| PharmSource ADVANTAGE: Sourcing Intelligence for Intelligent Sourcing |
September 2010
In This Issue
Feature Story: Merck Buys Back API Facility
PharmSource Special Report: Top Dose CMOs by Number of NDA and BLA Approvals
Business Conditions: Russian Pharma Landscape Ripens for CMOs and CROs
PharmSource ADVANTAGE Free Test-Drive Offer
| Welcome to the PharmSource Advantage Briefing! |
Welcome to the September 2010 issue of the PharmSource ADVANTAGE Briefing, a complimentary newsletter designed to provide actionable intelligence to bio/pharmaceutical and contract service professionals. Inside each issue, you will find a snapshot of the intelligence packed into our flagship newsletters, Bio/Pharmaceutical Outsourcing Report and Emerging Markets Outsourcing Report, along with a company profile developed from our comprehensive PharmSource ADVANTAGE contractor database.
This month, we discuss Merck’s buy back of its API manufacturing site in Riverside, Pa., USA. In addition, we analyze the changing landscape of the Russian pharmaceutical industry. We also profile Xcelience, which entered in a joint venture agreement with Penn Pharmaceutical Services. And don’t miss the information on our latest report, Top Dose CMOs by Number of NDA and BLA Approvals.
Enjoy the issue!
| Feature Story |
Merck Buys Back API Facility
Merck is buying back its API manufacturing site in Riverside, Pa., USA, from Cherokee Pharmaceuticals, according to local press reports. Cherokee, a subsidiary of outsourcing services provider PRWT, Inc., acquired the facility from Merck at the end of 2007.
According to a PRWT prospectus filed in 2008, PRWT acquired the Cherokee operation for total consideration of USD 22.2 million, for which Merck received USD 3 million in cash and two notes valued at USD 17.5 million.
In addition to the assets on the site, PRWT received a five-year supply agreement from Merck, which it claimed would generate USD 100-200 million in revenues annually for antibiotics and other chemical APIs and intermediates. The supply agreement gave Merck the option to extend the term for three years, which Merck apparently decided to exercise in 2008. The supply contract gave Merck certain rights, including the right to approve manufacture of a non-Merck product; a right to 3% of revenues generated on non-Merck products; and the right to reduce the amount of product purchased from Cherokee if Cherokee did not diversify its revenue base sufficiently.
Based on an SEC filing PRWT made in 2008, Cherokee generated revenues of USD 84 million annually, of which almost 90% came from Merck. However, overall facility utilization was low: less than 25% for the two pharmaceutical API synthesis plants on the site, and almost zero for the fermentation facility. A third plant manufacturing a crop protection ingredient had high utilization, however.
Aside from the Merck legacy business, the only other contract announced by Cherokee over the three years was with DuPont for a crop protection product. The company tried to make fuller use of its assets by getting into the chemical distribution business and announced a contract with Sigma Aldrich to distribute specialty chemical products. It’s not clear if this arrangement ever got off the ground.
Subscribers to PharmSource ADVANTAGE received our enhanced analysis of Merck’s decision to buy back the Riverside operation in the “What it means” segment of the article. This analysis also includes an in-depth look at the challenges Merck faces in shedding several manufacturing and R&D sites following its acquisition of Schering-Plough.
To read the full version of this article, sign-up for a free trial of PharmSource ADVANTAGE.
| PharmSource Special Report |
New Report Highlights CMO Success
A new analysis by PharmSource documents one measure of success in the CMO industry – the number of regulatory approvals gained. The report, Top Dose CMOs by Number of NDA and BLA Approvals, was published as part of the PharmSource Market Intelligence Service.
In our analysis, we found that 200 of the 487 products receiving FDA approval (NDA and BLA) during the period 2005-2010 involved a contract dose manufacturer. Of those 200, we were able to successfully identify the CMO for 185 (92%) of them.
In total, 72 different CMOs had at least one of the 200 outsourced FDA approvals granted during the 2005-2010 period. Of those 72 CMOs, 44 (60%) received only one FDA approval during the nearly five years covered by this analysis. Nearly half of the CMOs getting approvals (34 of the 72) are selling excess capacity and are not dedicated to the CMO business. The 12 companies receiving the most approvals accounted for 105 (52%) of all approvals involving a dose CMO.
The analysis suggests that we should see more industry consolidation in the coming years. Consider that more than 60% of CMOs listed in the PharmSource ADVANTAGE database that claim FDA compliance received no new FDA approvals in the period, while most CMOs that did receive an approval received only one.
The report contains a list of the 72 CMOs receiving FDA approvals and the number of approvals received by dosage form.
