November 2006

INSPECTIONS

EFCG and SOCMA Urge More Inspection of Foreign API Makers

CPhI Worldwide, Paris (Oct. 3)—The Synthetic Organic Chemical Manufacturers Association (SOCMA, Washington, DC, www.socma.org) and the European Fine Chemicals Group (EFCG, Brussels, www.efcg.cefic.org) have teamed to urge US and European regulatory authorities to increase inspections of foreign manufacturing facilities of active pharmaceutical ingredients (APIs) to reduce patient risk from sub-par drugs, to increase national security, and to level the economic playing field.

SOCMA and EFCG issued a joint position paper about the need for more inspections of foreign API manufacturing facilities (1). The move follows the submission of a citizen petition to the US Food and Drug Administration (Rockville, MD, www.fda.gov) by SOCMA's Bulk Pharmaceuticals Task Force, which also asks the agency to increase inspections of drug manufacturing facilities located outside the United States. SOCMA is the US-based trade association representing chemical batch and custom manufacturers.

The EFCG also has taken an active role in raising concerns over the preparedness of European Union (EU) and the European national regulatory authorities in implementing recent EU legislation. The law requires that all medicines marketed in the Union be made with APIs that comply with the harmonized GMP standard ICH Q7. EFCG had drawn attention to the need for increasing foreign-inspection resources and improving enforcement measures by EU and national authorities (2, 3). EFCG is part of the European Chemical Industry Council (Brussels, www.cefic.org), the European trade association representing chemical manufacturers. EFCG consists of 200 companies and six trade associations representing European fine chemical companies.

Specifically, SOCMA and EFCG are calling for increased foreign inspections based on the changing pattern of API supply into the United States and the EU.

"Globalization has caused unprecedented pressure on prices and margins and has driven ... generic and OTC companies to buy their APIs at the lowest cost, often from plants that have never been inspected by any health authority from the EU or US," assert SOCMA and EFCG.

The joint statement further says that the level of foreign inspections has not kept pace with changing supply patterns. "In 2005, FDA conducted 163 inspections of foreign API manufacturers, of which 14 (9%) of the API inspections were in China, 23 (14%) were in India, which is not proportional to the quantity of API being imported," says the SOCMA–EFCG statement. The groups estimate that more than 80% of APIs used by US manufacturers are imported, with about half of the imported volume originating from India and China (1).

"This is an appalling state of affairs considering the amount of medicines (and their precursors) imported into the United States," said Joe Acker, president of SOCMA. "The lack of inspections could mean a large number of unsafe medicines. On top of it all, less enforcement equates to less regulation and provides foreign firms a competitive advantage over US and EU firms that follow the rules."

A similar concern exists in the EU, where the European Directorate for the Quality of Medicines inspected about 80 API manufacturing sites over a seven-year period, with roughly half of those inspections in China and India (1). "The EU is unable to account for the number of manufacturing facilities importing into the Union, without considerations to the number of inspections performed," said the EFCG and SOCMA in a joint statement.

Guy Villax, chairman of EFCG's Pharmaceuticals Business Committee and CEO of Hovione (Lisbon, Portugal, www.hovione.com), addressed recent action by the European Parliament over this issue. "Recently a group of Members of the European Parliament expressed their concern by tabling a Written Declaration requesting the EU to make inspections of manufacturers and importers of APIs mandatory to ensure higher safety standards are met and qualified by a GMP Certificate," said Villax. "I have much sympathy for the authorities here in Europe. They are charged with the responsibility of protecting our citizens' health but are not given enough resources to send inspectors to countries such as India and China to ensure European standards are being met."

SOCMA and EFCG urge "steps be taken to stem the loss of domestic API manufacturing facilities" and for the "rigorous enforcement of the same standards across all pharmaceutical production venues."

References

1. "Uneven Enforcement Leads to Sub-Par Drugs and National Security Risk," European Fine Chemicals Group and Synthetic Organic Chemical Manufacturers Association, www.socma.org/PDFfiles/bptf/EFCGSOCMA_common_position_paper.pdf, accessed Oct. 10, 2006.

