Essential Insights for Sourcing Pharmaceutical Intermediate Efficiently

You know, the world of pharmaceuticals is changing pretty quickly these days. One really important thing for companies to focus on is how they source their pharmaceutical intermediates. If they want to stay competitive and keep their products up to scratch, it’s just crucial. A recent report from Grand View Research suggests that the global market for pharmaceutical intermediates is expected to hit around $25.2 billion by , which is a solid growth rate of about 5.4% every year. This just shows how vital these intermediates are in making active pharmaceutical ingredients (APIs). Having smart sourcing strategies isn’t just about saving a few bucks—it’s also about building a resilient supply chain, especially with all the geopolitical stuff going on and the unpredictability of raw material supplies.

And let’s not forget, as drug formulations get more complicated, companies really need to rethink how they’re sourcing these intermediates. A report from MarketsandMarkets points out that nearly 40% of R&D budgets in pharma go towards sourcing intermediates, which definitely hits the wallet hard. With regulations getting stricter and the push for innovation speeding up, it’s more important than ever for manufacturers to nail down their sourcing practices. That way, they can stay compliant and sustainable while also getting new therapies to market faster. In this blog, we’re going to dive into some key insights and strategies for optimizing the sourcing process of pharmaceutical intermediates. Our goal is to arm industry folks with some practical tips to thrive in this competitive landscape.

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Key Factors to Consider When Sourcing Pharmaceutical Intermediates

When you're looking for pharmaceutical intermediates, there are a few key things you really want to keep in mind to make sure you're getting the best efficiency and quality. First off, it's super important to check if your suppliers are compliant with all those tricky regulations. Different regions have different rules, and since pharmaceutical intermediates have to meet really strict standards, you definitely want to stick with suppliers who follow Good Manufacturing Practices (GMP). Doing so not only helps ensure the quality of what you're getting but also keeps you safe from those nasty risks tied to not meeting compliance standards. Then there's the supplier's experience and capability to consider. Honestly, a supplier that’s been around the block a few times and knows the ins and outs of pharmaceutical manufacturing is a huge plus. You’ll want to take a look at how they manage their production processes, the technology they’re using, and their quality control measures. This will give you a clearer picture of whether they can meet your specific needs. Don’t forget to check out their track record too—reviews, case studies, or testimonials can really shed light on how reliable they are and how well they perform in the industry. Oh, and let’s not overlook the importance of scalability and flexibility in their operations. Pharmaceutical companies often have to deal with demands that can change on a dime, so having a partner who can ramp up production or dial it back without dropping the ball on quality is absolutely priceless. This sort of flexibility not only saves time and money but also ensures that your supply chains run smoothly without any hiccups. By keeping these factors in mind, companies can source their pharmaceutical intermediates more efficiently and effectively, really aligning with their broader goals in supply chain management.

Strategies for Evaluating Suppliers in the Pharmaceutical Sector

You know, in the world of pharmaceuticals, picking the right suppliers for those crucial intermediates is super important. It really impacts product quality, compliance, and keeps the whole production process running smoothly. With the rising demand for meds and the headaches that come from supply chain hiccups and tricky regulations, a solid strategy for evaluating suppliers has become a must. It’s eye-opening to realize that around 70% of pharma companies are currently rethinking their supply chains to better tackle future disruptions—says a lot about how vital reliable partnerships have become.

When we dive into assessing suppliers, we really need to take a good look at their production capabilities, their track record with regulatory compliance, and how they handle quality assurance. A recent survey by PwC found that about 65% of pharma companies consider it a big deal for suppliers to comply with Good Manufacturing Practices (GMP). Focusing on that compliance doesn’t just keep our products safe and effective; it can actually help sidestep all sorts of regulatory delays too, which is always a win.

And let’s not forget about the growing importance of sustainability in supplier evaluation! A McKinsey report pointed out that 75% of pharmaceutical executives think that things like environmental, social, and governance (ESG) factors are going to play a crucial role in how they source in the future. So, suppliers who show they’re committed to sustainability and ethical practices are likely to set themselves apart from the crowd. Taking this all-encompassing view on supplier evaluation not only strengthens our supply chain's resilience but also aligns with what society expects from the pharmaceutical industry these days.

