improvement. A review of these moves, an outlook for the pharmaceutical market in 2007, and analysis of US pharmaceutical production and trade.

Changing Fortunes in Pharmaceutical Manufacturing

Contract dose manufacturing has hundreds of participants, but two have dominated the industry in this decade: 

 (Toronto, Canada). With revenues of $1.8 billion, Cardinal Health's Pharmaceutical Technologies and Services (PTS) business unit is by far the industry's largest player, with capabilities spanning a broad array of technologies and dosage forms. At $700 million in revenues, Patheon is the second largest player, and an innovator of now-standard industry strategies such as using development services to drive new commercial manufacturing business. 

It is remarkable, therefore, that we enter the new year with both companies facing somewhat uncertain futures. Patheon's board of directors is considering "strategic and financial alternatives," including the possible sale of all or part of the company, in the wake of disappointing financial results and operating problems at several of its facilities. Cardinal Health announced in November that it would sell the PTS business because of disappointing performance and because it is no longer a strategic fit with the corporation's focus on the downstream healthcare supply chain. 

The uncertainty surrounding the industry's two highest profile participants has raised concerns among both buyers and sellers of contract manufacturing services about the long-term prospects of the industry and the viability of the CMO business model. After all, if the two biggest companies in the industry can't make a go of it, how can the many smaller CMOs expect to generate profits and attract the capital investment necessary to remain successful? 

It would be wrong to jump to conclusions about the entire industry based on the Patheon and PTS experiences. Their acquisition-driven business strategies are unique in the industry, and the challenges of organizational complexity and voracious capital consumption posed by such rapid expansion are not faced by the majority of CMOs, which have chosen a more conservative approach to growth. 

The mid-1990s seemed to be an ideal time to build a global contract manufacturing business through acquisitions. Contract manufacturers in the electronics industry were doing it, and their revenues and stock valuations were soaring. Furthermore, the pharmaceutical research and development pipeline seemed full, and there was much talk of the expected growth in outsourcing as both major and small bio/pharmaceutical companies scrambled for more capacity to manufacture the expected flow of new products. That was the environment in which Patheon and Cardinal Health initiated their acquisition programs. 

Their earliest deals were right on the mark. Cardinal Health's first acquisitions, including 

 remain the core of the PTS business and the principal sources of its revenues and profits. Patheon's initial strategy of acquiring redundant manufacturing facilities from major pharmaceutical companies was both cost-effective and strategic. It was able to buy assets at just a fraction of their replacement value while gaining long-term contracts and building important relationships with some of the largest drug companies. 

Nonetheless, later deals ran into problems almost as soon as the ink was dry on the purchase documents. Cardinal Health's 2002 acquisitions of contract analytical laboratory 

ran into problems soon after their acquisitions due to the loss of major clients. In late 2004, Patheon borrowed heavily and issued equity to acquire 

 (Caguas, Puerto Rico), but an FDA warning letter and a variety of smaller but significant problems quickly eroded profitability and undermined the strategic and economic rationale for doing the deal. 

Now, ten years after launching their acquisition-driven strategies, results at PTS and Patheon have been disappointing at best. Cardinal Health has invested $5 billion in building PTS, but its estimated $300 million in earnings before interest, taxes and depreciation mean it is yielding less than an ultrasafe US Treasury security. At Patheon, after nearly $1 billion have been invested, financial performance indicators have fallen short of levels required in its loan agreements, and the company has been forced to consider more radical restructuring moves to ensure its long-term viability. 

As experience has shown, the acquisitions entailed business and regulatory risks that often could not be foreseen or were easily overlooked. But, those risks were compounded by the challenges of operating such complex organizations. Integrating and operating these global manufacturing networks successfully requires a broad range of technical and business skills and systems and a cadre of experienced people. These are assets that take years to build. It can be argued that that the architects of Patheon and PTS failed to appreciate fully the operating complexity of what they were building. 

