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Small Pharma Steps Up

Here’s some good news, courtesy of DCAT Value Chain Insights:

“Smaller bio/pharmaceutical companies are accounting for an increasingly larger portion of new products as measured by recent new molecular entity approvals.”

The list of companies presented in the article reads like a Who’s Who of company names you might not even know. But they represent a groundswell of change happening in the industry.

Ironically enough, last month we published a post on blockbuster drugs, the lifeblood of Big Pharma (Blockbuster Drugs Hang On: Is a Post-Blockbuster World in Sight Yet?). And while billion-dollar blockbuster drugs are certainly not dead (or going away anytime soon), the constant stream of new small and virtual pharma companies is certainly a sign of a healthy drug industry.

According to the article, “The rise in product innovation from smaller companies comes as R&D productivity from larger bio/pharmaceutical companies declines.” More telling, however, is the data showing that small pharma companies now dominate drug innovation. An article at PharmaVoice also pointed this out last year:

“A report by HBM partners showcases this trend by tracking the NMEs that were originally developed by small, mid-sized, and big pharma companies. In 2009, small pharma was responsible for discovering 31% of NMEs; now jump to 2018, when 64% of all NME approvals originated from small pharma, a 103% increase over 2009.”

That smaller pharma companies have been hotbeds of innovation isn’t a surprise. What is different is the continuing shift in commercialization strategy. Not too long ago, Big (or at least larger) Pharma would be the partner-of-choice to help push a compound over the finish line and onto pharmacy shelves.

The recent data explored in the DCAT article, however, shows that more and more innovator drug developers are choosing to commercialize compounds themselves – albeit typically using a contract manufacturing partner with the requisite chemistry or biologic experience needed to get to scale.

This is a good thing for any number of reasons. From a purely self-motivated perspective, the growth of our Contract Manufacturing Services line of business over the last few years supports this apparent trend. Despite calls around the world clamoring for ‘reshoring’ and ‘onshoring,’ (including here in India), more attention is focused on the realistic supply chain security objectives of backward integration, supplier diversification, or geographical sourcing. For vigilant and proactive bulk suppliers, CMOs and CDMOs, the opportunities seem quite positive.

But more importantly, it is beneficial to the entire industry.

Big Pharma will be able to identify acquisition targets from a larger pool of drug discoverers and developers (though approved drugs will undoubtedly make them costlier targets).

Small and virtual pharma firms – the innovators – will benefit from the presence of similar-stage firms. From collaborative partnerships or innovation hubs to access to capital, innovation begets innovation. Which – in the pharma space – ultimately begets better human health.

Improving human health, of course, is one of the strengths of small and virtual pharma. They are more likely to tackle orphan indications and rare diseases, foregoing their spot at the blockbuster trough to solve some of the overlooked critical health challenges.

Why You Need to Have the ‘Supply Chain’ Conversation with Your Pharma Suppliers

Supply chain security has been the subject of numerous posts on this blog in the past. It is important to note, however, that the pandemic hasn’t widely impacted global supply chains, per se.  Rather, short-term interruptions intensified scrutiny of an issue that had previously sailed under the radar for much of the pharma industry. In fairness, many have historically viewed supply chain resiliency as a distraction – an additional cost to offset potential negative consequences for bottom lines.

While that viewpoint may endure, most in the industry now consider supply chain security a necessity. In previous posts, we’ve discussed Neuland’s ongoing backward integration efforts, the acquisition and commercial launch of a new manufacturing facility (Unit III), and some of the challenges with current supply chains. In this post, we’ll share some of our supply chain experiences during the pandemic, and look at steps we’re taking (or have taken) to ensure continuity of supply for our API customers.

The Localized Impact of COVID-19 on Supply

While COVID may not have much of a long-lasting impact on global drug supply chains, there have certainly been some bumps in the road. The recent massive case wave in India, for example, impacted operations at numerous companies – including some of our own suppliers.

For example, one manufacturer in Vizag had sudden surge in COVID cases, which threatened our supply. We immediately arranged supplies from our alternate vendor to keep our lines running. The manufacturer recovered within 15 days and has recommenced supplies, but it highlights the importance of having alternate suppliers available and ready to fill any gaps.

In another instance, when oxygen supplies dwindled across India as cases rose, a manufacturer of liquid nitrogen converted all of their transport capacity into liquid oxygen tankers. Neuland contracted with an alternative Telengana-based supplier to continue running our plants without interruption.

These kinds of supply chain interruptions led us to develop a structured process in which we continuously maintain contact with our supply chain partners. This has been particularly useful in conversations with our KSM and Intermediate suppliers, allowing us to have transparency and head off supply challenges before they can impact operations.

With other suppliers, we send out mailers and text messages to maintain an open line of communication. These procedures allow us to react quickly if an issue arises.

Focusing on Core Competencies

At Neuland, we continuously monitor the manufacturing steps of our compounds. One aspect we pay particular attention to is whether a particular element of reaction chemistry falls within our core competency. In some cases, this offers the opportunity for us to outsource non-critical steps in a reaction.

Such a step is often taken due to considerations of plant occupancy owing to long reaction cycles and the scalability of certain processes. In many cases, outsourcing non-critical synthesis steps can ensure faster turnaround times, meaning timelier delivery.

Our overriding consideration is to focus on our core competencies and maximize value delivery to our customers.  In one recent case, we outsourced 3 synthesis steps of an API to two competent supply chain partners. This meant we were able to reduce the cycle time as well as the cost of the API to our customer.

Looking Six Months into the Future

Neuland follows a robust monthly SOP procedure which gives us six months of visibility into our Manufacturing & Procurement supply chain operations. The process involves a daily morning standup call of all key personnel which reviews:

  • orders received
  • production outages (if any)
  • COVID-related escalations
  • customer expediting requests
  • any other issues that have arisen.

This working group is fully empowered to make critical, on-the-spot decisions, as needed. When spikes or dips in demand occur during the monthly cycle, issues may be escalated. All key customer products and service levels are covered as a part of this daily review.

