Cost-effective energy solutions are not only an important part of facility design and operation, but they are also an integral part of a company’s sustainability initiatives. Renewable energy sources can improve a company’s environmental profile and its bottom line. The choice of a particular energy source depends on the capital costs of implementing alternative power systems, the energy source’s compatibility with existing systems, and other operational issues. 

Last month, NewAge Industries, a manufacturer of plastic molding and fittings for the pharmaceutical and biopharmaceutical industries, completed a solar-energy project at its facility in Southampton, Pennsylvania. The company installed 4082 solar panels on its roof in an array that is designed to generate 1 MW of electricity annually, which is roughly half the amount of power that the company uses each year. The solar panels cover about three-quarters of the company’s 244,000-ft 

roof, making it one of the largest solar installations in the state. 

The total cost of the solar-power system was $4.2 million. The state of Pennsylvania gave NewAge Industries a $1-million grant for the project, and the federal government contributed $1.2 million. As a result, the total cost to the company will be roughly $2 million, and the company expects to get a return on its investment in around six years. NewAge Industries predicts that the solar panels will have a service life of 20 years without additional labor costs. 

Environmental considerations were one reason that the company decided to install the solar-panel array. “I think it’s the right thing to do for the planet,” said Ken Baker, the CEO of NewAge Industries. The solar array generates power to run the extruders, injection-molding machines, motors, and chillers that the company uses to make its products. The solar array will cut the company’s reliance on the local utility company by about half. By generating power, the company estimates that the solar panels will yield a positive cash flow of between $300,000 and $400,000 per year. A system of inverters and switch gear ensures a consistent flow of power to the facility. The system first looks to the solar array to meet the facility’s demand for power. If the solar array isn’t generating enough power, the system automatically supplements the power supply through the municipal power grid. 

The company considered other renewable energy sources, such as wind, but decided that they would be impractical, and Baker began thinking about solar energy several years ago. To learn more about the technology, he attended seminars at the Solar Power 2008 trade show in San Diego, California. During the trade show, Baker visited various vendors of solar arrays to gain a firsthand look at the technology. To take advantage of federal and state grants in sustainable energy as a way to finance part of the project, NewAge Industries hired Keith Peltzman, CEO of Independence Solar, a solar-power consulting company, to advise the company about financing options and the project’s predicted return on investment. 

The vendor-selection process started with a pool of six vendors that eventually was narrowed down to one company, Borrego Solar, a privately held solar-power contractor. Several factors played a role in the company’s decision, such as the company’s financial strength and 31 years of experience in solar power. In addition, NewAge asked all potential vendors technical questions that Peltzman had developed, and Borrego’s employees, which included solar engineers, had an exceptional amount of knowledge.  

Baker wanted to work with US-based companies, parts, and labor to complete the solar-power project to help keep jobs in the US—and because of the state and federal funding that he was receiving. This criterion helped Borrego, which is headquartered in California, win the NewAge contract. Baker purchased American-made solar panels from Oregon-based SolarWorld, even though he could have bought Chinese-made panels for $150,000 less. California-based SunLink provided the racking system, and Colorado-based Advanced Energy supplied the electrical inverters. 

But before the solar-array project could begin, NewAge Industries had to determine whether the facility’s roof could bear the weight of the panels, which totals about 98 tons. After hiring a structural engineer to examine the question, the company learned that about 60,000 ft 

 of its standing-seam roof could not handle the weight. Rather than reinforcing the roof’s superstructure, the company chose to use the larger part of the roof that could bear the panels. 

The company also had to assess its electrical transformer. NewAge Industries receives incoming electricity at 33,000 volts, and its transformer adjusts the voltage according to the company’s changing demand for power. The utility firm PECO asked the company to change its transformer to ensure the safety of PECO employees who would work on the line in the future. 

Baker emphasizes that he was not alone in making sure that the solar-array project went smoothly. NewAge’s purchasing and accounting groups helped hammer out the terms and conditions of the contract with Borrego. The company’s engineering and plant-maintenance teams also worked with the consultants to ensure that the installation is sound. All of the company’s workers have an additional stake in the project’s success. Employees own 30% of NewAge Industries and 30% of the solar array. Thus, employees receive a share of the company’s profits, and they will benefit when the solar array generates revenue. 

NewAge Industries had already been embracing sustainability initiatives before it began considering solar power. One of the company’s first projects was to reduce the amount of energy it used. An early initiative involved changing the lighting in the warehouse and manufacturing areas. By switching from mercury-vapor to T5 fluorescent lights, the company reduced its energy consumption by one-third. Later, the company replaced its propane trucks with cleaner electric trucks, which the solar array will now be able to charge. 

In addition, the company recently began installing high-efficiency motors in its equipment and upgrading its air-conditioning units. During the ribbon-cutting ceremony, contractors were installing energy-efficient windows to improve insulation and reduce power consumption. 

Installing the solar panels has not ended the company’s interest in alternative power sources. The site’s next project might involve powering some air-conditioning and heating units with geothermal energy, says Baker, thereby offering another way for the company to improve its environmental footprint. 

Articles

CSR and Sustainability Forum

New Age Industries, a manufacturer of plastic molding and fittings for the pharmaceutical and biopharmaceutical industries, implements a solar-energy project at its Pennsylvania facility.

Sustainability at Work: Solar Energy

Almac Group, a contract development and manufacturing organization, officially opened its new North American headquarters in May 2011. The completion of a two-year construction project and $120-million investment for its facilities in Souderton, Pennsylvania, provides the company with parallel service offerings in the United States and in Europe through the company’s Craigavon, Northern Ireland, site. The new 240,000-ft

 North American headquarters houses more than 800 employees.

