An active pharmaceutical ingredient (API) sourcing strategy is built upon a well-defined manufacturing process. The keys to the strategy involve using long-term suppliers early in the development process so that the control strategy for their manufactured material can be developed over time and included in all supporting registration studies. From a business perspective, a supplier’s performance during product development can also be used as a predictor of long-term supplier success. Therefore it is essential to engage in source development at all stages of the API’s development.
For many pharmaceutical companies, their commercial API supply comes from an internal manufacturing site which operates only on the registered sequence of the API and utilizes contracted suppliers of advanced intermediates, otherwise called API starting materials (API SM). A small molecule synthesis can be thought of as a linear sequence of steps from raw materials to API, or a convergent strategy where two or more sequences merge at a key point. 
Figure 1 outlines such a convergent synthesis strategy where compounds “A” and “B” represent API starting materials, which according to good manufacturing practices, or "GMP 1," form the first intermediate manufactured product, or “GMP I”. Regardless of a firm’s approach to process design or manufacturing strategy, the themes and tactics revealed in this paper can apply.
This paper also addresses the staging or sequence of tactics that a pharmaceutical company uses for process development. There are discrete stages of investigation during process development that normally match a firm’s appetite for investment risk. For example, a manufacturing process suitable for long-term manufacturing is not required at Phase I clinical development. Figure 2 presents such a stage appropriate approach. Each of these stages also have well-defined objectives for API source development. These are described in detail below.
Technology Identification
During early stages of clinical development, the important criteria of speed and scale of operations may hamper a firm’s ability to focus resources on commercial supplier development. However, these early stages are useful for determining reaction types through route screening and evaluation of supplier material qualities.
Screening for Commercial Sources
As development progresses, a pharmaceutical company will need to carefully consider its regulatory strategy. At the end of Phase II, the United States Food and Drug Administration (FDA) provides the sponsor an opportunity to declare various aspects of its evolving chemistry, manufacturing and control (CMC) strategy, including its proposed API SMs for the method of synthesis. Therefore, the API SMs should be determined well before Phase III clinical development. By identifying the API SMs early on, the sponsoring firm can include its suppliers in the supply of API for pivotal clinical studies, as well as in the manufacture of the primary stability batches. Another advantage of discerning the API SMs early is that the sponsor firm will have clarity regarding the degree of regulatory oversight required for the supplier. For example, if the FDA determines that the propinquity of a sponsor’s intermediate requires full GMP methods for manufacture, development of a GMP supply chain can be undertaken prior to subsequent manufacturing of the intermediate by the Contract Manufacturing Organization (CMO). 
This scenario presents a potential risk for the sponsoring firm in the event that the CMO cannot produce its material according to full GMP methodology. The sponsoring firm should establish risk mitigation strategies to address such situations before they develop.
Another aspect of the emerging supply chain strategy is the identification of differing technologies for the manufacture of a common API SM. Figure 3 illustrates this example, where dual technologies are employed for the manufacture of API SMs “A” and “B”. Such strategies can increase supply chain flexibility, but only if each technology has an equivalent, controlled impact on API quality. The earlier a firm incorporates such divergent manufacturing approaches into its developing method of synthesis, the earlier it can consider the differential impacts which need to be addressed prior to later clinical stage API manufacturing.
Developing Commercial Sources
Additional criteria can be incorporated into the supply chain development during later stages of API development. Determination of the sustainability of a CMO for the firm’s material supply is highly important; in situations where a longer-term supplier leaves the business, a pharmaceutical firm could be left with a supply shortage. A CMO must have a strong value proposition for the work in which it is engaged. This is revealed by its ability to profitably leverage their assets and personnel for income growth and profitability. Therefore, financial diligence of suppliers is a primary concern for the pharmaceutical client.
Additional sustainability characteristics may require diligence over a period of time. Observations of a CMO’s performance through clinical development are excellent indicators of long-term supplier sustainability. For example, a CMO’s problem solving capability can be observed when there is a process upset. In such situations, it is instructive to note the degree of independence the CMO brings to the solution of the problem. 
Likewise, when material quality problems are observed, it is important for the pharmaceutical company to recognize if the CMO noted the issue or if it was found later in the supply chain. It’s important also to ask if the causes were related to process issues, maintenance and repair issues or other recurring sources of variability. Were deliveries on time, and did the CMO provide oversight for the shipment of their development batches? When difficulties are identified in these areas, the pharmaceutical company needs to address them with the supplier and determine if such issues represent a long-term concern.
Another strong indicator of long-term reliability is the methodology used by a CMO to ensure supply to their customers. CMOs must demonstrate the ability to use principles of manufacturing science in their routine manufacturing operations. Items of commerce made by large, usually continuous, operations are designed for intrinsic quality control. However, pharmaceutical intermediates in many cases are relatively new items of commerce, manufactured by batch processes and may carry substantial risk of special cause variability during manufacturing start-up and early commercial supply. A CMO must be able to demonstrate its ability to look for sources of variability in their processes, determine the root causes and eliminate them. The pharmaceutical company should use an appropriate degree of diligence to determine if the CMO uses tools such as Statistical Process Control and root cause analysis in its daily operations.
Another area of supply chain risk is the supply of alpha raw materials. A diligent pharmaceutical firm will understand its API supply chain from alpha raw materials through to the API itself. It is not uncommon for there to be only one source of an alpha raw material and the pharmaceutical company needs to have a strategy to deal with this risk. Risk mitigation tactics for this situation include using more than one technology basis for a key intermediate (i.e., different synthesis routes with differing raw materials), developing long-term inventories of key materials, and using differing raw material sources through different intermediate suppliers. Regardless of the tactics, the pharmaceutical company must use robust planning to prevent supply shortages.