Addressing Complex Supply Chain Challenges

Cold chain logistics has become top-of-mind in the wake of the mRNA vaccines. But cold chain was already a critical aspect for the drug industry. It has been reported that cold chain logistics accounted for more than 26% of the pharmaceutical industry in 2019 – and it continues to grow due to increasingly complex molecules and the rise of biologics.

Increasingly complex drug compounds have led to complicated supply chain attributes. Cold chain logistics has become top-of-mind in the wake of the mRNA vaccines. But cold chain was already a critical aspect for the drug industry. It has been reported that cold chain logistics accounted for more than 26% of the pharmaceutical industry in 2019 – and it continues to grow due to increasingly complex molecules and the rise of biologics.

Cold chain logistics may have become more necessary, but it also increases the risk of non-conformance in the supply chain. At Neuland, we’ve partnered with two logistics companies who are certified for Good Distribution Practices (GDP) and are considered among the best in the trade. In the past few years, we’ve avoided temperature outages in our commercial cold chain shipments and have had no products fall out of conformance.

In today’s global business environment, it is essential to have a secure supply chain which can provide consistent quality and prompt delivery without interruption. The pandemic has strained some aspects of the supply chain, emphasizing the importance of keeping a watchful eye on every aspect of the process. Where vendor qualification was once a task performed periodically, companies today must be constantly vigilant, paying close attention to their suppliers and ensuring they are ready to pivot instantly to address potential issues.

Ready to learn more about how Neuland can protect your API supply Contact us today.

Blockbuster Drugs Hang On: Is a Post-Blockbuster World in Sight Yet?

“Blockbuster” drugs — typically defined as those that generate annual sales of $1 billion or more — have been the lifeblood of Big Pharma company revenues since Smith, Kline and French’s Tagamet became the world’s first blockbuster in 1986. “Blockbuster” drugs — typically defined as those that generate annual sales of $1 billion or more — have been the lifeblood of Big Pharma company revenues since Smith, Kline and French’s Tagamet became the world’s first blockbuster in 1986.

But other, non-blockbuster therapeutics are on the rise, largely due to simplified or advantageous regulatory pathways and the rise of precision medicine. These include orphan drugs, gene therapy, immune system solutions, oncology therapies, CAR-T, CRISPR-based therapeutics, and others.

With so many emerging alternatives, there’s been much speculation about the pharma industry entering a “post-blockbuster” world. But does the evidence support it? To find out, we took a look at the current state of blockbuster drugs today.

Blockbusters are big business

A glance at any major pharma company’s bottom line makes it easy to understand the impact of blockbuster drugs. Simply put: they generate a significant chunk of revenue. While $1 billion in revenue per year is the price of admission to the blockbuster club, they can generate much more — over $100 billion in lifetime sales for some of the biggest winners. Pfizer’s cholesterol-fighting medication Lipitor, for example, had lifetime sales exceeding $150 billion in 2018, and AbbVie’s Humira approached $110 billion in that same year.

Blockbuster drugs are the cornerstones of many pharma companies’ portfolios. In 2019, for example, just three drugs — Eliquis, Opdivo, and Revlimid — accounted for 63 percent of Bristol Myers Squibb’s annual revenue, according to data reported by Pharma Manufacturing. Small wonder, then that blockbuster drugs are the cornerstones of many pharma companies’ portfolios. In 2019, for example, just three drugs — Eliquis, Opdivo, and Revlimid — accounted for 63 percent of Bristol Myers Squibb’s annual revenue, according to data reported by Pharma Manufacturing.

That’s one reason why pharma market watchers like InvestorPlace pay close attention to the rise and fall of blockbuster drugs. Since just one big success can send the stock price of a smaller company skyrocketing, investors have an interest in up-and-coming players with the potential to make blockbuster-class breakthroughs.

The flip side, however, is that larger pharma firms need a regular succession of blockbuster drugs to keep prices stable. These new champions are needed to replace formerly-profitable drugs that fall off the “patent cliff” and become fair game for the makers of generics.

Some of the biggest blockbusters on the market today include:

  • Humira — Literally the best-selling medication in the world, AbbVie’s Humira is an immunosuppressive used to treat arthritis, psoriasis, Crohn’s disease, colitis and other conditions. At its most recent height in 2018, the drug generated $19.9 billion. Last year it nearly matched that record, bringing in $19.8 billion in 2020. The days of this industry powerhouse may be numbered, however, despite patent deals that will keep it out of the hands of biosimilar manufacturers until 2023.
  • Keytruda — Though estimates of its potential vary, Merck’s cancer immunotherapy drug is widely seen as Humira’s heir apparent. According to Endpoints News, Keytruda is on track to become the top-selling drug by 2024, with analysts’ annual revenue forecasts ranging from $17 to $22.2 billion.
  • Revlimid — This blood cancer drug, recently acquired by Bristol Meyers Squibb, reportedly raked in $12.1 billion in 2020 according to Fierce Pharma. The drug has faced recent patent challenges however, held at bay only by a settlement with an Indian generics company, Dr. Reddy’s Laboratories. The agreement will allow Dr. Reddy’s to start chipping into Revlimid’s profits in as-yet unspecified quantities after March of 2022, with all limits expiring at the end of January, 2026.

Despite the disruptions of the COVID-19 pandemic, the pharma industry hasn’t been idle as some of the biggest blockbuster drugs in history enter their twilight years. Many other once-profitable drugs face US patent expirations in the near future. One is Lucentis, a macular degeneration drug from Roche which loses patent protection later this year, but is already slipping as a result of competition from Beovu, launched by Novartis in late 2019. This decline comes on the heels of two other big hits for Roche — Avastin and Rituxan — best-sellers that started facing generic competition in 2019.

New contenders

Despite the disruptions of the COVID-19 pandemic, the pharma industry hasn’t been idle as some of the biggest blockbuster drugs in history enter their twilight years. According to Evaluate Vantage projections reported by DCAT Value Chain Insights, the US Food and Drug Administration is expected to approve at least ten new biologic and small molecule drugs for launch in 2021 that have the potential to hit blockbuster status in the next five years.