2. G. Villax and C.Oldenhof, "Global API Sourcing: What Is Next for Suppliers to the European Union," Pharm. Technol. Sourcing and Management 2 (7), e10–e19 (2006), www.nxtbook.com/nxtbooks/advanstar/ptsm0706.

3. P. Van Arnum, "The EFCG Looks to Add Muscle to New European Legislation," Pharm. Technol. Sourcing and Management 2 (3), e4–e20 (2006), www.nxtbook.com/nxtbooks/advanstar/ptsm0306/.

–Patricia Van Arnum

MANUFACTURING

Manufacturing Data Emphasize Initiative, Information

Washington, DC (Oct. 13)—In a four-year study of pharmaceutical manufacturing, two business scholars—Jeffrey Macher at Georgetown and Jackson Nickerson at Washington University—found that initiative and information correlate with high productivity. The pair studied 42 facilities owned by 19 manufacturers, including plants producing oral and topical formulations, injectables, and active ingredients. They then correlated management practices with productivity measures such as cycle times, yields, failed batches, and deviation-management outcomes.

The Pharmaceutical Manufacturing Research Project—Final Benchmarking Report (www.olin.wustl.edu/faculty/nickerson/results) found:

1. Organizations actively using information technology to monitor quality with automatic electronic deviation reports, tracking deviations by lot and type, and following staff through the resolution process "universally" enjoy "superior manufacturing performance metrics."
2. Organizations that give "decision rights" for resolving deviations to the staff closest to the problem perform better than those that manage problems remotely.
3. Contract manufacturers, "generally, although not in all instances," show "inferior performance metrics."
4. Facilities that use process analytical technology (PAT) tools "generally, although not in all instances," demonstrate worse performance metrics.

Macher and Nickerson stress that the correlation "does not imply causation." For example, manufacturers often install PAT approaches as they try to fix problem processes, so that manufacturing shortcomings "cause" PAT, rather than vice-versa. The study, which began in 2002, covers a fairly early period in the evolution of PAT.

–Douglas McCormick

ACQUISITIONS

Pharma and Suppliers Consolidate

This fall saw a flurry of acquisitions by both pharmaceutical companies and suppliers.

Pharmaceutical Company Consolidation

Altana AG sells pharma business to Nycomed

Bad Homburg, Germany (Sept. 21)––Altana AG (www.altana.com) plans to sell Altana Pharma AG and its entire pharmaceuticals business to Nycomed (Roskilde, Denmark, www.nycomed.com) for €4.5 billion (about $5.7 billion).

The transaction is subject to approval by antitrust authorities in the European Union and the United States and by an Extraordinary General Meeting of Altana AG, which is scheduled to take place in December 2006. If the transaction is approved, closing is expected to take place by the end of the year, with the transfer of business planned for Jan. 1, 2007.

If the transaction is approved, Hakan Bjorklund, CEO of Nycomed, and Toni Weitzberg, Nycomed's chairman of the board, will remain in their positions. Altana Pharma's president and CEO, Hans-Joachim Lohrish, will be a member of the board of the combined group.

AnorMED accepts Genzyme's offer of $13.50 per share

Langley, BC, Canada (Oct. 10)—AnorMED Inc. (www.anormed.com) determined that Genzyme's (Cambridge, MA, www.genzyme.com) US $580 million offer to acquire all outstanding AnorMED shares at US $13.50 per share is a "superior proposal." The offer is 12.5% more than that offered by Millennium Pharmaceuticals on Sept. 26.

Genzyme will amend its tender offer to increase the price offered from US $8.55 per share to US $13.50 per share.

Gilead Sciences to acquire Myogen for $2.5B

Foster City, CA (Oct. 2)—Gilead Sciences, Inc. (www.gilead.com) agreed to acquire biopharmaceutical company Myogen, Inc. (Denver, CO, www.myogen.com) for $2.5 billion.

Myogen's lead product candidate is ambrisentan, an oral endothelin receptor antagonist for treating pulmonary arterial hypertension. Myogen expects to file a new drug application with the US Food and Drug Administration for the drug as early as the fourth quarter of 2006. GlaxoSmithKline PLC (London, UK www.gsk.com) holds rights to the product outside the United States. Myogen's other key product candidate is darusentan, an endothelin receptor antagonist for treating resistant hypertension.