A further complicating factor has been the fact that the vision of the market that provided the underlying rationale for PTS and Patheon has not been borne out. Major pharmaceutical companies have not embraced outsourced manufacturing to the degree that was expected ten years ago. Furthermore, the secondary role of contract manufacturers has meant that size and global capabilities have not proven to be the competitive advantages they were expected to be.  

In today's CMO market, companies that offer a limited range of capabilities from a small number of sites appear to be enjoying the best results. They have grown organically by understanding their markets well and responding quickly to new opportunities. Focused offerings enjoy several advantages, including far less complexity in operations and a clear business development message. In addition, they can target their capital spending and innovation efforts to add cutting-edge capabilities that provide real competitive differentiation and advantage. Examples of focused manufacturing and packaging companies include 

 (San Antonio, TX) in semisolid and liquid manufacturing and 

The large clinical CROs figured out the power of focus and simplicity years ago. Revenues and profits at 

(Princeton, NJ) blossomed after it shed its clinical packaging and biomanufacturing businesses early in this decade. 

 (Wilmington, NC) has grown to $1 billion in revenues and strong profits by focusing on excellent delivery of plain-vanilla clinical research services. 

 (Wilmington, MA) divested its Phase II–IV clinical research operations earlier in 2006 to focus on its core strengths in research models and preclinical toxicology. 

Of course, any given business model does not remain successful forever; companies must continually adjust to the changing demands of their customers. Over the next few years, as major pharmaceutical companies seek to consolidate their vendor bases to gain savings in cost of goods, it may be that multicapability suppliers will have advantages over vendors that can offer only a single service. But, that advantage will be sustainable only if the business model makes financial sense and companies deliver excellent performance across all service offerings.

 is president of PharmSource Information Services, Inc., and publisher of 

Outsourcing

The recent struggles of Cardinal Health's and Patheon's contract dose manufacturing businesses offer a lesson on good business practices.

Simpler is Better

) announced plans to divide and sell its global branded-pharmaceuticals businesses for $2.1 billion to several buyers last November, its strategy included retaining 3M Drug Delivery Systems Division. The division is part of 3M's healthcare business segment, which accounted for roughly 21% of the company's 2005 net sales. The sale of the company's branded-pharmaceutical business, also part of the healthcare business segment, covered regional marketing and intellectual-property rights for 3M's drug portfolio and immune-response platform, but did not include inhalation aerosol products that are sold through licensees. That piece moved to 3M's Drug Delivery Systems Division, which is advancing technology in two principal platforms: inhalation (including inhaled macromolecules) and transdermal (including microneedle or microstructured transdermal systems for vaccines). 


Inhalation drug delivery is well established, and recent advances by 3M focus on design improvements in pressurized metered dose inhalers (pMDIs) and extending the use of pMDIs to administering macromolecules such as proteins and peptides. 

 To further enhance product robustness, 3M continues to make improvements in the pMDI container-closure system (CCS).One improvement reduces the potentially problematic deposition of the active drug within the CCS by introducing can coatings (1). The company also is developing new fast-fill, fast-empty valve designs to improve dose-to-dose uniformity as well as to avoid the need for patients to prime the system if only used intermittently (2,3). In addition, 3M recently reported using a novel semipermeable system component to improve the dosing reproducibility of suspension formulations (4).

 Ease of use is another important consideration in pMDI technology. Breath-actuation technology is one example. An established product in this area is 3M's "Autohaler," which removes the need for press-and-breathe coordination. More recently, 3M has developed a dose-by-dose counter for inclusion within the pMDI delivery system (5, 6) to meet new guidelines by the 

) on dose-counting mechanisms in MDI products (7) and to help patients manage their therapies. These guidelines detail FDA expectations that all new oral pMDI products contain integrated features to enable patients to track the remaining number of doses. This would prevent the patient from either discarding an inhaler unnecessarily or, more importantly, using the product beyond the number of doses specified in its labeling.