“With our rate of growth, it is essential we build capacity in both our Northern Ireland and US operation to ensure the business continues to compete at a global level,” said Almac CEO Alan Armstrong in launching the new facility. “It is a testament to the ambition of our founding Chairman Sir Allen McClay, who originally envisaged this project, and we are proud to have brought it to fruition.” 

The new Souderton site integrates the company’s clinical technologies and clinical services activities into one location after being housed in separate locations in Audubon and Yardley, Pennsylvania. Almac consists of five major units: Almac Clinical Services, Almac Clinical Technologies, Almac Sciences, Almac Pharma Sciences, and Almac Diagnostics. Almac Clinical Services provides clinical supply services, such as comparator sourcing, blinding and overencapsulation, packaging and labeling of clinical-trial supplies, and distribution and depot activities. Clinical Technologies provides interactive voice and web-response systems and other like support services. Almac Sciences provides custom-synthesis services and technology. Key functions include: active pharmaceutical ingredient (API) development and manufacturing, biocatalysis screening and selection, route selection, process development, solid-state chemistry services, and development and manufacture of custom peptides, oligonucletides, and proteins. Almac Pharma Services provides pharmaceutical development and drug-product manufacture for all phases of clinical trial supply (Phases 0–IV) and commercialization.  Almac Diagnostics provides biomarkers for discovery and validation, bioinformatics, and genomic services. 

Almac was founded in 2002 by Allen McClay, although the history of the organization dates back to 1968, when McClay founded the pharmaceutical company Galen in Craigavon, Northern Ireland. Almac’s position in the US dates back to 1995 when Almac Clinical Technologies began operations in 1995 in Princeton, New Jersey, and subsequently moved to Yardley, Pennsylvania. In 1996, Almac Clinical Services started operations in Audubon, Pennsylvania. In 2000, Almac purchased an additional facility in Durham, North Carolina, which it still operates today. 

 Conceptualization and design of Almac’s North American headquarters began in late 2005 with construction commencing in July 2008. The project was completed on time and turned over to Almac in August 2010. The facility equips Almac to provide planning, packaging, distribution, analysis, and technology for clinical-trial materials. 

The new North American facility is housed on a 40-acre site, with the current 240,000-ft

 facility constructed on 25 acres, allowing 15 acres for future expansion. The facility essentially has two interlinked buildings, the first a 74,250-ft

 building providing administrative work space for Almac Clinical Services, Almac Clinical Technologies, Almac Sciences, Almac Pharma Services and Almac Central Services. 

 building, houses production and logistics services, including, packaging, testing, and distribution of clinical supplies.  The facility has extensive storage capabilities for pharmaceutical materials, including raw materials, in-process materials, and finished goods. The facility provides a range of storage solutions, including the following; 

• A controlled-substance vault that meets US Drug Enforcement Agency (DEA) requirements for storage of Schedule I and Schedule II controlled substances with a capacity of 310 pallets

• Temperature- and humidity-controlled 41,150-ft

 warehousing (15 to 25 ° C and 65% relative humidity) 

• Refrigerated and frozen storage space—a 271,000-ft

 drive-in cold storage unit is maintained at temperatures of 2 to 8 ° C, and a 6,131-ft

 walk-in storage unit stores products at between –25 and –15 ° C 

• Additional critical storage space is offered through the use of mobile units 

• A finished goods pharmacy is used for storing clinical patient kits, and surplus finished goods are stored in the warehouse facility. 

The facility also contains two data centers that provide disaster-recovery redundancy for the site as well as for Almac’s other US and UK sites.  

Manufacturing and primary packaging of clinical supplies are performed in a 20,250-ft

 primary production area. Eight rooms are designed for standard humidity conditions of 45% relative humidity, and an additional eight rooms are designed for low-humidity conditions (i.e., 20% relative humidity). The primary production area supports various manufacturing and open-drug packaging, including encapsulation, small dosage powder-filing for inhalers, tablet splitting, bottling, and blistering. Blending functions are planned for the future. Analaytical and solid-state chemistry services for clinical supplies also are performed at the facility through laboratory space of Almac Sciences. 

Secondary packaging of clinical supplies occurs in a 20,780-ft

 production area consisting of 23 production rooms. Temperatures in the secondary production are maintained at 18 to 25 ° C and relative humidity of 65% or less. The secondary production unit supports closed-drug manufacturing and assembly, including manual labeling, semi-automated label (mobile and nonmobile), automated labeling, walleting, cartoning, and assemblies. Additionally, a 163-ft

 cold storeroom provides temporary storage and processing of clinical supplies at cold temperatures (i.e., 2 to 8 ° C). 

 label-control area is dedicated for the design, printing, inspection, and storage of clinical labels. Additionally, distribution and distribution-support areas provide space for distribution suites used for the verification and packaging of individual clinical supply orders. A quality approval area is used for the physical audit and release of distribution orders. A staging area is used for holding released orders before courier pick-up, and a bulk-shipment area is used to accommodate the packing of pallet-size distribution orders. 

Pharma Partner Focus

With a new North American headquarters and expanded operations, Almac is furthering its transatlantic approach to contract development and manufacturing.

Almac Expands in North America

The Society for Chemical Manufacturers and Affiliates (SOCMA), the trade association representing custom and batch manufacturers, including producers of fine chemicals, intermediates, and active pharmaceutical ingredients (APIs), is actively engaged in policy advocacy and other membership activities. Patricia Van Arnum, senior editor of 

Pharmaceutical Technology’s Sourcing and Management

, recently discussed the association’s key objectives and activities for 2011 with SOCMA President and CEO Lawrence D. Sloan, on a broad range of issues involving policy advocacy in environmental, health, safety, and security measures, drug-manufacturing inspections, and custom and border control. 