Topping the list are Aducanumab, an Alzheimer’s drug from Biogen/Eisai (estimated 2026 sales: $4.8 billion); Argenx’s autoimmune disease biologic Efgartigimod ($2.5 billion); and Mavacamten, a Cardiac myosin inhibitor for cardiomyopathy from Bristol Myers Squibb ($2 billion).

Will blockbusters stay on top?

Based on current trends, there’s no sign that major pharma companies see an end to the dominance of blockbuster drugs any time in the near future. Significant investments are being pumped into R&D efforts to develop new drugs with blockbuster potential, as well as legal efforts to extend the protected status of existing winners.

All this activity suggests that blockbuster drugs will continue to be an industry focus for some time — unless one of the up-and-coming treatment modalities suddenly presents a more lucrative business model.

Atmanirbhar Bharat and PLI: A Future From the Past

Setting aside the sometimes-fraught-but-often-beneficial relationship, however, Atmanirbhar Bharat – and more notably the PLI scheme – has the potential to greatly influence the development of India’s expanding pharmaceutical sector. It is difficult to discuss India’s ‘Make in India’ plan without reference to China, and any discussion of India-China relations ultimately leads to a political – rather than economic or scientific – discussion of relations between our two nations.

Setting aside the sometimes-fraught-but-often-beneficial relationship, however, Atmanirbhar Bharat – and more notably the PLI scheme – has the potential to greatly influence the development of India’s expanding pharmaceutical sector.

Atmanirbhar Bharat seeks to realize one of the principal goals of the Father of India, Mahatma Gandhi – namely, a self-reliant India. Just a few years ago (in the golden age of global trade and protracted supply chains), the concept of trade self-reliance would have been interpreted as some form of economic nationalism rather than supply chain security. Post-pandemic, however, ‘economic self-reliance’ looks downright prophetic.

Atmanirbhar Bharat, of course, was not intended to be a wholly protectionist measure, but rather a series of economic development steps to improve India’s competitiveness in the global economy. One of the chief motivations for developing India-centric industries is our growing dependence on China. Consider:

  • India has a $54 billion trade deficit with China.
  • Indian industry relies heavily on Chinese supplies.
  • India’s largest drug companies obtain 70% of their APIs (active
    pharmaceutical ingredients) from China.
  • The pharma sector imported nearly $3.5 billion worth bulk drugs/drug intermediates in 2019, 67% of which was from China.

• India’s largest drug companies obtain 70% of their APIs (active pharmaceutical ingredients) from China.

Setting aside the issues of supply disruption, pandemics and cross-border disputes, Indian manufacturers have become dependent on low Chinese prices to maintain competitiveness. This is true of the pharma sector among many others.

“Make in India” – Seeding Innovation
One of the key initiatives established under Atmanirbhar Bharat has been the Output LinkedIn Incentive (PLI) scheme. In the pharma industry, the program aims to create 3 API parks with shared utilities to reduce dependency on the foreign manufacture of 53 APIs.

While Neuland is not a direct beneficiary of the PLI scheme as it is currently structured, there are ensuing benefits to pharma manufacturers like us. While Neuland is not a direct beneficiary of the PLI scheme as it is currently structured, there are ensuing benefits to pharma manufacturers like us. In fact, measuring the value of such programs at the individual company level only tells a very localized story of how one company benefits, or how one single community benefits in terms of job and disposable income creation.

When examined more broadly as an industry, the value of such programs and government support is better understood. While the rise of one well-funded or supported company may help strengthen a specific community, the advancement of an entire industrial sector helps strengthen a nation.

India, of course, already has a robust generic drug sector – the largest in the world, and a position it has held for many years. According to Global Business Reports:

“The generic drugs industry continues to strengthen itself as a key pillar of India’s burgeoning economy. As the largest provider of generics in the world, the sector contributes to 40% of the United States’ generic demand with Indian companies receiving 304 Abbreviated New Drug Application approvals from the United States Food and Drug Administration (USFDA) in 2017. Moreover, the industry exports to almost every nation, and has significant footprints in all the highly-regulated developed markets.”

The PLI Spillover Effect
The PLI scheme and other initiatives look to strengthen the generics position, but also target India’s growing innovator drug and biopharmaceutical sectors. The creation of hubs, as intended with the API parks outlined in PLI, attract startups, investors and allied companies, creating centers of excellence.

Hyderabad, where Neuland is based, is an excellent example of this concentration of resources – having earned the title ‘Cyberabad’ in relation to its strong base in the information technology sector. Likewise, it has been labelled India’s Genome Valley given its dominant position in India’s drug industry. What began as public sector undertakings 50+ years ago have since created centers of excellence in these two sectors.

From Generic to NMEs
Over the last 25 years, nearly every year has given us an opportunity to say: “this is an exciting time to be in pharma.” Case in point: even two years ago, it would have been difficult to imagine accelerating discovery and commercialization efforts to where we would treat a pandemic with multiple purpose-built vaccines in less than 12 months.

Aside from the science side of pharma, this excitement has been mirrored on the business side. When India joined the WTO in 1995, combined industry exports were under $600 million per year. Pre-pandemic, exports amounted to more than $20 billion per year, India had become the world’s largest producer of generic drugs and was the world’s 3rd largest producer (by volume) of drugs. In 2018, Indian drug companies accounted for 35-40% of the FDA’s 971 approvals.

This is astounding growth by any measure, and recent government initiatives such as ‘Make in India’ are expected to further strengthen the industry as attention in India expands from generics into NMEs (New Molecular Entities, or ‘innovator’ drugs) and biopharmaceuticals.

Historically, government grants and private equity investment in India has lagged behind other industrial nations. Given the sky-high expense and exceptionally long timeframes typical of drug discovery, development and commercialization, government efforts to stimulate growth in the sector are appropriate and welcome.

