Filling the Early Intermediate Security Gap

Published on: 
Pharmaceutical Technology, Pharmaceutical Technology-06-02-2019, Volume 43, Issue 6

With an increased focus on the supply chain security of non-cGMP intermediates, companies need to re-emphasize upstream manufacturing.

Editor’s Note: This article was published in Pharmaceutical Technology Europe’s June 2019 print issue.

Supply chain security has been long deliberated and extensively scrutinized within the pharmaceutical industry. Much of the attention around supply chains has been focused on the later stages. However, as the industry shifts and more challenges become apparent, particularly with non-cGMP intermediates-early intermediates (EI)-there has been a drive to ensure greater security across earlier parts of the supply chain as well.

To address the concerns around the supply and quality of EIs, Lonza Pharma & Biotech, headquartered in Switzerland, launched an initiative for small-molecule APIs (1). Through this initiative, the company will use its chemical production facilities located in Visp, Switzerland, to offer customers an integrated supply chain. Pharmaceutical Technology Europe spoke with Sean Diver, director of business development at Lonza Pharma & Biotech, to find out more about the changing supply chain security landscape.

Current challenges

PTE: What are the current challenges with the EI supply chain?

Diver (Lonza): In recent years, the reliability of supply of materials, as well as the price, have become far less stable, and this has forced customers to re-evaluate the value of the supply chain, including the non-cGMP intermediates or EIs. The unstable supply largely comes from the over-dependence on regional supply of non-cGMP materials and increased regulations to address quality and environmental concerns in the regions that traditionally supply materials.

PTE: Why has there been such an industry trend towards outsourcing of EIs and how has this impacted the supply chain?

Diver (Lonza): Over the past 15 years, Western producers have largely focused on downstream cGMP manufacturing while raw materials and non-cGMP intermediate production have shifted towards the East, into China particularly. In the late 1990s and early 2000s, Chinese producers invested in chemical capacity that produced materials at very low costs. This additional capacity at lower costs shifted the supply/demand balance significantly, provided tremendous excess capacity, and made it difficult for Western producers to compete based on price. The dependence on regional Eastern suppliers has been widely accepted and utilized until recently. 

However, due to shifts in the supply of materials, closures of significant capacity, and considerably higher pricing, the supply of EIs has shifted. As security of supply is driving the decisions around these materials, and price is not as strong as a driver, companies are broadening their horizon related to the source of supply. Today we are seeing companies working more broadly with Western producers.


Downstream consequences

PTE: What are the potential ramifications later in the chain if EI batches are found to be of poor or inconsistent quality?


Diver (Lonza): The implications of poor or inconsistent quality EIs are severe, as the downstream quality of advanced intermediates, API, and drug product could easily be impacted. It is critical that EIs be manufactured with a well-defined process, and with changes closely monitored and controlled. The impurities from these EIs can very easily make their way to the end product. 

A recent example of this is seen in the need to recall many sartan products in Europe, as well as the United States, due to impurities from an EI. In addition, correcting these quality-related problems can cost a lot of money, time, and most importantly, supply of life-saving medicines to patients. Speaking generally, when products are recalled due to the API being contaminated at one site, overreliance on a small set of producers can lead to supply shortages. In more extreme cases, such as if one site is the single source of a drug, a global shortage of a drug could occur.

Embrace the ‘value chain’

PTE: How can manufacturers improve the security and quality of EI supply?

Diver (Lonza): Embracing the supply chain as a ‘value chain’ can help ensure robustness, quality, sustainability, and innovation of API supply. Total cost of ownership philosophies need to include the EIs to address the security of the value chain.

Companies can benefit from engaging suppliers with assets for cGMP production as well as non-cGMP materials. Going beyond the traditional Eastern region and engaging with Western partners, such as those in Europe, with deep experience in quality management systems, technology, manufacturing, and innovation for the pharmaceutical industry can increase quality systemically and provide the manufacturing and delivery services needed to ensure uninterrupted supply and availability of critical medicines for patients. The right suppliers can enhance the value chain by engaging the appropriate technologies in the appropriate facilities that drive compliance and competitiveness. 

Regulatory impacts

PTE: In Europe, we are seeing a drive to improve supply chain security through the falsified medicines directive (FMD). Has this revised regulation impacted companies’ decisions on procurement of ingredients, in your opinion?

Diver (Lonza): The FMD has created a more rigorous system to protect and regulate the supply chain, manufacturing process, and delivery of medicines. In essence, the directive will influence companies to continue to seek data-rich and technology-driven solutions that optimize, streamline, and unlock value within their supply chains, starting from the very initial upstream phases including extraction and procurement of ingredients.

PTE: Are there other regulatory challenges impacting the supply of EIs?

Diver (Lonza): Enhanced approaches to environment, health, and safety (EHS) regulations has weakened the value of the supply chain as costs have risen in certain regions. In China, increasingly rigorous EHS requirements and substantial environmental taxes have put pressure on manufacturing facilities and even shut down a number of them due to poor environmental conditions. With such a reliance on supply of materials from China, customers’ supply chains have seen substantial price increases or have been left with no qualified suppliers of non-cGMP materials due to environmental regulatory requirements. This is why European and US suppliers are now being reconsidered for supply of these materials as rigorous EHS programmes have been in place and proven for many years.


Looking to the future

PTE: Over the coming five to 10 years, what may we expect to see trending, in terms of the EI supply chain?

Diver (Lonza): The unstable supply of EIs and new regulations will require pharmaceutical companies to transition from a supply chain mindset to that of a value chain, where companies can extract and unlock value-such as data, increased quality protection, and responsiveness-from every facet. Additionally, the Western chemical capacity must re-emphasize upstream manufacturing and invest in local assets, or their own assets, to better distribute the global supply of APIs, and intermediates to stabilize sustainability, cost, and quality of supply.

In summary, the industry has seemed to learn a lesson that being overly dependent on one region for global supply has serious risk. Pharmaceutical supply chains seem to be thinking about region-by-region strategies as well as global ones, and find tremendous value in it. In the future, look for supply of materials to come from sources that have a culture of compliance, innovation, and efficiency. The supply of these EIs will be treated more strategically than they have been over the last era. 


1. Lonza, “Lonza Launches Early-Intermediates Supply Initiative for Small-Molecule APIs,” Press Release, 14 Sept. 2018. 

Article Details

Pharmaceutical Technology Europe
Vol. 31, No. 6
June 2019
Pages: 40–41


When referring to this article, please cite it as F. Thomas, “Filling the Early Intermediate Security Gap,” Pharmaceutical Technology Europe 31 (6) 2019.