  Looking back at 2010 and 2011 to date, what would you identify as the key accomplishments of the association and its key objectives in 2011? 

 As part of our ongoing efforts to provide exceptional value to the batch, custom, and specialty chemical industry, SOCMA last year began stepping up its offering of program and services to members and non-members alike. In 2010, SOCMA improved existing programs, such as our popular grassroots program, SOCMA CONNECT, which includes our Annual Washington Fly-in. We also launched new services, such as our Sales and Marketing Peer Group and new technical and sales training programs being offered through collaborative partnerships with the American Chemical Society and others. 

SOCMA also developed its innovative Member Value Report, customized for every SOCMA member company, which documents a company's specific involvement with the organization in areas, such as Government Relations, ChemStewards, and Public Relations. It features a cost-savings analysis across each program and service.  As an example, it calculates the cost of retaining a law firm in lieu of using SOCMA to illustrate the value of our advocacy program. No other US chemical trade association offers this type of member return-on-investment tool. The report, which has been well-received by members, not only serves to indicate the members’ level of engagement, but also reminds them of the programs and services they are not taking advantage of. 

Last year, we also began work on a new services directory for SOCMA members and others in the chemical industry. The SOCMA Marketplace and Chemical Services Directory was conceived in response to the growing number of inquiries our staff was receiving for members who produce certain products. This new online tool will be a comprehensive directory and search engine of SOCMA member company capabilities. It will be launched by the end of the year. 

 In 2010, SOCMA launched member peer groups in human resources and sales and marketing, some of which you have alluded to already. Can you explain the reason behind establishing these groups and their function? 

 As a benefit of membership, SOCMA members can participate in training programs and events throughout the year to broaden their knowledge on issues, network with industry peers, and exchange best practices. The Sales and Marketing Peer Group, for example, includes representation from nearly 30 SOCMA member companies, small and large. The group, which was launched earlier this year, provides virtual forums for SOCMA’s sales and marketing members to interact and learn from subject-matter experts in their field. Through learning, polling, conversations, and collaboration, SOCMA has been using members’ feedback to offer a series of programs through conference calls. Conference-call learning allows these busy individuals to participate from anywhere without the need of a computer. To date, the group held two conference calls in the first quarter, one on May 24, and two others are planned for the the summer and fall. The group has an advisory panel of more than 20 C-level members from a diverse mix of companies. The panel acts as a sounding board for ideas to bring to the larger Peer Group. 

Environmental, health, safety, and security measures

 In the area of environmental, health, and safety (EHS), how does the association’s ChemStewards program operate in relation to other industry efforts, such as the Responsible Care program, and how is it a useful tool for companies’ EHS efforts? Does the program serve a collateral role in the association’s policy advocacy with respect to EHS regulation and legislation? Are there other benefits from participation in the program from a business perspective, such as recognition of the program and reduction in insurance costs? 

 ChemStewards is SOCMA’s environmental, health, safety, and security (EHS&S) performance-improvement program. The program was created by and for the batch, custom, and specialty chemical industry in 2005, and has quickly gained a reputation as both an efficient and highly effective management system. Among other things, ChemStewards promotes improving the performance of employee safety, lowering a facility’s environmental footprint, and continuously increasing the security of the facility. To date, 92% of SOCMA members are in compliance with ChemStewards. 

The performance-improvement programs through industry today have many similarities, but some important differences as well.  ChemStewards is the only management system that is totally facility based, thereby providing SOCMA members with adaptability and cost control.  Also, ChemStewards verification is completed by third-party auditors approved and certified through ChemStewards as well as the Board of Environmental, Health & Safety Auditor Certification. The program also stands out in the area of support service. ChemStewards provides EHS&S webinars on policy and regulations, governmental audits, and other hot topics. Members also have free access to the Chemical Operator Training Manual, a handbook designed to ensure the successful performance of chemical plant operators, as well as the ChemStewards Integrated Management System, a new database that integrates SOCMA’s program with other government-sponsored performance improvement programs, such as ISO 9001, ISO 14001, and OSHAS 18001. 

ChemStewards creates an enormous return on investment that extends well beyond the company’s fence line.  The third-party audit, for example, is an excellent cost/value proposition for members. Also, through the SOCMA Member Select Insurance Program, participants that incur verification costs after successfully completing ChemStewards audits are granted underwriting risk-management credits on policy premiums. 

Also, more and more SOCMA members are finding there is a commercial advantage to practicing ChemStewards.  We’re hearing that our members are becoming preferred vendors in many areas as their customers stipulate that ChemStewards is included in their purchase agreements. That is a pretty big deal because now companies are seeing a tangible effect on their bottom line. 

 Can you explain in more detail the ChemStewards Green Metrics standard, how it was developed, by whom, and how will it be used? How may it work with other industry standards, such as voluntary green-chemistry standards or other metrics of sustainability/green manufacturing, including corporate sustainability reporting? 

 The ChemStewards program was founded upon sustainability principles six years ago. From the beginning, our members have been focused on energy and waste-generation reduction. Last year, our Board of Governors requested that greater emphasis be placed on sustainability. A working group made up of representative SOCMA members led by staff canvassed ChemStewards participants on documenting how batch chemical plants are operating in a more sustainable manner.  Out of this research, the group recommended the addition of a voluntary new metric focusing on greenhouse-gas reporting.  The SOCMA board recently approved this change as well as the launch of a new Sustainability Award, which will be presented at SOCMA’s 90th Annual Dinner in New York on December 5.  