Best Practices for Ensuring Quality and Compliance in Sourcing

When it comes to finding pharmaceutical intermediates, the focus on quality and compliance is just so crucial. You really want to kick things off by choosing suppliers you can trust—those who stick to strict regulatory standards. Doing your homework here is key; that means diving into audits and really checking out a supplier’s quality management systems. It makes a world of difference in reducing the risks tied to not meeting the regulations and ensures that the products you get will actually be safe and effective.

Another tip? Implementing a solid quality assurance protocol throughout the sourcing journey is a must. You should be doing regular tests and validations on the intermediates. This way, if something deviates from what you expected, you can catch it early and fix it without any major hiccups. Plus, keeping the lines of communication open with your suppliers about what you expect in terms of quality and compliance really helps. It creates a kind of teamwork vibe that values product integrity.

Lastly, don’t forget to stay in the loop regarding any regulatory updates and industry standards. Regulations change all the time, and being proactive about compliance not only helps protect the integrity of your pharmaceutical products but also builds trust among your stakeholders. By following these best practices, companies can streamline their sourcing and ultimately boost their product offerings in the competitive world of pharmaceuticals.

Cost Management Techniques for Pharmaceutical Intermediate Procurement

Let’s talk about the world of pharmaceutical procurement for a second. You know, managing costs has become super important with all the competition and market pressures piling up. A game changer in China has been the "Two-Invoice System". It’s really shook up how pharmaceuticals are supplied, making everything a bit more transparent and efficient. This shift is all about cutting down distribution costs and tackling the crazy issue of drug price hikes, which is a win-win for both manufacturers and healthcare providers.

These days, pharmaceutical companies are on the lookout for fresh ideas to get their hands on intermediates more efficiently while keeping an eye on costs. Building strong ties with suppliers is key here. By taking a more strategic approach to sourcing, companies can lock in a solid supply of high-quality intermediates. Plus, if they negotiate long-term contracts and play the bulk-buying game right, they can save a ton of money—something that's super important for staying competitive in a market that’s always changing.

And let’s not forget tech—integrating it into procurement can seriously up your game when it comes to data analysis and forecasting. This helps companies make smart decisions. Investing in automated systems can help streamline things, improve inventory management, and cut down on waste, all of which really boosts cost efficiency. As the pharmaceutical scene keeps expanding, the companies that really focus on smart cost management and clever sourcing of intermediates are the ones that are going to come out on top in this competitive arena.

The Role of Technology in Enhancing Sourcing Efficiency for Pharmaceuticals

You know, the pharmaceutical industry is changing pretty fast, and if companies want to stay ahead of the game, they really need to get good at sourcing their intermediates. It’s all about getting products out on time. It turns out that using advanced tech has really made a difference in how sourcing works. A McKinsey report actually says that organizations that tap into digital sourcing strategies could save up to 30% on procurement costs. That really shows how much tech can shake things up!

One of the biggest breakthroughs has been using artificial intelligence (AI) for choosing and assessing suppliers. With all the mountains of data suppliers generate, AI helps companies sift through it to pick partners who are both reliable and cost-efficient. According to a Deloitte study, companies that have integrated AI into their procurement saw a 20% boost in supplier performance metrics and managed to cut down source-to-contract times by 15%. So not only does this mean smoother sourcing, but it also beefs up the overall resilience of the supply chain.

Plus, let’s talk about blockchain technology; it really is shaking up how we think about transparency and traceability in sourcing those pharmaceutical intermediates. A report from the World Economic Forum points out that blockchain could help lower global supply chain costs by around 20%. It’s allowing everyone involved to trace raw materials and intermediates with incredible accuracy. This level of transparency is key in fighting against counterfeit products, which ultimately leads to safer pharmaceuticals. As tech keeps evolving, we can’t overlook how it’s making sourcing more efficient. It’s definitely paving the way for a better and safer pharmaceutical supply chain.