 Looking ahead, 3M points to several key trends designed to improve the versatility and flexibility of pMDI-based delivery systems. For future market applications, there will be an increasing need to configure a delivery system containing fewer drug doses while retaining the same performance features. This may be driven by the development of new active drugs with longer durations of action and less-frequent dosing, demand for sample packs, or the future prospect of intermittent systemic therapies or even single-dose vaccine delivery. To this end, 3M has developed and reported on a range of pMDI delivery technologies suitable for reduced- (8) or single-dose product configurations (9).

 Using pMDIs to administer macromolecules is another area of active research and development. One example of inhaled  delivery of peptide and protein drugs to treat local or systemic disease is "Exubera" (inhaled insulin), recently approved in the United States and European Union.

 3M says pMDIs offer several advantages for peptide delivery.  First, the hydrofluroalkane (HFA) environment within a pMDI is inert and essentially moisture-free, which provides good stability for macromolecule drugs. Secondly, advances in valve and actuator technology in the pMDI help ensure a consistent and efficient delivery, an important consideration, given the cost and potency of biotech drug substances.  

 Despite these advantages, there can be formulation challenges in using pMDIs in administering proteins and peptides. Given the low solubility of proteins with HFAs, a suspension–formulation approach is required, which in turn will rely on the effective size reduction of the parent drug into a respirable size, while retaining its tertiary structure and biological activity, explains 3M.

 To address these challenges, 3M demonstrated the feasibility of a suspension–formulation approach using particle-engineering technology with a range of molecules that included recombinant human deoxyribonuclease, adenosine deaminase, and salmon calcitonin. The integrity and stability of these molecules for extended storage periods has been demonstrated (10, 11). Molecule stability and pharmaceutical performance in pMDI systems also has been shown: further data generated using salmon calcitonin showed consistent results for 

drug purity and respirable fraction on product stability (12), as well as encouraging pharmacokinetic data in a rat model (13). 

 Also, as part of a strategy to improve delivery of a wider range of molecules 

the inhalation route, 3M introduced a range of novel HFA excipients, including oligolactic acids (OLAs). The OLAs show improved functionality such as increasing solubility (14), enhancing suspension stability (15), and providing 

 sustained release (16) of active ingredients. 


3M Drug Delivery Systems Division's other key technology platform is transdermal drug delivery (TDD), and  microneedle or microstructured transdermal systems for vaccines is an emerging area of interest here. Other advances include improvement in liners, films, and adhesives used as components within TDD systems.

 Drug-in-adhesive (DIA) systems are the most prevalent of established TDD designs. DIA systems offer advantages in simplicity, reduced size and thickness, and improved comformability to the application site.

 Modified versions of the DIA design, reservoir designs, and, more rarely, matrix patches are other examples of TDD system designs. 

 "For drugs with a narrower therapeutic window or for which there is need for more temporal control of the delivery profile, systems with a rate-moderating membrane such as the multilaminate DIA or reservoir design are the best option," explains Tim Peterson, US early pharmaceutics and technology manager, 3M Drug Delivery Systems Division. "The multilaminate DIA combines most of the patient friendliness of the simple DIA design with added control over the drug delivery profile," he says. Another transdermal drug delivery type, matrix patches, are seldom used because they require an additional peripheral adhesive to hold the system in place, which in turn increases the overall patch size and thickness.  

 3M recently developed new components for transdermal drug delivery. These include fluoropolymer-coated release liners for use with new soft adhesives and formulations, ultraviolet blocking films for light-sensitive formulations, and microlayered films that are designed to be soft and occlusive. 

 In terms of system design for drug delivery, Peterson says the company develops customizable adhesives to improve the adhesion and drug-delivery performance of DIA products. The incorporation of microstructured adhesives is another recent advance that has the potential to improve the performance of DIA patches in several areas, including minimizing skin occlusion and reducing skin irritation (17–19). 

Pharma Partner Focus

Following the sales of its global branded pharmaceutical business, 3M stays the course in drug delivery as its Drug Delivery Systems Division advances technology in inhalation and transdermal drug delivery.