Supply chain sustainability also requires regular discussions between the pharmaceutical company and the CMO. Many companies establish intercompany management teams where even modest levels of commercial involvement are concerned. The size, structure and meeting frequency of such intercompany teams is dependent upon the issues, the shared value, and the changes being managed. However, regardless of the magnitude of transactional business, both the pharmaceutical company and CMO have a value proposition for the collaboration; when managers from each company acknowledge the health of their collaboration on a regular basis, a stable and reliable relationship will exist. The best relationships exist where personnel with equivalent responsibilities at each firm are in contact with each other with some regularity. Typical management structures are tiered by design. The first level of the design is a project team working at the technical level. During clinical development the companies should form a project team, including a project manager, and chemists and engineers from each company who determine goals and objectives and measure outcomes for their process. During commercial supply, the need for a project team may end; in most cases materials sourced from stable manufacturing processes can also be managed by procurement and account representatives for the pharmaceutical company and CMO, respectively.
The second level of engagement, depending on the degree of financial interaction of the companies, would be a joint management team (JMT). The JMT involves the technical, quality and procurement managers from each company periodically reviewing the collaboration. Normally a JMT would be formed for a collaboration which is based upon multiple project interactions. The pharmaceutical company’s criteria for the JMT could include quality and on-time delivery, technical performance, and cost, while the JMT members from the CMO would be concerned about customer satisfaction, volume, and potential new business. Another important responsibility of the JMT is to remove roadblocks for the project teams.
The largest collaborations should consider a steering team arrangement. Steering teams typically involve executive management from both companies. In addition to the measures tracked by the JMT, the Joint Steering Team (JST) would track the overall health of the relationship and focus on the future of the collaboration through mutually beneficial project forecasts (pharmaceutical company) and capability investments (CMO). The healthiest collaborations would have a JST where members are on a first-name basis with each other.
The timing for establishing the interfirm management structure varies with scope, but should be underway a few years before commercial supply begins. This timing gives each management group the opportunity to understand and appreciate the needs (Pharmaceutical company) and capabilities (CMO) brought to the relationship, and ensure a smooth transition from the development site to the manufacturing site.
Investing Towards Goals: Validation and Long-term Supply
Validation campaigns represent the pivotal experiment to support a supplier’s inclusion as an initial supplier of materials for the commercial API. As such, planning for a CMO’s participation in the validation campaign starts much earlier in the development process. It is important to consider the impact of a supplier’s materials on validation criteria, such as critical parameters [2]. Further, the validation campaign may be performed in the final manufacturing equipment. Therefore, the campaign may involve a technology transfer from a developmental facility into the commercial supply facility. The supplier’s approach to technology transfer should be evaluated and the pharmaceutical company should provide input regarding the technology transfer criteria and timing.
Supplier Continuation
A pharmaceutical company is obliged to utilize a documented practice for supplier selection, including technical diligence and quality audits, to reduce risk during the development of their product and comply with GMPs. During commercial supply of a pharmaceutical API or intermediate, on-going quality audits take place. It is also valuable to include a review of the supplier’s overall qualifications from time to time. While a JMT could provide the intention of such qualification continuity, the approach may not be as clear-cut as it was for a new product or during a quality audit. For example, technical diligence performed in the first year of a supplier – client arrangement will be outdated within a few years. While a well-designed process may run effectively and provide consistent quality results over many years, the personnel and capabilities of the firm’s development division can change dramatically. A good approach for the JMT or JST would be to periodically review several areas of the relationship to ensure the mutual value proposition is maintained. For example:
Financial stability – Dunn and Bradstreet reports should be reviewed periodically. JMTs may also want to review shareholder reports.
Organizational stability – New personnel or departures for each company; organizational changes and the strategic intent of such changes should be examined.
Quality and SHE compliance – Periodic audits of each area of a supplier’s operations should be undertaken and action plans used to address and close significant gaps. A review of the CMO’s audit performance overall, including regulatory body inspections should be performed.
Capability assessment – Firms should perform a periodic review of the supplier’s capabilities and determine if these capabilities match the evolving requirements of the Pharmaceutical company.
Annual Product Review – A detailed review of a CMO’s process performance should be carried out at least annually.
Ensuring of a reliable pharmaceutical supply chain begins with a well designed process and proper material and supplier selection, and is sustained through on-going stewardship of the client – supplier relationship. Taken together, these steps will provide a satisfactory business arrangement where each company can expect many years of successful business dealings.
References
1. Global Sourcing Strategies: Building a Sustainable Advantage, presented at ChemOutsourcing, Long Branch, NJ, 11 September 2012.
2. Kevin D. Seibert. Shanthi Sethuraman, Jerry D. Mitchell, Kristi L. Griffiths and Bernard McGarvey, The Use of Routine Process Capability for the Determination of Process Parameter Criticality in Small-molecule API Synthesis, Journal of Pharmaceutical Innovation, 3 (2), 105-112, 2008
Dr. Eckrich studied chemistry at Purdue University, receiving a BS in chemistry in 1979. He earned a doctorate in chemistry from Harvard University in 1984, studying with Professor E. J. Corey, the 1990 Nobel Laureate in chemistry. Tom has worked for Eli Lilly and Company since graduating from Harvard, starting out as a chemist working in the area of antibiotic research. In 1992, Tom became manager of chemical process development at Lilly, and has since held various leadership positions in chemical development, including the position of managing director of Lilly’s European Development Centre in Brussels, Belgium. Tom is a member of the American Chemical Society, the American Institute of Chemical Engineers, has published 10 scientific papers and holds three patents.
Tom is currently a member of Lilly’s Chemical Product R&D leadership team with responsibility for external sourcing and source development.