Generic Drug Opportunities in Global Markets

Generic drugs have moved quickly over the last 30 years into a position of dominance in drug markets around the world.

In 2018, generic drug savings totaled $293 billion in the U.S. based on 4 billion generic prescriptions (90% of all dispensed prescriptions). This yields a 10-year savings of about $2 trillion.

While some countries have historically been slower than others to embrace generics, things are changing.

A big part of the change comes courtesy of COVID, of course, which reminded us that supply chains aren’t perfect. The result among numerous governments has been an increasingly laser-like focus on moving at least some portion of the supply chain onshore to reduce supply disruption risks and (in some cases) implement price controls on specific medications.

Generic Drug Acceptance Around the World

One example is Latin America. The region bears watching, as Latin American nations continue to build research and development capabilities to produce biologics with expired patents. From the small molecule perspective, we’ve witnessed this ourselves. Over the last 12 to 18 months, Neuland has seen a noticeable upswing in interest for drug substances from a wider range of Latin American pharmaceutical companies.

Some regions (e.g., sub-Saharan Africa) continue to fight against generics skepticism. Often, cultural resistance can be traced to underlying structural issues, such as organizations undermining the credibility of generics for economic reasons, a lack of incentive to prescribe (or dispense) generics, or the absence of regulatory or health authorities to enforce product standards.

In Africa, it isn’t all bad news, by any stretch. Africa’s population boom has seen a fast-growing aging population likely to experience increased prevalence of age-related health issues:

“In addition, the growing middle class has more disposable income than earlier, leading to changing lifestyle patterns. This brings on its own set of problems. There is increased danger of heart-related diseases, high obesity rates and other lifestyle-related illnesses. In this respect, Africa is fast catching up with the West. Yet, its tropical climate makes it host to a large number of infectious diseases such as malaria, tuberculosis, polio, meningitis, cholera, yellow fever and hepatitis to name a few…Hence in the coming years there will be significant demand for generic drugs and medicines in Africa.”

It isn’t necessary, however, to travel far afield to find different approaches to generics. Europe, as a whole, is an excellent case in point:

“[T]he attitude of physicians and pharmacists towards generics still varies a lot worldwide, even between Northern and Southern European countries. In the Nordic countries trust in the quality of generics is higher than that in the Southern countries, with concerns only over their taste, packaging and appearance, since this may affect patients’ understanding and acceptance.”

Asia-Pacific has been a different tale of generics adoption. In spite of the significant structural differences in healthcare systems across the region, there is widespread use of incentives to increase the use of generic drugs to achieve cost optimization targets. 

KPMG: Generic Medications and Asia-Pacific Health SystemsWhen it comes to generic medicine market penetration (see KPMG chart, right), there remains a great deal of disparity.

As mentioned above, legislation has played a major role in generics adoption in some countries. The most obvious example is the Hatch-Waxman Act, which paved the way in the U.S. for a wave of generics that now dominate 90% of the volume of the U.S. market (up from 63% in 2008), but other countries have launched similar initiatives.

What Does the Future Hold for Generics?

Some experts have pointed to a shift in dosage form as a key opportunity for generics. Oral generic drugs (e.g., capsules and tablets) remain the largest segment by far – representing a majority of the total market share. But other dosage forms are gaining ground, as economical drug delivery technologies in the injectables and topical segments improve. For example, the relatively youthful generic injectables market is projected to experience 3X growth over the next decade.

Continued margin pressures remain a restraint on the segment’s growth, as the gross margins of generic medicines have been tightening for years. The global average gross margin of generic drugs has been in a decreasing trend for years (for example, it fell from an average of 45.19% in 2011 to 43.56% in 2015). This trend is projected to continue.

Here are 4 other key factors affecting generic drug adoption:

  • Patent Cliff
    While we may be a few years past the steepest portion of the patent cliff (approx. 2008-12), it continues to pose a key threat to some drug company pipelines. Plenty of cliffhangers still remain. 36 drugs face patent expiration and generic entry in 2021-2022. And the number of blockbusters going off patent will increase in the coming years according to KPMG:

  • Cardiovascular Disease
    Cardiovascular disease, including coronary artery disease (CAD, or coronary heart disease – CHD), cerebrovascular disease, peripheral artery disease (PAD), and aortic atherosclerosis represents the single biggest disease segment of generic medications.A study published last year in the Journal of the American Heart Association reported in a study of 12 cardiovascular disease/hypertension medications:

“The average availability of the select medications was 54% in low‐ and lower‐middle‐income countries and 60% in high‐ and upper‐middle‐income countries, and was higher for generic (61%) than brand medicines (41%). The average patient median price ratio was 80.3 for brand and 16.7 for generic medicines and was higher for patients in low‐ and lower‐middle‐income countries compared with high‐ and upper‐middle‐income countries across all medicine categories. Affordability was lower in low‐ and lower‐middle‐income countries than high‐ and upper‐middle‐income countries for both brand and generic medications.”

The key takeaway is that medicines to treat cardiovascular disease suffer from low availability and high costs, especially in low‐ and sub‐middle‐income countries.\

  • Domestic Capacity Expansion in Underserved Regions
    The expansion of global drug manufacturing to regions like sub-Saharan Africa, MENA or South America will continue, and generics will undoubtedly continue to increase market share by volume. The growth ramp is likely to be:
      1. shorter in countries which are seeking to onshore (or reshore) drug substance manufacturing to strengthen their domestic supply chains, and incentivize emerging industry.
      2. longer in nations or regions where generic drug skepticism remains high and little government action has or will be taken to manage drug pricing, quality or availability.
  • Regulatory Harmonization
    One factor which will play a key role in generic medicine penetration is regulatory harmonization, and the degree to which GMP standards will continue to converge into a widely-accepted single global standard. The 2019 agreement between the FDA and the EMA is one such example, easing the way for manufacturers who operate in both markets (U.S. and E.U.) with a more unified approach to regulation.

