Financial Justification in Pharma

Selection of any pharma manufacturing process, including supply chain and quality assurance practices, requires financial justification

By Girish Malhotra, PE, President, EPCOT International

Every business has a mission of making a profit and satisfying ROI expectations of its stakeholders while fulfilling customer needs with consistent, quality products. In this effort, a company’s investment in product development, technology and innovation has to be justified. In a competitive business world, process improvements are necessary to meet prevailing regulations and stay competitive. Related costs are either passed on to the customers or counterbalanced by productivity or tech improvements.

In a quasi-competitive world where products are needed to sustain and extend life, norms may or may not apply. Needed new products are created and sold at the highest possible price unless there is governmental price intervention. Justification for high prices is recovery of the R&D efforts. Manufacturing technology innovation is generally not a criterion to sustain such businesses, especially when the products have a limited patent life. Innovation might be incorporated to meet regulations. After patents expire, companies may or may not create or use the most economic processes because the product demand to extend life will be there. This generally prevails in the pharmaceutical world.

At times, I feel that the pharmaceutical industry’s biggest shortcoming has been in manufacturing technology innovation. It has done the minimum for technology innovation or does it under duress to show that they are on the leading edge or to placate the regulators. Some may disagree with it.

Manufacturing technology innovation in pharmaceuticals is constrained by three factors. In addition to economics, they are government regulations and drug dose needed to cure diseases. Why the drug dose? Drug dose (micrograms to milligrams) and patient population heavily influence the needed manufacturing technologies. Still, all said and done, the pharmaceutical industry has done a yeoman job in curing diseases.

Government regulations are critical and an essential part of the pharma landscape for product quality. They assure that the processes are repeatable and the product quality is maintained. Record keeping of manufacturing and test methods is essential. It is expected that once followed diligently, processes will produce repeatable quality products. My conjecture is that companies have to have an excellent understanding and command of the process to the extent that they can reproduce any process upset and correct it without much effort. That will shorten processing times and result in optimum processes producing quality products all the time. If done so, quality diligence will be ingrained in their overall business.

Regulatory bodies at times are and can be labeled as overbearing and demanding. In the last decade or so, the U.S. FDA has been nudging manufacturing companies to innovate manufacturing technologies. They can cajole but cannot force new or better manufacturing technologies or methods. Each company has to have financial justification for their investment in manufacturing technology and methods innovation for each product and process.

For example, batch manufacturing methods for active pharmaceutical ingredients and their formulations have been the norm. Since dose can vary from micrograms to as much as 500 milligrams or more, low to high volume API might be needed to serve the same population number.

Continuous API manufacturing is limited to products that would exceed yearly production volume of about 400,000 pounds. There are very few APIs that would meet this volume criterion.

Between batch and continuous processes there is another possibility where products can be campaigned for longer than batch times and less than continuously. Such processes generally would require that API chemistries and formulations are very similar. High equipment utilization is necessary and regulatory compliance can be a challenge. Tech details, references and other perspectives are offered in the 2016 CPhI Annual report.

All said and done each company producing APIs or their formulations has to justify and use the most cost efficient technology to produce products that are economic and deliver the same quality all the time. Regulators can only regulate and assure product quality. Companies still have to justify use of every technology. Excellence comes from within the companies rather than outsiders.

 

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