In May, more than 100 participants from industry and academia attended SOCMA’s first-ever EHS&S and Sustainability National Conference in Houston. The event focused on the concept of sustainability and how it’s defined for small and medium-sized chemical companies. SOCMA will continue discussions with members on the impact of sustainability on their businesses and what changes ChemStewards can make to meet their needs. 

APIs

SOCMA President and CEO Lawrence D. Sloan discusses the key policy initiatives and activities of the association.

SOCMA Focuses on Concerns of Batch and Custom Manufacturers

 announced that 34 science teachers in the United States, Canada, and Puerto Rico are this year’s recipients of the 19th annual Amgen Award for Science Teaching Excellence. The award recognizes science teachers from kindergarten through twelfth grade who have significantly influenced their students through exemplary science teaching and have achieved results in student learning in communities in which Amgen operates.

 has recently donated $100,000 to Children's Specialized Hospital Foundation, based in Mountainside, New Jersey. This donation will aid renovation efforts for the hospital's Toms River, New Jersey, facility. BASF has been a supporter of Children's Specialized Hospital for several years, including a previous donation to construct a therapy gym at the hospital's inpatient rehabilitation center in New Brunswick, New Jersey. In total, the company has donated more than $600,000 to the Children's Specialized Hospital Foundation since 2006. 

 has awarded five grants totaling $1.5 million to organizations that empower African-American women with Type 2 diabetes to better manage their disease. The grants are part of 

 a five-year $100-million initiative to improve health outcomes with people with Type 2 diabetes in the United States by strengthening patient self-management education, community-based supportive services, and broad-based community mobilization. 

 participated in the 4th annual World Economic and Environmental Conference (WEC 2011) in Qingdao, Shandong, Province, China, which is jointly hosted by the UN Industrial Development Organization and the International Energy Conservation Environmental Protection Association. Dow was also presented the "Carbon-Value Innovative Value Award" at the event for its research and exploration of low-carbon solutions. 

 has made a new offer to supply its rotavirus vaccine, Rotarix, to the Global Alliance for Vaccines and Immunization (GAVI) Alliance at $2.50 per dose as part of the company’s efforts to increase access to medicines and vaccines in the developing world. GSK made the offer in response to a request by UNICEF, which will review the offer. If accepted, large-scale vaccination could begin later this year, according to GSK. 

 held Roche Children’s Walk to raise awareness for children in need which involves employees walking to collect donations for daycare centers in Malawi and children’s charities in their own countries. The commitment is supported by Roche, which organizes the walk, and matches donations by employees. The event, held in mid-June, involved more 15,000 employees at more than 100 sites worldwide. To date, the program, which began in 2003, has raised more than CHF 7 million ($8.4 million). 

 has granted prequalification to the company’s Typhim Vi polysaccharide typhoid vaccine, making it the first WHO prequalified typhoid vaccine. WHO prequalification is a key step that allows for the procurement of vaccines by UNICEF and other United Nations organizations such as the Pan American Health Organization. 

 launched an effort to recruit one million volunteer readers, tutors, and mentors on June 21, which was designated as a day of action to bring people together to volunteer in their communities. This year, more than 200 communities in all 50 states mobilized volunteers for projects focused on education, income and health. 

A roundup of developments in corporate social responsibility and sustainability from the bio/pharmaceutical industry, its suppliers, and other public and private organizations.

CSR and Sustainability in the News

The global pharmaceutical market is in transition. Growth in established markets is slowing as growth in emerging markets, particularly China, is on the rise. State policy to increase access and affordability of medicines, a growing middle class, and increased demand for quality drugs are all factors influencing pharmaceutical demand in China. On the supply side, China’s pharmaceutical market is dominated by domestic companies although multinational drug companies are increasing their presence in the market. 

China is playing an increasingly important role in the global pharmaceutical market. The global pharmaceutical market is expected to reach $1 trillion by 2014 and nearly $1.1 trillion by 2015, according to a May 2011 report by the IMS Institute for Healthcare Informatics (1). The market will increase at a compound annual growth rate (CAGR) of 3–6% during the next five years, slowing from the 6.2% annual growth rate that occurred during the past five years. Absolute global-spending growth is expected to be between $210 billion and $240 billion between 2011 and 2015 compared with $251 billion between 2006 and 2010. Removing the effect of exchange-rate fluctuations, absolute global-spending growth will be between $230 billion and $250 billion on a constant dollar basis compared with $228 billion in the previous five years. For purposes of this analysis, the pharmaceutical market includes all types of biopharmaceuticals, including biologics, over-the-counter drugs, and traditional medicines distributed and administered through regulated delivery systems, such as pharmacies, hospitals, clinics, physician offices, and mail order. Spending figures are reported at ex-manufacturer estimates that do not reflect off-invoice discounts and rebates (1).  

As pharmaceutical industry growth slows in developed market in the United States, Western Europe, and Japan, emerging markets, particularly China, continue to ascend. The US share of global pharmaceutical spending is projected to decline from 41% in 2005 to 31% in 2015 while the share of spending from the top five European national markets (i.e., Germany, France, Italy, Spain, and the United Kingdom) is projected to decline from 20% to 13% during the same period. Meanwhile, 17 high-growth emerging markets, led by China, will contribute 28% of total spending by 2015, up from only 12% in 2005, according to IMS (1).