The generic drug industry is driven by many stakeholders. Consumers demanding low-cost alternatives to expensive brand-name drugs are a key driver. In countries with mature generic markets, acceptance of generic medications is high. Populations in nations which lack robust healthcare and regulatory infrastructure exhibit higher degrees of distrust towards generics, though such resistance continues to decline. As supply chains become more ‘local’ around the world, robust quality assurance systems are put in place, and advocacy/education & price control/incentive programs are leveraged, generics adoption will only further increase.

API Production: Building a Process Safety Culture

It is important to distinguish between occupational and process safety hazards. Personal or occupational hazards resulting in injuries like slips, trips, falls and cuts impact one individual in a workplace. Process safety hazards, however, may result in major accidents such as fires and explosions or involve the release of dangerous materials. Working in the pharmaceutical manufacturing industry may bring many rewards, but it also has an element of risk. We often work alongside hazardous chemicals, in both labs and manufacturing spaces. Some in the industry operate with (or in proximity to) heavy equipment and industrial machinery.

For those in harm’s way, the Environment, Health & Safety (EHS) group is arguably one of the most important teams in a pharma plant. The EHS team coordinates all safety program components, including occupational safety, plant safety, process safety and more.

It is important to distinguish between occupational and process safety hazards. Personal or occupational hazards resulting in injuries like slips, trips, falls and cuts impact one individual in a workplace. Process safety hazards, however, may result in major accidents such as fires and explosions or involve the release of dangerous materials. These potentially severe incidents can have catastrophic effects resulting in multiple injuries and fatalities. Process safety hazards pose a threat not only to workers inside a plant, but also to the nearby public.

Among the various areas of EHS responsibility, the process safety group is responsible for minimizing the risks that come with handling chemicals. Their key task? Running tests to identify potentially hazardous reactions and developing the steps necessary to control the release of hazardous material and energy from process operations.

Managing the Increased Risk of Hazardous Reactions During Scale-Up

In any situation where chemicals are being used, there is a risk. In pharmaceutical manufacturing, that risk increases exponentially during scale-up from the lab bench to commercial scales. When higher quantities of chemicals are used, the chance for a reaction is much greater. Challenges which arise during scaling typically involve heat-loss behavior, which can elevate pressure or create heat-related safety issues. The principal factor in determining severity is the energy present in the chemical process, which is directly related to the quantities of chemicals in use. The effects of scale-up – namely, from laboratory or pilot to full commercial scale – has a significant impact on the balance between heat generation and heat loss.

Performing a proper process safety assessment is required for any chemical process to be executed at volume. At scale, hazardous reactions can have severe consequences – whether it is an operator injury, facility or equipment damage, or the loss of time to meet deadlines. In some cases, process safety failures may lead to financial loss and a tarnished corporate reputation. Performing a proper process safety assessment is required for any chemical process to be executed at volume. At scale, hazardous reactions can have severe consequences – whether it is an operator injury, facility or equipment damage, or the loss of time to meet deadlines. In some cases, process safety failures may lead to financial loss and a tarnished corporate reputation.

In the worst-case scenario, there can be significant loss of life, such as the 1984 release of methyl isocyanate in Bhopal where thousands of people died, or the effects on plants and humans from long-term exposure to dioxins at Love Canal in New York. Process safety focuses on ensuring that no organization or community need endure such an incident.

How Important is Process Safety?

According to the authors of the Organic Process Research & Development article (Process Safety in the Pharmaceutical Industry—Part I: Thermal and Reaction Hazard Evaluation Processes and Techniques):

“The most seasoned practitioners of process chemistry and engineering would agree that safety is of paramount importance in running on scale and cannot take a back seat to any other process characteristics.”

We agree, and that’s why we have created a culture of “safety first, quality always.” This philosophy is part of ‘The Neuland Way.’ We are a quality-conscious and value-based company committed to making a difference in people’s lives – which means safety always comes first for our team and our customers.

Begin with a Trained and Experienced Team Running Safety Tests

All chemical accidents are preventable, provided enough is known about the process details and the science. For this reason, the process safety team is always comprised of a highly trained staff with deep knowledge of chemistry. Neuland’s process safety personnel are scientists who understand the details of the process in question and have a holistic awareness of manufacturing at scale.

To safely execute a chemical process, the process safety lab (PSL) performs a series of tests which offer a predictive analysis of the following:

  • Pressure build-up and energy liberated
  • Exotherms
  • Onset temperatures and criticality classes 1 through 5
  • Static charge
  • Flammability
  • Physical and chemical properties of the material being used and produced
  • Anything else related to OHC 1-5

The results of these tests lead the team to make suggestions for the next steps. That could mean moving forward as planned, or it could mean making adjustments to meet safety protocols. The PSL remains constantly alert to any process changes, examining processes and running tests as needed.

Tests, of course, are a big part of what the process safety team does. But this begs the question – how much safety analysis is enough?

We rely on the team’s expertise to help make the right decision of what constitutes sufficient analysis. Based on their experience, they may perform a basic ‘fit-for-purpose’ assessment while prioritizing safety in the beginning stages. However, as the molecule advances into larger batches to meet developmental supplies for Phases 1 through 3, process safety development must shift to developing an efficient, efficacious and reproducible process. As process safety experts, they do whatever it takes to thoroughly understand the potential hazards in both the lab and the plant.

Safety as a Part of Team Culture

The goal of any process safety team is to do the right thing to protect the organization and the wider community. At Neuland, we recognize that safety isn’t just a series of steps we take to avoid disaster. It’s part of our culture, and it preserves the integrity of what we do.

Earth Day 2021: Reinventing Business As Usual

Within the pharmaceutical and biopharmaceutical industries, 2020 has – indeed – caused a rethink of ‘business as usual.’ April 22 is Earth Day and this year’s theme is Restore our Earth. On their website, states “When life around the globe returns to normal, our world cannot return to business-as-usual.”

