Competition in the pharmaceutical fine chemicals sector has come down to chemistry. An absurd notion, perhaps, given the range of sometimes arcane and often hazardous chemistries involved in producing active pharmaceutical ingredients (APIs). Nonetheless, many contract suppliers of APIs see an ascendance of the science of chemistry as a significant evolutionary change in the business given the commodity market dynamics that only recently dominated it.
Vying for exclusive supply contracts is no longer a matter of amassing the reactor vessels—dismissively referred to as pots and pans—necessary to support a blockbuster drug, because there are few new blockbuster drugs. And the constant battle against cut-price competitors in Asia is no longer a viable excuse for lagging sales, since these days quality APIs from Asia are not particularly cheap.
Overall, the market has evolved with the rise of small start-up drug companies and the downsizing of R&D at big drug companies. Nowadays, suppliers agree, customers need chemistry.
And contract manufacturing organizations (CMOs) are hiring chemists at a record rate. They are also hiring engineers and in many cases statisticians, putting professionals in the various disciplines to work together in what has become a multidisciplinary effort to streamline chemical processes that support the development and launch of new drugs.
“The world has changed,” says Aslam Malik, president of California-based Ampac Fine Chemicals. “Molecules are more complex; there are a lot more chiral centers that require the use of sophisticated chemistry. Nowadays it’s pretty common to see processes that involve eight to 10 steps of synthesis on average, whereas in the past it was three or four steps.” And downsized big pharma companies are just as much in need of support as small start-ups, he adds.
What companies need to offer now is a kind of chemistry life-cycle management service extending from early process development to commercial scale-up. In the past, chemists developed the process, and engineers ran the plant, Malik says. “Now, chemists are staying with it constantly through the shifts to make sure the project is going as planned.”
The complexity of the molecules that customers require puts Ampac in a good position, given its expertise at simulated moving bed (SMB) chiral separations, according to Malik. “SMB is picking up,” he says, “but there is a lot of chemistry to do upstream and downstream of it. We have increased the number of chemists, with about 34 in R&D now alone.” Overall, chemist ranks have doubled in the past two years at Ampac, he says, and the number of engineers has risen comparably.
The Northern Irish firm Almac is also hiring. “This has been the biggest year ever for the chemistry part of our business,” says Denis Geffroy, the company’s vice president of business development. “We invoiced 30% over last year, which was already a record year.”
Over the past six months, the company has hired 50 new employees, 20 of whom are chemists, Geffroy adds.
It was not long ago, he recalls, that contractors were looking for growth anywhere other than traditional chemistry. “We were introducing analytical services and peptide manufacturing,” Geffroy says. “But in the last couple of years, we have seen growth in our chemistry service.” He says the company took a “huge risk” two years ago when it decided to add two 1,000-L reactors to its API capacity. “It’s now fully occupied,” he says. “It’s probably the best decision we ever made.”
Geffroy attributes the growth in chemistry-related services to three major factors: improved new-product pipelines, the shuttering of manufacturing plants by major drug companies, and a return of business from Asia. He agrees with Malik that the complexity of molecules is raising the chemistry bar and notes that Almac is pursuing some highly prized technologies.
“One of the big changes is the integration of biocatalysis and chemistry,” he says. “Biocatalysis is chemistry, at the end of the day. And we are operating more processes using enzymatic reactions.”
Guy Villax, chief executive officer of the Portuguese pharmaceutical service firm Hovione, has also seen the demand for chemistry surge. And he views outsourcing of API development and manufacture as “structural”—an elemental part of business rather than a cost-saving option—now that major drug companies have significantly pared down internal production capacity.
CMOs and their customers are becoming more sophisticated at making business decisions about working with each other, Villax says. “We can finally, as an industry, stop making the silly generalizations, such as ‘Everyone went to Asia, and now everyone is coming back.’ What is happening is that people are more competent. They know what to buy in Asia and what to buy in the West.”
The contract manufacturing business is moving into a new phase, according to Villax, one that has little to do with the hardware. “Now, you simply can’t just buy the differentiator,” he says. “Success is the result of experience and accumulated knowledge and databases.”
Data are no small part of the equation, he adds, noting that data-based quality management principles, such as quality by design, are gaining momentum in process development. Design of experiment, a statistical method of multivariable analysis in R&D and process engineering, will be a critical practice as data and statistical analysis become the common ground of chemistry and engineering, Villax says.
“And it’s not just chemistry and engineering,” says Villax, who is in his 50s. “A lot of what I am describing involves computer simulation skills, things people my age don’t know about. It also requires that an organization have the DNA to accept change. One needs to open the doors to people who are 20 years younger.”
Stephen A. Munk, CEO of the Michigan-based contract manufacturer Ash Stevens, agrees that chemistry has become a multidisciplinary science that is rising hand in hand with engineering in the contract manufacturing business. But he is also heartened to see the reemergence of traditional synthetic chemistry.
“You have very big multidisciplinary teams,” Munk says. “You have statisticians designing combinatorial experiments, you have engineers dealing with designing of robots for high-throughput screening—who thought about that 25 years ago?” But the new strength in the basic discipline of chemistry is also something of a surprise to Munk.
