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Outsourcing

US signs huge COVID-19 drug contract with a start-up

New Virginia firm partners with a pharmaceutical chemical maker in its made-in-America gambit

by Rick Mullin
May 19, 2020 | APPEARED IN VOLUME 98, ISSUE 20

09820-buscon1-ampacworker.jpg
Credit: Ampac Fine Chemicals
Ampac's Petersburg, Virginia, facility is a former Boehringer Ingelheim factory briefly owned by a Chinese firm before Ampac acquired it in 2016.

The Trump Administration has granted Phlow, a Richmond, Virginia–based company formed in January, $354 million in funding to manufacture medicines at risk of shortage, including therapies required to respond to the COVID-19 pandemic.

Phlow will receive the funding, plus a possible $458 million more for longer-term production, from the Biomedical Advanced Research and Development Authority, part of the US Department of Health and Human Services.

The announcement follows mounting political calls to establish US production of active pharmaceutical ingredients (APIs), which have steadily been outsourced over the past 20 years. Over 80% of APIs and chemical ingredients used in the US to manufacture generic and over-the-counter drugs are produced abroad, Phlow says, mostly in China and India.

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The name of the new company reflects its intention to implement a continuous manufacturing process known as flow chemistry to produce drugs cost competitively.

Establishing a wholly US-based supply of pharmaceuticals, however, will be a complicated proposition, given the range of raw materials and precursor chemicals now produced in Asia.

The global nature of the pharmaceutical chemical industry will also challenge any made-in-America stance. Phlow’s manufacturing partner, California-based Ampac Fine Chemicals, was acquired in 2018 by SK Holdings, a South Korean firm, and operates as part of SK’s pharmaceutical services division, called SK Pharmteco.

Phlow says it will build a new facility in Virginia, but that it has already begun production of precursor chemicals, APIs, and finished drugs for COVID-19 treatment. The company claims the government funding will enable it to deliver over 1.6 million doses of five generic medicines used to treat COVID-19 to the US Strategic National Stockpile, including drugs for sedation of patients requiring ventilator support, pain management therapies, and antibiotics.

Phlow says it is also establishing what it calls a strategic active pharmaceutical ingredients reserve, a government stockpile of key ingredients used to manufacture essential medicines domestically. Responding via e-mail to an inquiry from C&EN, Eric Bovim, a spokesperson for Phlow, wrote: “For national security reasons, we are unable to discuss which medicines are being made.”

Ampac operates three manufacturing sites in the US, including one in Petersburg, Virginia. The facility is a former Boehringer Ingelheim API plant that was acquired by a Chinese firm, UniTao Pharmaceuticals, in 2014 and then by Ampac in 2016.

Phlow is also partnering with Civica Rx, a nonprofit launched in 2018 by several health systems to address generic drug shortages in the US, and with the Medicines for All Institute at Virginia Commonwealth University, which designs efficient production technologies with an emphasis on flow chemistry.

Ampac is among pharmaceutical chemical companies also pursuing flow chemistry, which is touted as being able to significantly reduce cost and time in producing drugs. To date, however, no API has been fully synthesized in a continuous process in a facility that conforms to the US Food and Drug Administration’s standards.

While the CEO of Phlow, Eric Edwards, is an unknown in the API manufacturing sector, the firm’s vice president of business development, Malcolm Rosenthal, is a veteran of the industry.

The new company’s board includes Civica Rx CEO Martin van Trieste, who was a senior vice president for quality at Amgen and former head of Rx-360, a consortium of drug makers and API firms, and Rosemary Gibson, chair of the board of Altarum Institute and the author of China Rx: Exposing the Risks of America’s Dependence on China for Medicine.

Industry consultant James Bruno says he is not surprised that a start-up was awarded the large government contract rather than an established API producer, given Phlow’s partnership with Ampac, one of the largest US contract API makers. Ampac’s former parent company, American Pacific, is a rocket fuel producer with a history of government contract work. “I think this has been in the works for a while,” he says.

Bruno says Phlow is still coming into focus. “I’m not 100% sure where their assets are,” he says, noting that the Petersburg plant has required heavy renovation since Ampac acquired it. Ampac’s other US facilities are in Rancho Cordova, California, and La Porte, Texas.

It is also unclear how the new company will fulfill the remit of repatriating the entire supply chain of critical medicines from raw materials to the final dosage form.

“I’m all for this, don’t get me wrong, but we’re still going to be buying our starting materials from China and India,” Bruno says. Phlow’s goal is to be a finished-dose drugmaker that is back-integrated into APIs and starting chemicals. “That is not trivial,” he says.

The deal’s announcement, coming a day after President Donald J. Trump revealed he has been taking daily doses of hydoxychloroquine since news of White House staff testing positive for COVID-19 broke earlier this month, had an unmistakable political tone.

“Years from now, historians will see this innovative project as a defining moment and inflection point for protecting American families,” Peter Navarro, director of the White House Office of Trade and Manufacturing Policy, said in a press release about Phlow. “We are now moving swiftly in Trump time to forge an American solution, one that leads with American ingenuity, American workers, and American factories.”

CORRECTION

This story originally ran with the wrong chemical plant photo. It was updated on May 21, 2020, with the correct one.

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