It’s a powerful message indicating we stand at a crossroads, with different choices available to us on how we reestablish our lives. Do we pick up where we left off in 2019, ignoring 2020? Or do we use this opportunity to re-invent ourselves, our businesses and our communities?

Within the pharmaceutical and biopharmaceutical industries, 2020 has – indeed – caused a rethink of ‘business as usual.’

We’ve seen this across multiple fronts – from never-before-seen levels of collaboration to comprehensive reevaluations of supply chains. We’ve written on both topics – with the former (global collaboration in the fight against SARS-CoV-2) an unheralded, remarkable achievement, and the latter (the elevation of supply chain concerns) all too predictable, in light of worrisome events & trends over the last decade or so.

In the spirit of Earth Day, another ‘rethink’ is warranted. This one doesn’t come out of the blue, but – like supply chains – has slowly (but inevitably) crept into the industry’s consciousness: green chemistry.

Green Chemistry and the Pharma Industry

Green chemistry (‘sustainable chemistry’) concentrates on chemical processes which reduce or (preferably) eliminate entirely the use of hazardous chemicals and reagents, along with the waste they create. Drug manufacturing waste management and pollution control involves a significant amount of technology and infrastructure, such as multi-effect evaporators, vertical thin film dryers and reverse osmosis facilities.

The global pharma industry – like many others – has historically suffered from waste and pollution problems. Even today, drug manufacturing waste generation remains largely unregulated. (At Neuland, our EHS department is tasked with working on exciting initiatives aimed at reducing our ecological footprint – and customer costs.)

Different countries have addressed (or not) this issue in different ways, though it is by no means a problem that has been solved anywhere around the world. Regulations have emerged to mitigate the challenges (again, with different countries and regions doing more – or less). Industry-driven initiatives such as green chemistry and zero liquid discharge (a closed-loop cycle that minimizes or eliminates discharge of any liquid effluent by recycling and treating all wastewater), however, may hold the true keys to more sustainable drug production – driven by business decision-making, rather than via regulation…a change process which ultimately tends to be more effective.

Among pharma, green chemistry has never been particularly trendy, but for those drug manufacturers who have paid attention it is important. In fact, setting aside its earth-friendly, ‘Go Green!’ attributes, it just makes good business sense.


Green chemistry can save companies money. Here are some of the economic and business advantages green chemistry offers, according to the U.S. Environmental Protection Agency (EPA)...Green chemistry can save companies money. Here are some of the economic and business advantages green chemistry offers, according to the U.S. Environmental Protection Agency (EPA):

  • Higher yields for chemical reactions, consuming smaller amounts of feedstock to obtain the same amount of product
  • Fewer synthetic steps, often allowing faster manufacturing of products, increasing plant capacity, and saving energy and water
  • Reduced waste, eliminating costly remediation, hazardous waste disposal, and end-of-the-pipe treatments
  • Better performance so that less product is needed to achieve the same function
  • Reduced use of petroleum products, slowing their depletion and avoiding their hazards and price fluctuations
  • Reduced manufacturing plant size or footprint through increased throughput
  • Improved competitiveness of chemical manufacturers and their customers

We discussed some of the green chemistry practices we apply in a post back in 2014:

“At Neuland, we optimize input materials such as chemicals, solvents, fresh water as well as energy and process conditions in order to minimize environmental impact and health and safety hazards. For example, once an API production process has been developed, we then carry out process improvement initiatives to further maximize efficiency and reduce the impact of waste. All of our treated effluents are recycled to achieve Zero Liquid Discharge status.”

The fact is, green chemistry is not only good for the planet (and ultimately human health), but it is also good for the industry’s bottom line.

The fact is, green chemistry is not only good for the planet (and ultimately human health), but it is also good for the industry’s bottom line.     It is our obligation to recognize that we – as an industry and as individuals – can do better. That we must do better – for our health, for our communities and for humankind. It is our obligation to recognize that we – as an industry and as individuals – can do better. That we must do better – for our health, for our communities and for humankind.

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The Dizzying Confusion of Drug Pricing Regulations

In the U.S., skyrocketing drug prices are as much a hot-button issue as ever, with the nation spending more than $500 billion a year on prescription medicines. In 2019, drug pricing was expected to be a top drug industry issue heading into the New Year. Things changed in 2020. The pharma industry (and the whole world) was…well…slightly distracted.

Drug pricing, however, didn’t just simply disappear as an issue. In the U.S., skyrocketing drug prices are as much a hot-button issue as ever, with the nation spending more than $500 billion a year on prescription medicines.

U.S. spending on drugs may be high, but U.S. use of prescription drugs is not. From a 2019 article at The Conversation:

“[I]t is not like Americans are overly reliant on prescriptions drugs as compared to their European counterparts. Americans use fewer prescription drugs, and when they use them, they are more likely to use cheaper generic versions. Instead the discrepancy can be traced back to the issue plaguing the entirety of the U.S. health care system: prices.”

Policies and proposals to solve abnormally high prices abound. President Trump’s Most Favored Nation model, which would have slashed “drug pricing through a nationwide ‘demonstration program’ based on the lowest price in 22 countries of 50 widely used drugs in Medicare” was recently blocked from implementation. President Biden had previously endorsed different legislation which would “cap drug prices based on an index of six countries, and empower the Secretary of HHS to negotiate for further discounts.”

Is Drug Pricing Regulation Beneficial?
In the cases of the proposals supported by both U.S. Presidents, there is much apprehension over who will end up paying the difference when it comes to regulated pricing.  Concerns that doctors will switch patients to cheaper – and perhaps less effective – drugs swirl around worries that less commonly prescribed drugs may see prices rise to offset the decreases.

Price regulation, however, isn’t all bad. In fact, it can be quite important. One example would be the price of hepatitis C vaccines in the U.S.

A 12-week course of antiviral treatment for hepatitis C – which can eliminate the virus from the body – can cost as much as $84,000. A single Sovaldi pill (one of the hepatitis C antivirals) is reported to cost as much as $1,000. While the introduction of generics or other competing products generally helps drive prices lower, there are still limits on when – and even if – a U.S. health insurer will cover treatment. It has been noted that where drug purchasing power is low, regulation could be helpful – such as in the case of hep C vaccines in the U.S.