In 2005, China was ranked as the ninth largest national pharmaceutical market and in 2010, it moved into third place, a position it is projected to maintain through 2015 (note: spending is based on constant US$ at 2010 exchange rates), according to IMS (1). In 2010, China’s pharmaceutical market was valued at $41.1 billion, having increased at a compound annual growth rate (CAGR) (US$ at constant exchange rates) of 23.9% between 2006–2010. A CAGR of 19–22% is projected between 2011 and 2015, according to IMS (1). 

Inside China’s healthcare and pharmaceutical market

Although overall healthcare spending in China as a percentage of gross domestic product (GDP) is low at approximately 5%, the portion of healthcare spending directed at pharmaceuticals is as high as 50%, based on 2009 data, according to a May 2011 report by the management-consulting firm KPMG (2). In contrast, pharmaceutical spending in the US is only 13% of total healthcare spending. Per-capita drug spending in China is still low, only $35.1 in 2009 (2). 

State initiatives to increase access and affordability of healthcare, particularly in rural areas, a rising middle class, growing demand for higher quality drugs, and the sheer size of its population are factors influencing the pharmaceutical market, according to the KPMG report. The state-led Healthcare Reform Plan, which went into effect in 2009, is investing approximately RMB 850 billion ($124 billion) over the initial three years of the plan to increase access to medicine. The first phase of the plan, which is scheduled to be completed by the end of 2011, seeks to increase accessibility by building basic healthcare facilities, expanding public medical insurance to cover 90% or more of the population, and reform the drug-supply system. By 2020, the Chinese government plans to bring the entire population under public medical insurance, strengthen infrastructure, and streamline research and delivery (2). 

China’s pharmaceutical market varies between urban and rural areas. The mainland Chinese pharmaceutical market consists of a complex array of regional markets that are dominated by generic drugs and over-the-counter (OTC) products, according to the KPMG report (2). Based on 2009 data, OTC products accounted for 38% of China’s pharmaceutical market, prescription drugs for 33%, traditional Chinese medicines 8%, medical devices 6%, and other products 15% (2). The OTC market was valued at RMB 88 billion ($13.6 billion) in 2009 and RMB 96.4 billion ($14.9 billion) in 2010. Prescription drug sales are expected to reach RMB 442.5 billion ($68.3 billion) by the end of 2014 and have recently outperformed growth in the OTC market. In 2009, the prescription drug market in China increased 27%, compared to growth of only 7.7% for the OTC market, according to the KPMG report (2). 

China has more than 5000 pharmaceutical companies, of which about 98% produce generic drugs, according to the KPMG report (2). The generic-drug market in China was valued at $29.3 billion in 2009 and is expected to increase at a CAGR of 12.9% to reach a value of $57.1 billion by 2014 (2). 

China’s pharmaceutical market is highly fragmented. Nearly 90% of China’s pharmaceutical manufacturers are small- or medium-sized companies, and the 10 largest companies account for only 13% of the industry’s overall revenues. (2). Almost half of the top 10 pharmaceutical companies in China are multinational firms, but no one firm controls more than 2.5% of the market, according to the recent KPMG analysis (2). Based on market capitalization as of the first quarter 2011, the top domestic pharmaceutical companies in China in descending order are Sinopharm, Shanghai Pharmaceuticals, Harbin Pharmaceutical, Yunnann Baiyo Group, Sichuan Kelun, Shanghai Fosun, Jiangsu Hengrui Medicine, Kangmeli Pharmaceutical, Shenzhen Hepalink, and Shangdong Dong-E E-Jiao (2). On the distribution side, there are approximately 7000 pharmaceutical distributors in China, of which approximately 80% are small- to medium-sized enterprises. The top three pharmaceutical distributors—Sinopharm, Shanghai Pharmaceutical, and Jointown—account for nearly 21% of the market. In 2009, the top 100 pharmaceutical distributors accounted for 67% of the market and the top 500 accounted for 85%, according to the KPMG report.  

The strength of domestic Chinese pharmaceutical companies is in manufacturing generic drugs and active pharmaceutical ingredients (APIs), notes the KPMG report (2). In 2009, the number of chemical pharmaceutical manufacturers reached 2434, up 7.5% year-on-year. As of August 2010, China had roughly 1200 API manufacturers capable of producing more than 1500 categories of APIs. China is ranked first in the world in output of penicillin, vitamins, antipyretics, and analgesics. These ingredients accounted for 80% of China’s total pharmaceutical export value in 2009 (2). The government is said to be drawing up a plan that would invest $761 million in API manufacturers with the goal of raising the country’s export value of products by $4 billion annually (2).  

The strength of China’s API market was on display at API China and Interphex China, which was held in Chengdu in April. API China and Interphex China, which are organized by the exhibition company Reed Sinopharm, brings together API manufacturers, fine-chemical producers, equipment vendors, and suppliers to pharmaceutical manufacturers. The exhibition is held twice a year in China. The April show in Chengdu, a city in the Sichuan province in southwestern China, was co-located with PharmChina, a trade show of pharmaceutical distributors. Collectively, the two shows attracted more than 3500 exhibitors, representing more than 80,000 categories of products, according to data from Reed Sinopharm. 

 In addition to the exhibition, API China and API Interphex in Chengdu included a specially orchestrated program, Sino-India Partnership Program (SIPP) to further enable business relations between China and India. SIPP included a special zone of Indian API manufacturers at API China as well as a Sino-India conference session, which was supported by the China Pharmaceutical Industry Association. The conference provided insight into the pharmaceutical manufacturing industries in China and India. China is now a provider of raw materials and fine chemicals to India and further partnerships in API trade, which would combine China’s position in APIs with the finished drug-product manufacturing base in India, was one area of further collaboration discussed at the conference. 

