Hovione may have made itself a name as a first-class manufacturer of regulated active pharmaceutical ingredients (APIs), but it still needs to compete on price for some of its business. As in many industries, one of the best ways to lower cost is to have a manufacturing base in China. That is what Hovione did in March 2008 when it acquired a 75% stake in Hisyn Pharmaceutical, an API manufacturer in Taizhou, Zhejiang province. The site is a four-hour drive from Shanghai.
Hovione already runs a small plant in the Chinese territory of Macau. But for its first manufacturing venture in China proper, the firm did not take half measures. Spreading over 22 acres in an industrial estate, Hisyn is more spacious than Hovione's main site in Portugal. Hovione is initially using the site to make active ingredients for X-ray contrast media, including iohexol and iopamidol.
Before Hovione bought its stake in Hisyn, it had already been sourcing contrast media ingredients from the Taizhou firm. "We audited Hisyn many times in the past, and we knew that their quality standards met our requirements," says Eddy Leong, a Macau-based Hovione executive who now acts as deputy general manager of Hisyn. "We were short of space in Portugal, so Hisyn and Hovione decided this was the way forward."
A lot has changed at Hisyn over the past year. Before the merger, Hisyn operated three plants; now, the site is fitted with seven plants that have doubled production capacity. Leong says Hovione is now better equipped to compete in the price-sensitive contrast media market. Hisyn currently employs more than 250 people, but the site has space for further expansion.
Furthermore, Hovione has introduced a lot of changes in the way Hisyn operates. A tour of the site reveals that all the operators are wearing steel-toed boots and safety glasses. Before Hovione came in, Leong says, many were walking around in sandals and without eye protection. Some were even using their mobile phones inside the workshops, a practice that is a fire hazard. "We had to explain in detail the rationale of the safety practices," he says. The boots and glasses are supplied by the company.
One of the main challenges for Hovione is to get operators to understand the philosophy behind current Good Manufacturing Practices, rather than just blindly follow instructions as some of Hisyn's staffers are still prone to do. "The people here have the basic concepts required for producing quality, but cGMP demands an actual change in mind-set," Leong says.
For the purpose of upgrading the skills of Hisyn's staff, Leong notes that it's a huge advantage that Hovione has a number of Chinese-speaking employees, like himself, who follow cGMP at the company's U.S. Food & Drug Administration-approved site in Macau. When he notices practices that need to be changed in Taizhou, Leong says, it's easy to have someone from Macau fly in and set up a training program. Managers from Macau or Portugal are constantly on visits to Hisyn, he notes.
Hisyn's products are still not approved for sale in the U.S. Leong notes that Japanese government inspectors came to Taizhou at the end of 2008 and okayed its products for export to Japan. The next step, he says, will be to seek approval from European regulators. Within a year or two, he expects, the site will be ready for an FDA inspection. "When we go through our first FDA inspection, we don't want to just pass; we want to be very good."