Abstract

In the search for new and efficient ways to discover and develop new drug candidates, many big pharma companies have utilized external partners for R&D services. In recent years the scope has broadened to support a full range of drug development activities from lead identification and optimization to late-stage development. This article will focus on the challenges and opportunities in developing partnerships with contract research organizations (CRO) to prepare active pharmaceutical ingredients (APIs) and intermediates in support of safety assessment activities and early stage clinical studies. This will include components of a strategic sourcing plan, selection of preferred partner base, evaluation of CRO performance using metrics, and establishing streamlined workflows using best practices to shorten timelines, create efficiencies, and ultimately reduce costs.

What to Source and Why?

A recent survey conducted by Jeffries and Co. showed that many pharma companies expect to grow their outsource spending significantly across all stages of development(see Figure 1) [1]. Though the outsourcing spend in early stage development is less than late stage, it is one of the predominant growth areas, predicted to increase by 30%.

A significant growth in outsourcing is seen in the increased use of CROs to prepare early stage APIs and intermediates. This increase is due to a number of reasons including the desire of pharma to shift fixed costs to variable costs, expand capacity, to access scientific expertise, and expand capabilities.

Pharma’s internal capacity and plant costs are fixed and cannot be easily adjusted. However, work to prepare APIs and intermediates is a variable demand. This demand can be shifted externally towards CROs as a variable cost, when needed, based on the pipeline. Flexible spend at CROs can also increase a pharma company’s capacity by providing additional external headcount to meet the peaks of internal demand. Another benefit of sourcing is that Pharma can rapidly and flexibly access a pool of qualified scientists through CROs without the need to internally recruit and hire.

Complementing the in-house capabilities of a pharma company, CROs are often used for specialized activities such as high-potency API synthesis, peptide synthesis, chemocatalytic and biocatalytic processes, SFC separations, and fermentation. In these specialized and often capital expensive fields it is an attractive strategy to buy the service needed from a CRO rather than maintaining the internal capacity and capability with consequent internal fixed overhead costs.

Regardless of what is sourced through selected CROs the challenge of protecting the sponsor’s intellectual property (IP) must be addressed. Issues regarding IP can be mitigated by appropriate due diligence, building terms regarding IP into the contract, and developing trust and familiarity with CROs by starting with less information-sensitive projects, such as intermediates, before progressing to APIs.

Strategic Sourcing

In the late ’s into ’s, many pharma companies sourced early phase APIs and intermediates with a large number of CROs on a fee-for-service (FFS) or per project basis through competitive bidding. Technical packages with specifications for the preparation of APIs or intermediates were sent out to multiple CROs to bid. This method of sourcing usually was project focused, highly transactional, and provided pharma an opportunity to evaluate several different CROs with actual projects. However, managing a large number of different vendors can be inefficient, costly and can put a strain on a sponsor’s sourcing management resources. To minimize the administrative burden and improve the overall management of vendor relationships, a recent trend seen in pharma for sourcing is the use of a consolidated partner base of preferred providers in a strategic partnership or alliance.

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A sourcing strategy using a smaller number of preferred CROs can be managed more efficiently and requires less sourcing management resources. Such strategic sourcing is usually managed through an established governance team with defined roles and responsibilities. The established governance team, with participation by executive leadership and other key stakeholders (scientists, sourcing managers, and procurement), assesses and defines the company’s core competencies and capabilities. Once the core competencies and capabilities of the company have been determined, a sourcing strategy can be developed which will utilize CROs with complimentary competencies and capabilities and will allow a company to focus internally on their core competencies.

There is no universal strategic sourcing model which can be applied to all of pharma sourcing. However, key attributes of successful strategic partnerships or alliances are trust and utilization of preferred CROs as integral extensions of the sponsor company with shared goals, objectives, responsibilities, and accountability.