There is certainly another side to this model. Where health insurance coverage is in place for a majority of people, increased regulation can be less helpful…and may, in fact, become intrusive or harmful. Over-regulation can stifle industry innovation, and restrain the investment needed to fund drug discovery, development, clinical trials and commercialization.

The U.S. healthcare system has a reputation as a hands-off, high-cost-driven, free enterprise system. But it also illustrates how legislation and regulation can play an important role in furthering drug availability and affordability. There have been numerous programs such as the Orphan Drug Act (itself responsible for bringing hundreds of medicines to the market which otherwise would never have been developed), the Hatch/Waxman Act (which paved the way for much broader availability of generics), and many other initiatives.

The smaller the GDP, the bigger an issue drug pricing is.

Drug pricing is an issue that is magnified in smaller countries. Some nations, and especially those in the third world, struggle with higher prices. One study by the Center for Global Development found that some poor countries pay 20-30X more for basic medicines than others. This included the generic heartburn medicine omeprazole, and the pain reliever acetaminophen (paracetamol). One reason this occurs is safety:

“In many developing countries more expensive brand-name generics are widely used, because people are concerned about unsafe or counterfeit drugs. In the poorest countries, unbranded generics are only 5 percent of the pharmaceutical market by volume—in comparison to the US where unbranded quality-assured generics are 85 percent of the market by volume.”

“A robust market for generic drugs is a core part of an affordable health system. But in way too many countries, generic drug markets are broken and patients are paying the price,” said Kalipso Chalkidou, the director of global health policy at the Center for Global Development and an author of the study. “You need enough competition to keep prices low and quality assurance that consumers trust, or essential medicines are going to be much more expensive than they should be.”
From: New Study Finds Some Poor Countries Paying 20 to 30 Times More for Basic Medicines Than Others

This is the case in India, where branded generics – as opposed to unbranded generics – are widely used. What is the difference between a branded and unbranded generic? According to an article at Pharmacy Times (Branded Generics: Misunderstood, but Lucrative):

“Branded generics are prescription products and are not authorized generics, which are drugs made by or under license from the innovator company and sold without a brand name… IMS Health, which began tracking and reporting on branded generics in 2002, defines the category as including prescription ‘products that are either novel dosage forms of off-patent products produced by a manufacturer that is not the originator of the molecule, or a molecule copy of an off-patent product with a trade name.’ This definition is used by both the FDA and the United Kingdom’s National Health Service (NHS).”

The Challenges and Complexities of Regulating Drug PricesThe Challenges and Complexities of Regulating Drug Prices

A 2019 article by Stan Fleming at Forbes discussed the challenges of regulating drug prices:

“As difficult as compromise will be for an industry that is falling short of sustainable growth, it will also be a challenge for pricing boards. If affordability is the mandate, regardless of how low commissions set prices, they will face pressure to go farther still. Markets steer capital to where the need, and hence the value, is highest. Controls would do the opposite. The higher the medical need and the more patients treated, the greater will be the pressure to reduce prices.”

The bottom line is that drug pricing isn’t a binary issue in which you either support unfettered free market solutions or inflexible, obstructive regulation. There needs to be a middle ground. It’s a complex issue. As Fleming indicates, “Price controls would improve access to existing drugs through lower costs but reduce productive capacity.”

A balance will need to be found that allows for more realistic pricing – especially in those smaller countries which suffer from exponentially more expensive drugs, and in larger nations where certain drugs without competition are priced out of reach. The challenge, as it always is, will be to craft legislation which helps patients while averting negative impacts on the pharma industry…impacts which ultimately trickle down to the very patients such legislation is intended to help. One way to achieve this would entail some degree of regulation of essential lifesaving drugs in developing countries, while de-regulating other drugs generally.

Overcoming the Challenges of API Complexity

Pharmaceutical drug molecules are becoming increasingly complex, posing challenges in formulation development and manufacturing. This is particularly true of small molecule drug APIs and peptides, both of which have a growing tendency towards complexity.

Our approach to these challenges in both cases is to begin with the end objective in mind by applying a variety of capabilities early in the process to support the later stages of drug development. These include:

  • Particle sizing and reduction
  • Process and complex chemistry
  • “Route scouting” to find new synthetic production routs for APIs
  • Reducing complexity
  • Eliminating hazardous or expensive solvents
  • Shortening the production cycle
  • Finding solutions to other technical problems

The importance of this type of process understanding was underscored in an article by Pharma’s Almanac, which argued that it has become central to successful drug synthesis:

“As small molecule APIs become increasingly complex, the development of robust, high-yielding, and cost-effective synthetic routes becomes more challenging. Strategies that emphasize a high level of process understanding facilitate more effective route design and analytical method development.”

In many cases with small molecule drugs, the primary challenge is solubility, which impacts the bioavailability — and thus the efficacy — of the drug. This has been a growing problem for many years as drugs have become increasingly insoluble. Sanjay Konagurthu, senior director of science and innovation, Pharma Services for Thermo Fisher Scientific, summed up the problem in a recent article published by PharmTech:

“Small molecules are still the largest segment of drug development in the industry. Oral and injectables dominate the pharmaceutical pipelines. In terms of oral drug delivery, it is currently estimated that 70–90% of small molecules in the pipelines have solubility and bioavailability challenges. This number has doubled compared to over 10 years ago.”

The article goes on to recommend that outsourcing partners should play a crucial and integral role in formulation strategy. A partner can provide expertise in CMC, technology, and regulatory affairs, or can act as a traditional pharmaceutical R&D department for the sponsor company. In addition, a knowledgeable CMO partner can help bolster product knowledge throughout all phases of a program lifecycle.

As a class, peptides have grown more complex as technologies and methodologies emerge to construct ever-larger chains. Even in their smallest, most simplified forms, peptides have always been a particularly difficult drug class due to challenges with bioavailability.