Another exhibition of API China and Interphex China is scheduled for Nov. 9–11 in Nanjing, the capital city of Jiansung Province in Eastern China. The 2010 installment of API China and Interphex China, held in Suzhou, Jiansung Province, attracted more than 30,000 visitors and more than 1400 exhibitors, which included 800 pharmaceutical ingredient and intermediate producers, 300 pharmaceutical packaging companies, and 200 equipment vendors, according to data from Reed Sinopharm. 

Improving the quality standards of pharmaceuticals is a key priority of the Chinese government The KPMG report points to several recent key developments to improve  GMP. In February 2011, the Ministry of Health of China (MOH) published the final version of China’s new drug GMP (i.e., GMP 2010), and the measures went into effect Mar. 1, 2011. The provisions introduce the concept of quality risk management, the use of standard operating procedures, efficient management of manufacturing records, and the identification of key personnel responsible for quality, which includes the company head, manufacturing management, and quality management. Existing drug manufacturers, depending on the risks of the products they manufacture, have a grace period of up to five years to comply with GMP. Companies that fail to comply will no longer be allowed to manufacture products at those facilities in noncompliance. The State Food and Drug Administration estimates that the new regulation could shut down as many as 500 small and medium-sized drug producers (2).  

1. IMS Institute of Healthcare Informatics, “The Global Use of Medicines: Outlook Through 2015 (Parsippany, NJ, May 2011). 

2. KPMG, “China’s Pharmaceutical Industry: Poised for the Giant Leap (Shanghai, May 2011).  

Strong growth is projected for the pharmaceutical industry in China, offering opportunities for drug companies and manufacturers of active pharmaceutical ingredients.

Tracking Pharmaceutical and API Growth in China

Large-scale biopharmaceutical manufacturing equipment for upstream product manufacture has changed relatively little over the past decades. Innovation in bioprocessing equipment, particularly, bioreactors, has been slow despite some gains, such as cost improvements, greater flexibility, higher product yields resulting from improved genetic and cell engineering, and widespread adoption of small-scale, single-use bioprocessing equipment.  

8th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production

 show the industry is demanding better upstream and downstream processing. The survey, which had responses from 352 global biomanufacturers, analyzed production, budgetary, technological, and quality issues. The study showed that the industry is interested in new-product innovation in single-use bioreactors, cell-culture media, and various service areas (1). 

A key finding of the study was interest in upstream equipment innovation. Bioreactors are one of a company's largest bioprocessing expenses. To illustrate interest in alternative bioreactors, more than two-thirds (68.1%) of survey respondents reported current in-house use of single-use bioreactors, and this percentage is growing, especially in research and development and clinical-scale production. Improvements in bioreactors, particularly for single-use, along with purification equipment, were ranked as the areas where bioprocessing innovations were reported as most needed, with 29.2% of respondents citing bioreactors as a key area (see Figure 1).  

Figure 1: Areas identified by survey respondents in most need of new upstream product and services development. (FIGURE 1 IS COURTESY OF AUTHOR) 

Partly due to the slow-changing and strict regulatory environment, single-use suppliers are focusing on relatively traditional bag-liner-in-a-steel-bioreactor single-use systems. Much of industry's desire for improved bioreactors is related to the need for large-scale (e.g., >1000-L batch-fed), single-use/disposable bioreactors. Today, 1000 L is currently the largest cost-effective size for disposable batch-fed bioreactors. Future areas for single-use bioreactor innovations may include unitary (i.e., single-piece) all-plastic rather than plastic-lined and even stainless steel-lined plastic bioreactors.  

Contract manufacturers have more interest in improved single-use bioreactor systems compared with product developers/manufacturers, according to the study. Interest in disposable bioreactors also differed among regions. Respondents from Europe (32.2%) showed the highest interest compared with 26.9% from the United States, and 31% from the rest of the world (1).   

The study also surveyed 175 suppliers and examined 52 equipment and functional areas. The results showed most suppliers are involved in new-product development and that single-use bioreactors is the hottest area of new-product development;  40.5% of respondents are working on them in some way. Expression-system platforms and cell-culture optimization also were key areas of new-product development (1).  

The study further evaluated 15 areas where biomanufacturers were actively implementing performance improvements in their facilities. The greatest percentage of facilities had "significant" or "some" improvement from better process development (identified by 66.8% of respondents) and optimized cell-culture processes (identified by 61.9% of respondents) (1).  

Perfusion bioreactors appear to be positioned to become the next major revolution in bioprocessing and single-use equipment, with perfusion equipment on track to compete head-to-head with conventional batch-fed bioreactors even at commercial GMP scale. The study, however, showed that the industry's view of perfusion largely is dated.  

Perfusion is not new. For example, perfusion bioreactors were widely used for hybridoma culture in the 1970s–1980s before antibody manufacture switched to batch-fed, mammalian-cell bioreactor manufacture of recombinant antibodies. Perfusion bioreactors were available from such companies as Endotronics, Cellex, Biosyn, and Biovest. Today, providers of perfusion bioreactors include FiberCell Systems and Zellwerk (marketed in the US by Glen Mills).  

