5 Things to Know Before Buying Intermediates Pharma Service

A Pharmaceutical Formulation Intermediate (or PFI) is a blend of active substances and excipients, oftentimes in a powdered form. An Active Pharmaceutical Ingredient (or API), on the other hand, is the active component of the drug that acts on the symptoms of a disease. APIs work in coordination with inactive ingredients, which have no direct effect in healing one’s health condition, but are necessary for its production. For instance, dye is an example of an inactive ingredient as it doesn’t heal the body but is used in a pill to lend it a certain color.

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API refers to the key ingredient or chemical that makes the drug work. While a finished formulation or a formulation intermediate is the process in which different chemicals including the active ingredients are mixed in specific ratios to produce a specific drug.If you consider the example of a Paracetamol 500mg tablet, the API or the active component is the 500mg of paracetamol. However, in addition to Paracetamol, the tablet may also contain some colorants, fillers, preservatives, binders, etc. These other ingredients include maize, starch, stearic acid, soluble starch, povidone, etc. which are known as PFIs for their necessary production.

Understanding the legal part of things From the pharmaceutical management point of view, APIs must be registered with the Drug Regulatory Authority, according to the law, and synthesized in a GMP-compliant plant after obtaining the approval number.In general, both APIs and PFIs are manufactured by pharmaceutical companies in their home countries. But in recent years, many companies have chosen to shift their manufacturing overseas to reduce costs.

PFI or API – the challenger for a big pharma company?

‍A big pharmaceutical company generally deals with around 200 to 250 suppliers all over the world for its API formulation. Dealing with so many suppliers is challenging and expensive to run economically. Due to these differences in costs and time, along with hectic supply chain management, many API providers are buying finished formulation companies and vice-versa, resulting in cross consolidation. And it has also been noted that dealing with the core task of API cannot make it economically feasible due to high technical and testing costs.

Choosing to partner with an external vendor forPFIs is more profitable If giant drug manufacturers want to save on expenses to curb overspending, they might need to cut short the number of suppliers they work with. Especially in tough times like the Covid pandemic or any other unexpected events. However, if there is a cross consolidation between APIs and PFIs, in terms of supply chain management perspective, then they will not have to deal with multiple suppliers like earlier.

Moreover, many pharmaceutical companies are located in the UK and US, while most API and PFI manufacturers are located overseas. Because finished dosage manufacturers purchase APIs from suppliers and manufacture PFIs in-house, the cost incurred for its technical production is way high, increasing their testing costs as well. That said, drug manufacturers these days prefer purchasing PFIs from a specialized manufacturer, to reduce the cost and increase their RoI, so that they don’t have to make PFIs in-house and invest in machinery and manpower.

About ZIM Laboratories

As a bio/pharma API sourcing partner there are two straightforward questions we hear from clients:

1. When we can receive the API in the quantity we desire?
2. What will be the cost?

Our answers to these two questions are invariably the same: it depends.

While disappointing as far as answers go, it’s also the correct one. Answering those two questions will always require more information than most companies expect – and the scope of that information is sometimes eye-opening for newer sourcing and procurement professionals. The fact is, there are many factors that come into play when you engage with drug substance suppliers, and all of them must be taken into consideration.

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The key thing pharma execs must remember is that everything hinges on the business case. Yes – of course there are API or intermediate suppliers who will shrug and say, “an order is an order…sure we’ll fill it.” But there are fewer of those than you may think. Drug substance manufacturers will likely ask a litany of questions before they consider entering into a supply agreement. They need to ensure this relationship makes sense for their business.

In smaller and virtual biopharma companies, the answers to supplier questions may be difficult to come by. In virtual or very early-stage companies (think “two brains and a molecule”), some supplier queries have answers, but the company may not want to share them…either with the sourcing company or the potential supplier. In other cases, the project may not have matured knowledge-wise to a point where long-range projections are available.

API Sourcing Questions You Need to Be Prepared to Answer

A sourcing partner like LGM will ask you questions beyond ‘when’ or ‘how much.’ We aren’t being nosy. We promise! But any supply relationship we create for you, or you form on your own will likely depend on your answers…and your willingness to answer.

With that said, here are some of the topic areas a supplier will want to explore when considering whether to participate in your drug project.

The Basics

1. What’s the indication?
2. What’s the drug’s route of administration?
3. Will the API or drug substance require any special handling or transport, or pose any other kind of logistics challenge?
4. How complex is the chemistry? How developed is it? What is the basic approach (antibody drug conjugate, a deuterated small molecule, a peptide via solution phase synthesis)?

Beyond the basics, there are some broader topic areas a supplier will want to explore. Here are 5 more areas API manufacturers want to explore before you become a client.

5. Non-GMP Research or GMP Clinical Material?
   Will you initially need any non-GMP material for research or experimental purposes, or will you only want GMP material? Non-GMP material will clearly cost less, and may offer opportunities to find an API supplier that isn’t FDA inspected, or doesn’t work with as many GMP substances.Timing comes into play, as well. If you will be transitioning from non-GMP to GMP material in short order or will need additional GMP material in the next few months, then it is worth the extra investment to find a longer-term supplier upfront.Generally, it is not wise to begin a project with a non-GMP supplier only to realize they will not be able to support you when higher quality materials are necessary.

6. Geography
   Which markets will you be targeting? Some suppliers may have only specific geographies available for purchase, due to prior exclusivities or other agreements they already have in place.Aside from any exclusivities or restrictions, the target geography is important because it indicates which regulatory standards will apply during manufacture. Will APIs need to comply with US Pharmacopoeia, for example, or meet EU EMA, US FDA or other global standards?Geographically speaking, your suppliers need to match the requirements of your current and future target markets.

7. Regulatory Pathway
   The regulatory pathway you will be choosing for your drug candidate will have a big impact on supplier selection and availability. For example, pursuing an NDA has different requirements (and a much longer pathway) than a 505(b)(2) or an OTC compound.Generic and OTC APIs have their own challenges. While there are many more suppliers, margins are very low, and volumes matter.

8. Quantity
   Speaking of volumes mattering…they really As a biopharma company you may be looking for security of supply but remember suppliers are looking for security of revenue.A one-off RFQ for an R&D quantity of a difficult-to-make API will have fewer takers…and most will be requesting projections, forecasts and timelines for future quantities.You may need 100 grams for R&D and evaluation, but what’s your plan? When will you need quantities for submission batches? What is your high-level estimation of what you will need at kg scales? How many metric tons?

   This is what the manufacturer wants to get to…a situation in which they have a long-term relationship build around a commercially viable compound. If they will be allocating resources and manpower to this drug substance, they want to manage their business risk as much as possible.

9. First, Primary or Secondary Source
   Suppliers will want to know whether you are looking for the initial source of a drug substance, or a primary or secondary supplier. It isn’t uncommon for companies to be reluctant to disclose they already have a source – or whether they are evaluating a second source for savings, quality improvements, or to build risk mitigation into their supply chain.As a sourcing partner to biopharma companies, we’ve run into situations where not knowing this upfront led to problems. In one particular case, we approached a manufacturer for a quote only to be told they had been working with the company directly as the primary supplier for nearly four years!

The Answers We Don’t Have Can Make a Difference.
We know molecules – and we know how to find them for biopharma companies. Much as suppliers will want to know answers to some key questions, when we have this information we can better refine our lists of potential suppliers and zero in on the best solution for our drug company clients.

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