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Rapid change towards industry developing and manufacturing niche APIs is leading to smaller-scale facilities that offer higher containment and flexibility.
Multiple factors are driving growth in the API market. According to market analysis, an increase in the adoption of biologics, rise of high-potency ingredients, blockbuster patent expiration, and an ageing population are some of the influencers to the API market expansion (1).
To find out more about the evolution of APIs, how industry shifts have impacted pharma companies and supply chains, as well as potential trends for the sector in the coming years, Pharmaceutical Technology Europe spoke with James Lawler, head of quality at C2 Pharma.
PTE: Could you describe the evolution of APIs in the pharma industry over the past three decades?
Lawler (C2 Pharma): The evolution of APIs has been extraordinary in terms of the number and volumes produced. Most of this period was dominated with large-volume, blockbuster drugs, and many large API facilities were built exclusively for production of these ingredients at multi-ton scales. As many of these APIs came off-patent, the market prices dropped dramatically, and production shifted to Asia where manufacturing costs are much lower.
During the past decade, there has been a rapid change towards the development and manufacturing of niche APIs, which are more potent and are required in different volumes than the blockbusters of the past. The more potent the API is, the less amount is required for the product, and the higher the market price and profitability. This has caused a shift towards building small-scale facilities with higher containment and flexibility requirements.
PTE: What implications have these hard-to-source products had on pharma companies and the respective supply chains?
Lawler (C2 Pharma): As facilities transition and supply chains shift globally, there has been a marked rise in drug shortages and quality issues. In some cases, manufacturers simply could not get access to a critical API reliably, whereas in others, they could get access, but the quality was not acceptable.
When these blockbusters fell off patent, prices dropped and generic competition rose, causing many of manufacturers from the United States and European Union to stop making certain APIs, and creating a gap in the supply chain. Then as production transitioned to Asia, there was a drastic increase in quality issues of various kinds. In some cases, Asian API sources did not meet pharmaceutical-grade standards and products with less purity from other industry applications were falsely sold as pharmaceutical-grade. In other instances, facilities were lacking from cleanliness, containment, and suffering from contamination issues. And in the worst cases, documentation and products have even been fully falsified, causing great unrest in the industry. Based on these occurrences, across the industry a hesitance to work with Asian suppliers has grown. This was intensified as many Asian production facilities continued to receive warning letters and import alerts, and multiple recalls were issued.
No doubt, demand for cheaper medicines are partly responsible for fuelling these shortages, but federal regulations have also hindered the progress of API development and production with conflicting demand for low production costs and market pricing. Manufacturers have had little support to meet these demands, forcing them to turn in directions they may not have in the past, even while these same government-funded regulatory agencies are continually identifying and citing poor quality standards within the available options.
The reality is that programmes need to be supported at both a country and global level to ensure quality, reliability, and transparency of the pharmaceutical supply chain globally.
PTE: In your opinion, what do you see as being the major trends in APIs for the pharma industry for the coming decade?
Lawler (C2 Pharma): While large-volume APIs for the maintenance of daily conditions (such as hypertension, regulation of cholesterol, acid reflux, etc.) will continue to be important, their demand is expected to decrease over time. This is being driven by US and EU focus on preventing and/or managing conditions with lifestyle changes such as diet, fitness, and weight management. And even in cases where these medicines are still necessary, many of these groups are now avoiding generic medications and preferring to pay for the branded product or a niche product, especially if it has a natural source or input.
While Big Pharma continues to respond to this evolution by moving away from multi-ton blockbusters to lower-volume, higher-potency, and niche APIs, we have also seen an evolution of pharma towards biotech with a drive towards combination, personalized, and cell and gene therapies. And though these types of drugs are much more specific and effective, they are also much more expensive to produce, transport, distribute, and store.
Over the coming years we expect to see more growth in the development and manufacture of niche APIs, and a continued strategic split as many Big Pharma companies focus on these ‘next-generation’ medicines and abandon conventional chemical API treatments. However, this trend cannot continue forever. The fact remains that the world’s population continues to grow and age rapidly, and biotech cannot cure everything. APIs will always have a place in the medicines market.
1. Research and Markets, “Active Pharmaceutical Ingredients (API) Global Market-Forecast to 2025,” Report, May 2019.
Pharmaceutical Technology Europe
Vol. 31, No. 8
When referring to this article, please cite it as F. Thomas, “Niche APIs By Popular Demand,” Pharmaceutical Technology Europe 31 (8) 2019.