CRO Evaluation and Selection

The strategic sourcing plan of a company will define the type of work to be outsourced and the corresponding business requirements. Many methods of selecting CROs used by pharma have been based on common procurement practices including the application of AQSCIR or AQSCI (Assurance of Supply/Regulatory Compliance, Quality, Service, Cost, and Innovation) [2] (see Figure 2). As illustrated, the foundational business requirements are represented at the base of the AQSCI pyramid and the differentiators are at the top. From the information gathered from RFI (Request for Information) responses and due diligence facility visits, the business requirements outlined in AQSCIR can be applied in the selection of preferred CROs in sourcing early stage APIs and intermediates. Preferred CROs must meet defined business requirements under each of the areas indicated in the acronym. Assurance of Supply and Regulatory Compliance is one of the most important criteria. Typically, a preferred CRO must be able to guarantee that goods and services are regulatory compliant, have the ability to ramp up or down their capacity to meet company demands, can produce the quantities required, and complies to all applicable shipping, environmental and safety regulations. In the Quality criterion, a CRO must possess the ability to provide goods and processes which meet required specifications. Preferred partners should have strong process development and analytical capabilities in order to develop chemistry and analytical methods which are essential to support early API and intermediate sourcing. The Service a CRO provides is another selection criterion and may include dedicated account managers, flexible and short project initiation lead times, electronic data interchange tools, short communication response times, logistics and customer service. In the Cost selection criterion, a CRO cost of goods and services must be competitive and meet the pharma company’s expectations. Finally, but not the least important selection criterion, is Innovation. In early stage API and intermediate sourcing, a preferred CRO should use leading-edge technology, equipment, and facilities to demonstrate their ability to develop and improve chemistry, adding value to the partnership.

Other selection considerations outside of the AQSCIR criteria can be based on CROs breadth of relevant services. A sponsor’s strategic sourcing plan may require the use of CROs that provide integrated services in other areas of drug development. Vendors that provide integrated services have been utilized as a source of “one stop shopping” recently in the strategic sourcing of drug discovery. Time will tell if the use of integrated CROs provide a competitive advantage. Finally, selection of a preferred partner can be made based on how well the CRO work culture fits that of the sponsor. The CRO culture should be compatible with sponsor’s culture and share similar values, expectations, attitude to business risk, and commitment of successful drug development.

Concentrating more business at selected CROs with “preferred” status leads to stronger partnerships. A steady stream of work coupled with “preferred” status provides the confidence and drivers for CROs to invest in new resources and technologies to better improve the services provided.

Before selecting CROs and implementing the developed strategic sourcing plan, key company stakeholders gather and analyze information about potential preferred partners to form an assessment of their performance against the AQSCIR attributes. Some of the important information that should be obtained regarding various CROs are details about facilities, capacity, capabilities, financials, staff, and available references. An efficient method to request information from multiple vendors is by sending RFIs using eSourcing tools. These tools can send out template surveys to multiple CROs. Once RFI responses have been collected and analyzed, a due diligence visit to potential CROs is arranged to verify that the information provided in the RFI responses are accurate and to assess CROs work flow and practices. Such visits also provide an ideal opportunity to review the suitability of the two partners for an alliance. If a potential CRO looks promising for selection and has a cGMP facility, an audit can be requested and performed by the company’s QA group to assess if the facility is compliant to cGMP[3] and meets the company’s standards.

Sourcing Management

The overall success of a strategic sourcing partnership will depend significantly on the effectiveness of the sponsor’s sourcing management. The use of communications tools and standard processes developed from best practices are some important areas of sourcing management that can be implemented in a strategic sourcing partnership to ensure the working relationship between a sponsor and CRO is efficient, transparent, and ultimately productive.

Communication Tools

There are many different methods of effective communication used by sourcing managers when sourcing early stage APIs or intermediates. Sending RFPs (Request for Project) to preferred CROs and evaluating their subsequent proposals is essential to competitive bid sourcing of early stage APIs and intermediates. Electronic procurement tools can allow sponsors to upload and send RFP’s with project scope, technical package, and specifications to multiple CROs. It is important to provide a clearly defined scope with detailed technical information, deliverables, and expected timeline upfront in the initial RFP. Understanding the project chemistry and requirements will enable the CRO to provide the sponsor with an accurate response regarding the pricing, lead time, and other project information through the tool. Such a tool can compile and evaluate bids in a head-to-head comparison of CRO proposals.