Despite their many advantages — including lower toxicity, high potency, and high selectivity — they tend to break down quickly, especially in the stomach. This has typically led to them being delivered by injection or infusion, but these alternatives have their own challenges since peptides also degrade rapidly in the bloodstream. The need to use such delivery mechanisms also impedes broader market acceptance.

In the last two decades, however, technology and research have enabled drug manufacturers to realize the full promise of this class by making it possible to synthesize specific peptide chains precisely and cost-effectively. The changes have come about thanks to multiple advances in chemistry, biology, genomics, dosage formulation, combined with rapid shifts in our understanding of human health and exponential improvements in technology (from computational power & informatics to spectrometry, imaging and more).

The result has been a growing use of synthetic peptides in therapeutics, diagnostics, and antibody production. They’re also being used as tools for understanding biological processes.

Confronting API Complexity

Whether due to the solubility challenges mentioned above, the need for increasingly complicated delivery methodologies, the emergence of high-potency compounds or other characteristics of small molecule or large peptide chemistry, pharmaceutical drug discovery and subsequent process development continue to grow in complexity.


Neuland has expertise in both solution phase and solid phase synthesis methodologies. We’ve also developed proprietary technology, a preparative HPLC technique which delivers 10 to 20 times better throughput compared to the standard preparative HPLC technique. These capabilities enable Neuland to offer the highest quality peptide products at competitive rates. Contact us for more details.

Weighing the Potential for APIs and Finished Dosage Forms in Emerging Markets

New markets for drug manufacturers are emerging worldwide in regions that have typically purchased and imported drugs in finished dosage forms. While this shift has been underway for a few years, the focus on drug manufacturing self-reliance has surged in response to supply chain security concerns that came to light during the COVID-19 pandemic.

As a result, global interest in sourcing APIs to manufacture drugs locally is growing. Here’s a quick overview of potential opportunities in key regions.

Sub-Saharan Africa

According to a recent report by McKinsey & Company, most of sub-Saharan Africa currently relies on imports for up to 70-90% of over-the-counter and prescription drugs. The resulting strain on both government and household budgets has many regional leaders considering the promotion of more local production.

Most countries in the region are still at the earliest stages of pharma industry development. Only Kenya, Nigeria, and South Africa have industries of moderate size – and almost all of them source APIs from other manufacturers. This is partly because most countries in the region lack a chemicals sector (and infrastructure) needed for API production, and partly because the cost of locally produced APIs would likely be 10 to 15 percent more expensive than imports – notably from India.

While the report acknowledges many benefits local drug production could bring to the region, development of a local industry is likely to take several decades at least. In the near term, the report suggests that drug-product formulation is the better bet until new technologies lower the costs of producing APIs locally.

Middle East/North Africa (MENA)

Pharma markets in the MENA region vary considerably depending on where you look. An analysis of the region by CHEManager, for example, notes that Saudi Arabia imports 85 percent of pharmaceuticals because of its high spending power and cultural preference for foreign brands. Egypt, by contrast, produces 90 percent of its drugs domestically, with a much larger slice of its market share made up of generics.

Manufacturing and distribution networks are strengthening in the region, especially in Morocco, Tunisia, and Algeria. These are building on already-strong and established markets in Egypt and Israel. CHEManager also stresses the importance of the Gulf Cooperation Council (GCC), a multinational partnership consisting of Bahrain, Oman, Saudi Arabia, Kuwait, the UAE and Qatar, which is working to standardize drug prices and reduce regulatory barriers. Notable among their efforts is a free trade agreement with India. This is likely to increase generic penetration into the Middle East market and grow demand for imported APIs as MENA companies continue to ramp up domestic manufacturing.

Latin America

Latin America’s high-growth economies, rapid urbanization, and aging populations are driving a growing pharmaceutical market. According to Mordor Intelligence, the region’s pharma industry is expected to register a CAGR of 6.8% between 2020 and 2025. Foreign investment from India, the U.S. and Europe are on the rise, thanks to growing domestic drug consumption, low manufacturing costs and government incentives.

Pharma Manufacturing and other industry-watchers consider Brazil one of the most promising pharma markets in the region. This is partly due to its population, which is the sixth largest in the world. Steady growth is another factor — about 7 percent year over year from 2015–2020, despite a recession from 2014–2017. According to the São Paulo pharmaceutical industry business association, Sindusfarma, the Brazilian Ministry of Economy registered 418 pharma manufacturing plants in the country in 2018.

Like many countries, Brazil currently imports about 90 percent of its APIs from India and China. COVID-19 has led to discussion of incentives to bolster local production of APIs. One analysis also anticipates significant growth in Columbia, which several companies have tapped as a regional production and distribution hub.


The Asia-Pacific region (APAC) has been called “the new life sciences” frontier by L.E.K. Consulting. A recent special report from L.E.K. highlights a variety of attractive market entry opportunities for pharma companies. With more than 60 percent of the world’s population, regional healthcare expenditures in APAC are projected to grow by 7 percent annually to US$2.4 trillion by 2022, outpacing growth in both the U.S. and Europe. While most manufacturers have typically focused on the large markets in Japan and China, lucrative opportunities are also emerging in Taiwan, Korea, Australia, Singapore, Indonesia, and Thailand.

While APAC is a convenient geographical category, the APAC market itself is highly fragmented and there’s no one-size-fits-all approach. For example, developed markets like Australia and Singapore have advanced healthcare systems and policies that make it easy to establish a local or regional presence. Emerging markets like India and Vietnam offer different opportunities – notably from growing middle classes that want higher-quality options than the universal healthcare their countries provide. The L.E.K. report divides the region into five categories, each with different entry recommendations.

Neuland Labs: Global Partners in Potential

Interested in pursuing opportunities in any of these regions? Neuland can help you make the most of opportunities around the world by supporting your efforts with strong global regulatory experience, complex chemistry expertise and bulk manufacturing capabilities. Contact us today to learn more.