Nearly all current bioprocessing today involves batch-fed bioreactors. Perfusion involves continuous slow feeding and removal of spent media along with the desired product with the host cells retained within the bioreactor by being bound to bundles of capillary fibers or other membranes or retained in suspension in the bioreactor by special filters. While batch-fed bioreactors involve cells in dilute culture- media suspension, perfusion bioreactors grow cells at ≥100 to 1000 × times higher concentration, with bioreactors commensurately smaller. Thus, using a small perfusion bioreactor over time with the same amount of culture media may match or beat the product output of a much larger batch-fed bioreactor. For example, FiberCell Systems reports it is developing desk-sized units that will have the equivalent recombinant-protein production capacity of conventional 2000–5000-L bioreactors.  Also, ATMI recently launched iCellis, the first large-scale perfusion bioreactor. 

Although perfusion appears to be a viable new product candidate, the BioPlan survey shows that industry knowledge and attitudes toward perfusion remain largely dated. Among a list of 17 problems commonly encountered in bioprocessing, respondents consistently had more serious concerns with perfusion than with batch-fed systems. These issues included process complexity (66.1% of respondents had serious concerns with perfusion systems compared with 4.9% for batch-fed) and contamination risks (63.9% had concerns with perfusion compared with 3.8% for batch-fed systems) (1). These and other concerns for perfusion already are being resolved as new bioreactors enter the market. As new products are launched in coming years, commercial-scale devices are likely to capture significant interest as new upstream solutions.  

 is president of BioPlan Associates, tel. 301.921.5979, 

8th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production, 

 BioPlan Associates (Rockville, MD, April 2011), 

Outsourcing

A recent industry survey shows keen interest in improving bioreactors and cell-culture media.

Wanted: Better Upstream Bioprocessing Technologies

The United Nations held an informal interactive civil society hearing last month in preparation for the High-Level Meeting of the General Assembly on the Prevention and Control of Noncommunicable Diseases (NCDs), which will be held September 19 and 20 in New York. The hearing brought together UN officials, nongovernmental organizations (NGOs), the private sector, academia, and other civil society organizations, including the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA), to offer input for the upcoming meeting. In line with the preparations for the UN meeting in September,  IFPMA issued a Framework for Action, a 10-point plan that outlines the areas in which the research-based pharmaceutical industry can participate in tackling the growing problem of NCDs in the developing world. 

 The UN informal interactive hearing, which was held June 16 in New York, included participation by UN General Assembly President Joseph Deiss, UN Deputy Secretary-General Asha-Rose Migiro, and the World Health Organization (WHO) Assistant Director-General Ala Alwan. In a media forum on June 20, Migiro outlined the importance of addressing NCDs in the developing world. “Cardiovascular disease, chronic respiratory disease, cancer, and diabetes are often mistakenly viewed as diseases of affluence,” said Migiro in a UN statement. “After all, the thinking goes, if someone has plenty of money, they will buy rich foods, alcoholic drinks, and tobacco products. And they will have plenty of leisure, not physical work. Certainly this describes some cases, but not the vast majority.  Poor countries suffer 80% of the noncommunicable diseases’ death toll.  Poor mothers who lack good nutrition in pregnancy are more likely to give birth to babies vulnerable to noncommunicable diseases later in life.” 

Migiro noted that an estimated 8 million premature deaths (i.e., people aged below 60) due to NCDs occur in developing countries each year. “The economic costs of noncommunicable diseases are astronomical.  But let us put aside those costs for a moment, even though they are catastrophic for too many families,” she said. “There is no cost-benefit analysis that can sufficiently describe the suffering of family and friends.  There is no calculation to determine what someone might have contributed to our world if only they had never fallen ill.”

The upcoming UN High-Level Meeting on NCDs is an outgrowth of several global health initiatives. In February 2010, WHO Director-General Margaret Chan addressed more than 100 stakeholders at the first Global Forum of the Non-Communicable Disease Network (NCDnet) in Geneva, pointing to the problem of NCDs in developing countries. “Diseases once associated with abundance are now heavily concentrated in poor and disadvantaged groups. Developing countries have the greatest vulnerability and the least resilience,” she said. 

NCDnet, a voluntary network of UN member states, donors, philanthropic foundations, UN agencies, NGOs, and the private sector, focuses on the prevention and control of NCDs in low- and middle-income countries by augmenting collective advocacy, increasing resources, and promoting effective global and regional action to strengthen national capacity. It evolved from the May 2008 meeting of the 61st World Health Assembly, at which health ministers endorsed the Action Plan for the Global Strategy for the Prevention and Control of Noncommunicable Diseases (NCD Action Plan). The NCD Action Plan defined six objectives for implementation during a six-year period from 2008 to 2013. Under each objective, specific sets of action for UN member states, the secretariat, international groups, and other partners are detailed. Objective 5 of the NCD Action Plan specifically calls upon member states, WHO, international partners, and other stakeholders to promote partnerships for the prevention and control of NCDs.  The creation of NCDnet is in direct support of this objective. 

NCDs currently account for 35 million deaths annually worldwide, the majority of which happen in low and middle-income countries (28.1 million), according to an Apr.13, 2010, UN press release. WHO forecasts that globally, deaths from NCDs are likely to increase by 17% over the next 10 years, with the greatest increase projected in Africa (27%), followed by the Eastern Mediterranean region (25%). 

At a press briefing at the UN on June 20, 2011, John Seffrin, president of the American Cancer Society, noted that on a worldwide basis, by 2030, NCDs are expected to cause about five times as many deaths as communicable ailments. David Bloom, Clarence James Gamble Professor of Economics and Demography at the Harvard School of Public Health, noted that the economic burden of NCDs on a global basis could evolve into costs of approximately $35 trillion from 2005 to 2030. 