Gilead is acquiring Myogen in a two-step transaction: a cash tender offer for all outstanding Myogen common stock at $52.50 per share, followed by a cash merger in which Gilead would acquire any remaining outstanding Myogen common stock at $52.50 per share. Upon completion of the two-step merger, Myogen will become a wholly owned subsidiary of Gilead. The deal is expected to close before the end of 2006.

GSK invests in French production facility

London (Sept. 29)—GlaxoSmithKline (GSK, www.gsk.com) will invest more than €500 million in a vaccine-manufacturing plant in St-Amand-Les-Eaux, France. The move will expand the company's production capacity in formulation, filling, freeze-drying, and packaging in response to increasing worldwide demand for pediatric and adult vaccines.

The St-Amand-Les-Eaux plant will manufacture GSK's vaccines for meningitis, Streptococcus pneumoniae, and non-typeable Haemophilus influenzae. In addition, the site will help produce several of GSK's developmental vaccines.

The French facility will include a lyophilization plant for stabilizing vaccines, a liquid plant for filling syringes and vials, a packing plant and warehouse, a power plant, and quality control laboratories. The plant is expected to be operational in 2011.

Hospira takeover of Mayne Pharma increases global presence

Lake Forest, IL (Sept. 20)—In a move that continues the consolidation trend in the generic drugs market, Hospira Inc. (www.hospira.com) agreed to acquire specialty injectables company Mayne Pharma Limited (Melbourne, Australia, www.maynepharma.com) for $2 billion. Hospira's offer of AUD $4.10 (US $3.08) cash per share is a 32% premium over Mayne's Sept. 18 closing price.

The acquisition will increase Hospira's global presence, doubling its international sales to 30% of the company's total sales. According to a company release, Hospira will save $50 million by 2008 "through infrastructure optimization as well as improved supply chain, administrative, and other operational efficiencies." Hospira Chief Executive Officer Christopher Begley said, "This combination will create the leading generic injectable pharmaceuticals company in the world."

Mayne Pharma shareholders will vote on the proposal in early December.

Pfizer to acquire PowderMed

New York (Oct. 9)—Pfizer (www.pfizer.com) is positioned to enter the DNA-based vaccine market with its agreement to acquire UK-based PowderMed Ltd. (Oxford, www.powdermed.com), which holds a pipeline of DNA-based influenza vaccines in clinical development for treating both seasonal and avian flu.

Pfizer hopes PowderMed's DNA-based technology will lead to new vaccines that are easier to use and store than current vaccines and will be more quickly adaptable to changing influenza strains. The technology has generated vaccines that are stable at room temperature without the need for cold storage.

The company's needle-free delivery system also could allow self-administration of vaccines. The formulations are based on the company's "Particle Mediated Epidermal Delivery" (PMED) technology, which delivers DNA-coated microscopic gold particles into the skin using pressurized helium gas. PMED vaccines have been shown to elicit both antibody and cell-mediated immune responses. Financial terms of the deal were not announced.

UCB offers to buy Schwarz Pharma

Frankfurt, Germany (Sept. 25)––UCB SA (www.ucb-group.com) offered €4.4 billion ($5.6 billion) in cash and stocks to acquire Schwarz Pharma AG (Monheim, Germany, www.schwarzpharma.com). If approved, the combined company will be called UCB and will be based in Brussels.

The UCB offer of €50 per share ($64) in cash and 0.8735 UCB shares was accepted by the Schwarz family, which owns 60% of the stock. Schroders Investment Management Ltd. and Capital Research and Management, which combined hold nearly 8% of Schwarz's stock, also agreed to the deal.

The deal would create a company with annual revenues of more than €3 billion ($4.2 billion) and annual research and development spending of more than €700 million (almost $1 billion).