Other important sourcing management tools are those supporting exchange of confidential information. It is important that secure networks are established to allow real-time encrypted communications between CROs and sponsor sourcing managers. Such tools can include a secure web portal for encrypted correspondences and an external web platform that is accessible by both sponsor stakeholders and CROs. An external web platform enables sponsors to upload technical packages and CROs to upload updated project plans, weekly progress reports, final reports, weekly teleconference meeting minutes, and shipping and logistical documentation. Having the same version of project documents and updates available to both sponsor stakeholders and CROs provides an efficient and transparent method to initiate new projects, provide real-time updates to internal project teams on current projects, and provide access to final reports and data of completed projects.

Effective and transparent communication is important toward a successful strategic sourcing partnership. A sponsor’s sourcing manager should serve as the primary point of contact for CRO communications regarding projects and logistics; and should also be the primary point of contact internally as well as coordinator for internal stakeholders in communications such as project tech transfers, updates, and issues. Having a primary point of contact for both CROs and internal stakeholders will ensure that established sourcing best practices and vendor standard operating procedures (SOPs) are followed and can reduce contradictory communications that cause confusion for both CROs and sponsor stakeholders.

Standard Processes

stablishing streamlined workflows and processes using best practices to provide the most impact to shorten project timelines, create efficiencies, and ultimately reduce costs is an important function of sourcing management. Sponsor sourcing managers work with CROs using good project management skills and establish standard workflows and procedures that are applicable to a sponsor’s entire preferred vendor base. SOPs which describe processes that are expected from all preferred CROs provide a sound foundation. SOPs describing best practices for CROs need to be flexible to allow variability and adaptation by CROs. Many CROs may have their own SOPs in place developed from working with various pharma companies and may be more efficient than the sponsor’s SOP. However, it is still important that the best practices and processes implemented by CROs are compatible to the sponsor’s SOPs and meet the sponsor’s requirements.

CRO Performance and Feedback

In order for sponsors and CROs to build a partnership, it is important to capture agreed upon project-specific metrics. Examples are cycle times, quality (met specifications), and target vs. actual delivered quantity and date comparisons. Project-specific metrics captured can then be used to assess CRO performance and lead to improved productivity. In order to maintain successful strategic sourcing partnerships, it is important to measure CRO performance and provide performance feedback to CROs on a regular basis (typically monthly or quarterly). Many of the criteria used to establish and select preferred vendors and partnerships can be used to develop a supplier scorecard that incorporates both qualitative and quantitative measurements of supplier performance. A supplier scorecard can be in the form of a survey rating CRO performance on specific projects based on metrics captured and perception of performance in the areas of AQSCIR, and can be scored internally by sponsor sourcing managers and stakeholders. When supplier scorecards have been completed, relative comparisons and assessments of a CRO’s performance can be determined. Derived from previous CRO performance assessments, scorecard results and metrics can also show trends of improvement or deterioration of performance and can be communicated to preferred CROs as performance feedback. Such feedback can lead to improved CRO performance of services. Similarly, feedback from CROs regarding sponsor sourcing management can benefit the strategic partnership.

Conclusion

Using a structured evaluation process and meeting the AQSQIR business requirements defined by the sponsor’s governance team, CROs can be selected to compliment a sponsor’s core competencies and capabilities. Strong project management of CROs using best practices can streamline workflows to shorten timelines, create efficiencies, and reduce costs. Strategic partnerships can be monitored by assessing CRO performance on a quarterly basis using metrics and established supplier scorecards. Identified trends in CRO performance can be communicated as constructive feedback to CROs. Developed strategic sourcing partnerships built on trust with preferred CROs as integral extensions of a sponsor’s drug development activities can lead to successful sourcing of the preparation of early stage APIs and intermediates.

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References

1. Windley D, Bolan G A Detailed Analysis of Jeffries’ CRO Survey, Jeffries and Co., Inc., March 15, .
2. Business Requirements Analysis – The Core of Category Management available on the internet: http://www.positivepurchasingacademy.com/getdoc/d-6a51-4dcc-bd2e-98c2c06c/-WB-GEN-V1-1-BUSREQS-pdf.aspx.
3. Guidance for Industry, Q7A Good Manufacturing Practice Guidance for Active Pharmaceutical Ingredients, August , ICH.