Click here for more information on Top Dose CMOs by Number of NDA and BLA Approvals.
| Side Effects |
Side Effects identifies CMOs and CROs that might be impacted by key events affecting their clients, including company acquisitions, product acquisitions and licenses, product approvals, late clinical product terminations, and FDA rejections.
| Contractor | Pharma Company | Event | Product | Relationship |
| Potentially Positive Side Effects | ||||
| Althea Technologies | Advanced Biosciences Laboratories | Pre-IND package completed & submitted | DNA-based HIV-1 vaccine | Fermentation; injectables manufacturing |
| Osny Pharma | HRA Pharma | FDA approval | ella | Solid dose manufacturing |
| Biocon | Optimer Pharmaceuticals | MAA filed | Fidaxomicin (OPT-80) | Small molecule API manufacturing |
| Patheon | Optimer Pharmaceuticals | MAA filed | Fidaxomicin (OPT-80) | Solid dose manufacturing |
| SAFC | Winston Pharmaceuticals | Health Canada approval | Civamide | Small molecule API manufacturing |
| Potentially Negative Side Effects | ||||
| Hospira One 2 One | Bioniche Pharma | to be acquired by Mylan | Ultiva | Injectables manufacturing |
| Gland Pharma | Bioniche Pharma | to be acquired by Mylan | Ibutilide Fumarate | Injectables manufacturing |
| DSM Pharmaceuticals | Bioniche Pharma | to be acquired by Mylan | Aloprim | Injectables manufacturing |
| Patheon | Penwest Pharmaceuticals | to be acquired by Endo Pharmaceuticals | PW2101 | Solid dose manufacturing |
| Draxis Pharma | Penwest Pharmaceuticals | to be acquired by Endo Pharmaceuticals | TIMERx | Solid dose manufacturing |
| Lonza Group | Trubion Pharmaceuticals | to be acquired by Emergent BioSolutions | TRU-015 | Cell culture |
| Laureate Pharma | Trubion Pharmaceuticals | to be acquired by Emergent BioSolutions | TRU-015 | Cell culture |
Source: The PharmSource Lead Sheet
| Business Conditions |
Russian Pharma Landscape Ripens for CMOs and CROs
The Russian pharmaceutical industry is in the midst of a major overhaul that may prove quite advantageous for CMOs and CROs that can get on the ground in the country or have already established a presence there. Earlier this spring, the Russian government announced the implementation of Pharma 2020 (PharmSource Briefing May 2010), which is intended to increase the number of manufacturing facilities for small molecule APIs and biologics in the country, strengthen local drug development efforts, increase the number of domestically produced drugs in use, and bolster the export of Russian pharmaceuticals.
In June 2010, there was further evidence that the Russian government is serious about its efforts to move the country to the forefront of the industry by improving standards. The U.S. Pharmacopeial Convention (USP) trained laboratory staff from a scientific center for medical products associated with Roszdravnadzor, Russia’s federal entity that monitors healthcare and social development. The training included USP’s reference standards, WHO GLP, and several chemical processes.
According to Lyudmila Maksimova, government affairs manager at the American Chamber of Commerce in Russia, “Most of the local pharmaceutical manufacturing facilities in Russia currently do not meet GMP standards. Estimates show that out of 500 domestic pharmaceutical manufacturers, only 10% meet GMP standards, 40% have limited GMP-compliant lines, and 50% have not yet started transition to GMP. The new law … definitely changes the situation in a positive direction. It requires that all domestic pharmaceutical manufacturers switch over to GMP standards starting January 1, 2014.” Pharma 2020 also mandates that all new facilities currently under construction in the country must comply with GMP standards. To help facilitate the transition, a number of quality laboratories and regional quality centers are being formed in the country.
Opportunities Soon Available for CMOs and CROs
In response to Pharma 2020, changes are occurring in the country in the bio/pharma industry that could set the stage for a plethora of opportunities for contract service providers. After all, the government’s goal is that at least 50% of all drugs in the country be produced domestically. Currently, only a quarter of the pharmaceuticals in Russia are made locally.
However, the new law does not contain detailed provisions on both contract manufacturing and contract research organizations. Therefore, there is still a need for regulations to clarify various aspects of contract service provider activity. “Currently, the business community in Russia, industry associations and the government are working on a number of draft laws in the area of pharmaceutical manufacturing and clinical trials,” continued Maksimova. In fact, there are more than 30 draft laws affecting the healthcare and pharmaceutical sectors still being discussed in Russia. Once the law is further defined, the extent of opportunities available for contract service providers should be made clear.
Domestic Companies Have Home-Court Advantage
Since one of the primary goals of Pharma 2020 is to increase the number of homegrown manufacturers, this could potentially result in a less-than-friendly environment for international companies. “On the surface it looks as if the focus of Pharma 2020 is squarely on domestic companies, since the Russian government’s priorities in the industry are to concentrate on strengthening control over prices and to implement protectionist measures to support local manufacturers,” said Maksimova.
“Despite the economic downturn, the Russian pharmaceutical market remains one of the most promising and fast growing in the world. This makes it attractive for investment from both domestic and foreign pharmaceutical manufacturers. In fact, in the last year, several dozens of such manufacturers announced their plans to build their own manufacturing facilities in the country. It is also noteworthy to mention that the number of foreigners willing to open up their production facilities in Russia is approximately equal to that of domestic investors,” continued Maksimova.