Suppliers Deals

Aesica acquires Merck site

Cramlington, UK (Oct. 9)—Aesica (www.aesica-pharma.com), a supplier of active pharmaceutical ingredients (APIs), acquired a chemical-manufacturing facility at Ponders End, UK from Merck Sharp and Dohme Limited (MSD, Hoddesdon, UK, www.msd-uk.co.uk). Aesica also agreed to supply intermediates and APIs to Merck for several years. The supply agreement could generate $150–300 million in revenue.

The Ponders End manufacturing facility in Enfield, North London includes both bulk-manufacturing and potent-compound facilities that produce several of MSD's products. The plant can manufacture as much as 300 tons of products per year. Following the acquisition agreement, 74 of the site's employees became employees of Aesica.

Aptuit to acquire EaglePicher

Greenwich, CT (Sept. 26)––Aptuit, Inc. (www.aptuit.com) agreed to acquire the assets and operations of EaglePicher Pharmaceutical Services (EPPS, Lenexa, KS, www.eaglepicher.com) as part of Aptuit's strategy to build capabilities in active pharmaceutical ingredient (API) development and drug-substance manufacturing.

Aptuit will acquire EaglePicher's facilities in Lenexa, Kansas and Harrisonville, Missouri and plans further investments. The deal extends Aptuit's capabilities to include API supply from postdiscovery to market. Following the acquisition, Aptuit will have 12 facilities worldwide, including a clinical trial distribution network of 27 supply depots. The acquisition is expected to close within 90 days.

–Erik Greb, Brianne Harrison, Maribel Rios, Patricia Van Arnum

REGULATIONS

FDA Issues Guidances on Quality Systems, OOS, Cell Lines

During September and October, the Center for Drug Evaluation and Research (CDER) and the Center for Biologics Evaluation and Research (CBER) of the US Food and Drug Administration released more than a dozen draft and final guidance documents*. About half of them have implications for pharmaceutical and biologics manufacturing, including:

Investigating OOS test results

CDER released Investigating Out-of-Specification [OOS] Test Results for Pharmaceutical Production for chemistry-based laboratory testing of CDER-regulated drugs. The guidance addresses traditional drug testing and release methods for active ingredients, excipients, and other components, in-process materials, and finished drug products. It does not cover process analytical technology, "as routine in-process use of these methods might include other considerations."

The source of the OOS result should be identified as an aberration of either the measurement process or the manufacturing process. The obligation to determine the cause of an OOS result remains, whether the batch is rejected or accepted. The regulations require the investigation to be "thorough, timely, unbiased, well-documented, and scientifically sound," backed up by a clear written record.

The guidance outlines preferred procedures and responsibilities as the manufacturer works through a three-phase process to determine the cause of the error: assessing the accuracy of the laboratory's data; conducting a full-scale investigation; concluding the investigation, with final quality control unit determinations on batch quality and release.

Quality systems guidance

FDA's Guidance for Industry: Quality Systems Approach to Pharmaceutical CGMP Regulations describes the responsibilities of the "quality unit," which combines the duties of quality control and quality assurance, "ensuring that the various operations associated with all systems are appropriately planned, approved, conducted, and monitored." The guidance further describes a "Six-System Inspection Model" in which the overarching quality system embodies five overlapping subsystems: production; facilities and equipment; laboratory controls; materials; and packaging-and-labeling.

Most of the document outlines the components of the quality-systems model in operation. It offers guidelines for defining management responsibilities, allocation of quality resources, dividing manufacturing duties between the quality unit and the production staff, and reviewing records and evaluating data.

Cell-based vaccine development

CBER's draft guidance, Characterization and Qualification of Cell Substrates and Other Biological Starting Materials Used in the Production of Viral Vaccines for the Prevention and Treatment of Infectious Diseases, covers cell substrates of human or animal origin and applies to the characterization and qualification of viral seeds. It does not cover the characterization of unicellular production organisms.

"Due to the absence or limited experience with new cell substrates," the guidance says, "manufacturers should develop and apply the best technologies available to assure that these new cell substrates are safe." It discusses properties of the cell substrate, cell banking, viral seeds, biological raw materials, and quality control testing methods such as tests for adventitious agents and cell properties.

–Douglas McCormick

*For the full listing, see www.fda.gov/opacom/morechoices/industry/guidedc.htm.