“One of our recent hires is a fresh Ph.D. in chemical synthesis,” he relates. “Frankly, I was happy to see a resurgence in the synthesis I was raised on. For a while in the ’90s and 2000s, I thought chemical synthesis was a dead science. You didn’t see guys looking to synthesize a structure just for the beauty of learning about interactions to apply to chemical synthesis.”
But a love of chemical synthesis may pay off in a market where even small companies such as Ash Stevens, which has about 80 employees, are asked to provide early-stage R&D and process development services. And such demand is reflected in recent investments in instrumentation that used to be “the domain of big pharma,” Munk says. In recent years, capital expenditures at Ash Stevens have gone toward X-ray powder diffraction and inductively coupled plasma mass spectrometry equipment.
Rudolf Hanko, CEO of Siegfried, a Swiss CMO, wants even further development of the chemistry needed for API production. The challenge posed by complex drugs, he says, “is that organic chemistry, despite progress over the past 150 years, is still not a science that allows you to synthesize molecules in a convergent way.” Rather than extol the virtues of being able to manage a complex, multistep synthesis, Hanko says, CMOs should seek to design routes that reduce the number of steps or allow them to be taken simultaneously.
Hanko uses an auto assembly line, that paragon of efficient manufacturing, as a model. “The API is the car in our example,” he says. “It’s impossible to convolute that molecule into eight or 10 components and then say, ‘I have a final step that brings these eight to 10 components together, and after six hours reaction time and six hours of clean-up we have our API.’ ”
In some exceptional cases two components can be brought to a final reaction stage, he acknowledges, “but then each of these elements has 10, 15, maybe 20 linear steps behind it. That leads to a situation where each step requires two or three days, and the entire pathway might require four weeks, or eight weeks, or for some molecules, four months.”
The result, Hanko explains, is molecules that cost $60,000 to $100,000 per kg.
“Yes, organic chemistry has made enormous advances over the past 20 years, but it is still far, far away from where it would ideally be,” Hanko says. “That is why we need the best people, the most talented chemists, and why we need good contact with academia.”
Hanko notes that Siegfried consults with local institutions such as the University of Zurich and the Swiss Federal Institute of Technology, Zurich, often called ETH. The company also awards the Siegfried Medal in conjunction with academic partners for outstanding research in chemical process development.
One advantage to accessing academic research is that it keeps basic science in focus in an enterprise that naturally leans toward applied science, Hanko says. But basic science is only one element of an increasingly complex mix of disciplines.
“We hear the question again and again whether we should educate people more to understand the applied science or the basic. I think that’s simply the wrong question,” he says. “The important question is: ‘How do you educate people to be good at teamwork in interdisciplinary science?’ ”
Like many CMOs, Siegfried has a deep chemistry toolbox containing everything but extremely specialized and hazardous types such as radioactive synthesis. It has even scaled up carbohydrate chemistry, which 10 years ago it listed on its website as unavailable, Hanko says. “We were always able to do it at the lab scale, but now our biggest product is one of the most complex carbohydrates known in the world of chemistry.”
Advanced chemistry is also on the upswing in China, where a handful of CMOs have been working to put R&D on par with Western competitors while maintaining a cost advantage. Chongqing-based Porton, for example, has expanded its chemistry staff by 20% over the past year, according to CEO Oliver Ju. “We keep hiring good chemists who have education and work experience in the big pharmaceutical companies, particularly in North America, to strengthen our chemical capabilities,” Ju says.
The company has kept close ties to industrial and academic chemistry. For example, the firm’s chief technology officer, Jianguo Ma, worked at AstraZeneca and other drug firms for 20 years. Ma’s predecessor at Porton was Thomas Archibald, an expert in hazardous chemistry who worked in research management at several U.S. pharmaceutical chemical firms.
Partnerships have also boosted chemistry services at Porton. For example, the firm works with Cambrex Karlskoga and Celtic Catalysts on chiral catalytic synthesis.
Technology partnerships are just as common in Europe and the U.S., driven by the growth of biotech drugs and the quest for efficient chemical manufacturing practices. Ampac, for instance, has a deal with Codexis under which it accesses biocatalysis technology, and it recently announced a pact with Proteaf Technologies to develop continuous-flow chemistry for fine chemicals manufacturing. Almac has a partnership with Novozymes to develop small-molecule peptide conjugates for targeted therapies.
Looking ahead, the burgeoning of chemistry may result in manufacturing capacity constraints at some firms, a development that could pivot strategy back to the pots and pans. At Almac, according to Geffroy, biocatalysis might require chemistry to be done in a highly dilute fashion in reactors up to 5,000 L in size.
There is more than enough idle capacity to be had, given big pharma’s flight from production, but acquiring it would be a big step for Almac or any other firm considering a new phase of growth.
“Will the next phase involve more organic growth or possible acquisition? A partnership?” Geffroy ponders. Picking up assets elsewhere would move production away from Northern Ireland, where single-site manufacturing has been an asset for Almac. “It’s a tough decision,” he says.