In line with the UN hearing on NCDs last month, IFPMA issued its Framework for Action to outline the pharmaceutical industry’s focus in NCDs and specify the areas, identified by the research-based pharmaceutical industry, to which it feels it can be most impactful. “The NCD framework is just the beginning; our vision is to work with others to identify what can be done in practice to help poor people access the care and treatment they need,” said IFPMA Director General Eduardo Pisani, in a June 16, 2011, IFPMA press release. “Together, we want to find ideas for concrete actions to put on the table in the aftermath of the UN NCD Summit in September. The Framework is our roadmap for this work.” 

The Framework for Action centers on four main areas: innovation and research, access and affordability, prevention and health education, and partnerships. “We want to step up to the plate where we can have an impact,” said Cinthya Ramirez, manager of global health policy at IFPMA, in an interview with 

 “We are building on our existing approaches, partnerships, experience, and efforts in other global health initiatives to specifically address NCDs.”

In the area of innovation and research, the framework calls for continued investment in research and development (R&D) for new medicines for the prevention and treatment of NCDs overall and also in addressing the specific needs of developing-world populations. IFPMA estimates that there are more than 1500 drugs in development to address NCDs. 

Actions on access and affordability for IFPMA and its member companies include working with governments and WHO to promote policy, regulatory, and supply- chain environments to enable and implement commercially sustainable access and pricing strategies for the supply of NCD vaccines and medicines in the developing world. IFPMA’s Ramirez offers as an example access to palliative care, which may be limited in certain developing countries due to trade or policy issues that limits access to painkillers and other palliative-care measures. Improving the infrastructure and supply-chain practices is another example. “Strategies to prevent stock outages of medicines are another way in which access to medicines can be improved,” says Ramirez, who points to certain innovative approaches using mobile-phone and telecommunication technology in monitoring supply in remote areas that the industry has used in supplying anti-malaria drugs to the developing world. 

Also, with respect to access and affordability, IFPMA’s action plan also calls for advising and assisting WHO’s work on the appropriate use of medicines for preventing and treating NCDs on WHO’s Essential Medicines List and to work with WHO to remove administrative hurdles that currently limit access to essential medicines. WHO’s Essential Medicines List is a listing of more than 350 medicines that satisfy the priority healthcare needs of a population and are selected with regard to disease prevalence, evidence of efficacy, safety, and comparative cost-effectiveness. IFPMA also plans to work with other key stakeholders to eliminate import duties on medicines that prevent and treat NCDs and other charges, such as consumption or value-added taxes, throughout the supply chain that increase prices to patients. 

Lifestyle choices play a major role in NCDs and part of the strategy to combat NCDs involves health education to consumers, patients, physicians, and healthcare professionals. At the UN press briefing in June, UN Deputy Secretary-General Migiro noted that two-thirds of all new cases of NCDs can be prevented by addressing four main risk factors: tobacco use, unhealthy diets, lack of exercise, and excessive alcohol consumption. The importance of health education in preventing NCDs also was a key finding of a recent study by IFPMA and the Association of International Pharmaceutical Manufacturers (AIPM), the Russian national pharmaceutical industry association. The survey, 

Population Attitude to Personal Health: Perception of Health, Understanding of Risk Factors, Morbidity and Mortality

, which was conducted in Russia from January 2011 to April 2011, was presented on the occasion of the first global Ministerial Conference on Healthy Lifestyles and Noncommunicable Disease Control in Moscow in April 2011. “The survey showed that although people recognize the negative impact of smoking, abuse of alcohol, obesity, and lack of physical exercise has on health, they still engage in at least one of those activities,” said Ramirez, underscoring the need for increasing knowledge on the link between lifestyle choices and NCDs. 

The IFPMA Framework for Action addresses prevention and health education in several ways. First, the pharmaceutical industry will seek to promote innovative tools to increase health literacy, such as awareness of NCDs, their respective risk factors, and the need to adhere to treatment as well continue advocacy and support of screening initiatives. Ramirez points to IFPMA’s cooperation with the World Health Professions Alliance (WHPA), an association representing more than 26 million health professionals in 130 countries. WHPA has been a vocal voice on NCDs by advising its members of NCDs, the social determinants of NCDs, and the ways in which healthcare professionals can inform patients on NCDs, including with simple tools such as scorecards. Within the pharmaceutical industry itself, the member companies of IFPMA plan to actively promote best practices to advance a healthy workforce for the more than 1 million employees of IFPMA member companies. 

As in other global health initiatives, a multi-stakeholder approach is an important component in tackling NCDs, and the IFPMA Framework for Action addresses the value of private, public, and public–private partnerships. Part of the focus is on developing innovative health delivery models in this multi-stakeholder approach, including public-private partnerships. Also, the member companies of IFPMA will continue to work with the UN, principally through WHO, governments, healthcare providers, health financing mechanisms, the wider business community, procurement bodies, NGOs, and other patient groups in prevention, access, financing, and capacity-building initiatives targeted at NCDs. 

Ramirez emphasizes the importance of  these collective efforts. “We recognize NCDs are a major global health problem in the developing world and that the pharmaceutical industry can play an important role with its partners,” she said. She adds that the pharmaceutical industry will continue to participate in developing and implementing specific programs in support of combating NCDs, including efforts of the UN and WHO. 

IFPMA’s Pisani sums up the value of these partnerships. “This NCD Framework For Action represents a paradigm shift for the research-based pharmaceutical industry,” he said. “It puts our industry’s collective global health responsibilities firmly at the forefront of how we see our role in the new global health community…In order to tackle the rise of NCDs, and stay the course, we need to look at sustainable new approaches to global health which have prevention at the core.”  

The International Federation of Pharmaceutical Manufacturers and Associations issues a Framework for Action for noncommunicable diseases.