The top draw for these companies is the provision in Pharma 2020 that states that as soon as a foreign manufacturer starts producing pharmaceuticals in the country, it acquires the status of a local manufacturer. This, of course, provides certain advantages for these manufacturers over their foreign competitors. Therefore, opening up a local production facility could be well worth it for many.
Subscribers to PharmSource ADVANTAGE received the complete version of this article which contains a detailed overview of several manufacturing, modernization and innovation projects currently underway in the Russian bio/pharma industry.
To read the full version of this article, sign-up for a free trial of PharmSource ADVANTAGE.
| PharmSource ADVANTAGE: Contractor Profile |
|
Xcelience, Inc.
Headquarters: Tampa, Fla., USA Services:
|
Clinical Dose Manufacturing and Packaging
Xcelience and Penn Pharma Form Joint Venture
Xcelience (Tampa, Fla., USA) and Penn Pharmaceutical Services (Gwent, UK) formed a joint venture to provide clinical manufacturing services, including API encapsulation, using a network of Capsugel’s Xcelodose precision powder micro-dosing systems.
Below is a part of an actual profile from the PharmSource ADVANTAGE database of contract service providers. The database provides detailed information about contractor capabilities in dose and API manufacturing, packaging services, formulation and more. Qualified companies are listed in PharmSource’s contractor database free of charge, based on their relevance to our data sets. Along with each profile, you’ll find information about known clients, mergers/acquisitions/alliances, company financials and our comprehensive archive of proprietary articles.
The PharmSource ADVANTAGE database of contract service providers can be used to create a shortlist of contractor candidates, or for benchmarking. It can help you save weeks of searching, researching and due diligence.
| Xcelience | |||
| Mergers/Acquisitions | News & Analysis | Known Clients | |
| Corporate Profile: | |
| Address: | 5415 West Laurel Street Tampa, FL 33607 USA |
| Voice: | 813-286-0404 |
| Fax: | 813-286-1105 |
| Website: | www.xcelience.com |
| E-mail: | info@xcelience.com |
| Ownership: | Private: management owned |
| PharmSource Commentary: | Contract Services |
| Contract Business: | |
| Business head: | Derek Hennecke |
| Title: | President and CEO |
| Contract revenues: | $0-24 million |
| Business Head contact: | Derek Hennecke Voice: 813-286-0404 E-mail: derek.hennecke@xcelience.com |
| North American contact: | Randall Guthrie Voice: 813-286-0404 E-mail: Randall.Guthrie@xcelience.com |
| Trade shows: | AAPS Annual Meeting |
| Xcelience Tampa – FL – USA Facility 5415 West Laurel Street Tampa, FL 33607 USA Phone: 813-286-0404 Fax: 813-286-1105 info@xcelience.com |
|
| Specifications for “Solid, Semi-solid/Liquid Phase I/II CTM” | |
| Processing Capabilities | |
| Granulation | |
| Non-aqueous solvents: | Yes |
| Dosage forms | |
| Aerosol: | No |
| Gum: | No |
| Liquids – non-sterile: | Yes |
| Metered dose inhalers: | No |
| Semi-solids: | Yes |
| Softgel capsules: | No |
| Solid dose: | Yes |
| Transdermal: | No |
| Project acceptance criteria | |
| Antibiotics | |
| Cephalosporin: | No |
| Penicillin: | No |
| Controlled substances | |
| DEA schedule II: | Yes |
| DEA schedule III, IV, V: | Yes |
| High potency and cytotoxic | |
| Cytotoxic materials: | No |
| Hormones/steroids: | No |
| Vaccines and viruses | |
| Vaccines-killed: | No |
| Vaccines-live/attenuated: | No |
| Vaccines-recombinant: | Yes |
| Other materials | |
| Proteins & peptides: | No |
| Radiopharmaceuticals: | No |
| Vitamins & nutritionals: | Yes |
| Development capabilities | |
| GMP: | Yes |
| Particle coating | |
| Fluid bed: | Yes |
| Microencapsulation: | Yes |
| Microwave: | No |
| Drying | |
| Spray drying: | No |
| Tray: | No |
| Particle sizing | No |
| Cone: | No |
| Hammer: | Yes |
| Jet: | No |
| Micronization: | No |
| Granulation | |
| Extrusion: | No |
| Fluid bed: | Yes |
| Low-shear: | Yes |
| Roller compaction: | No |
| Spheronization: | No |
| Tableting/encapsulation | |
| Bilayer tablets: | No |
| Compression: | <10k units/hr |
| Encapsulation: | Feton manual fill, sizes AA and 0-4 |
| Instrumented press: | No |
| Overencapsulation: | Yes |
| Tablet coating – Hi-coater type: | No |
| Semi-solids | |
| Filling capabilities: | Tube, Jar, Suppository |
| Regulatory approvals and certifications | |
| USA – FDA: | Yes |
To view the full version of this profile, sign-up for a free trial of PharmSource ADVANTAGE.
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