In anticipation of a live roundtable at CPhI North America (available on demand after the event) we spoke with Bikash Chatterjee, CEO at Pharmatech Associates on his view of the great reshoring trend occurring across the industry, and what technologies and advances could help deliver more manufacturing back to the United States.

CPhI North America: “The Real Cost of Bringing Manufacturing Home” – Wednesday, August 4, 2021, 2:00pm Eastern Time

To watch the session again, or register for the in person CPhI North America (August 10-12) in Philadelphia, please visit: www.cphi.com/northamerica

Contract Pharma: What sort of new technologies will aid reshoring?

Bikash Chatterjee: Everyone knows about the U.S.’ emphasis on continuous manufacturing which subsumes quite a few technologies and interests. In terms of the areas that I think will aid global reshoring, artificial intelligence/machine learning and additive manufacturing are two that have the potential for significant impact. For example, we saw additive manufacturing come into play when it came to addressing the personal protective equipment shortage during the pandemic, providing rapid and consistent PPE units to stem the shortage while large volume manufacturing geared up. Machine learning has proven to be highly effective when it comes to predictive failure of equipment supporting the implementation of total productive maintenance (TPM) programs across the industry. That’s probably one of the most mature adaptations of AI that we’re seeing on the shop floor right now. And you’re going to see other AI initiatives around the supply chain component for multiple pieces of the overall drug supply chain.

Automation is going to be needed for offshoring to be successful; we’ve got to make it viable from a business perspective, and that means we’ve got to find a way to make active ingredients locally, nationally, and make them cost effective.

CP: What are the drivers behind reshoring in the USA?

Bikash: There’s definitely a reshoring trend in the U.S. right now. But around the world, reshoring is on everyone’s agenda at a government and legislative level. In the U.S. alone, Congress has passed 10 legislative actions to try and address reshoring and there are more than a dozen bills in discussion focusing on Buy-American and reshoring. The Biden administration announced a taskforce to look at developing a U.S.-based supply chain for 50-100 critical drugs on the essential medicines list.

Right now, reshoring is being driven through incentives from the government, but I think we’re going to have to find a way for it to be self-sustaining if it’s going to have any longer-term traction.

CP: So what is your view on the duality of lowering healthcare costs and bringing manufacturing home?
 
Bikash: Lowering healthcare costs: that’s not going to go away anytime soon. It is a core objective of both the political left and the right . Beyond the initiatives and incentives being provided by BARDA, you are also seeing some innovative solutions being pursued in the private sector. On the API side, the evolution of new flow reactors is taking a step-function leap forward, providing the ability to manufacture APIs more cheaply – with a goal to be in line with the cost of Asian manufacturers but with greater consistency.

There is one thing that people don’t often consider with the reshoring initiative when they think about continuous manufacturing – they focus on the efficiency and cost savings associated with continuous manufacturing – but it also requires keen insight. It is a kind of QbD on steroids: we need to understand and manage the raw materials and active ingredient characteristics so that when we design the process to manufacture the drug product, we can have confidence that the presumptive assumptions that went into that design are still being met. That’s a complicated undertaking. It’s a similar case with the analytical tools that we’re going to use for measuring and controlling each unit operation. So our ability to realize cheaper drugs is going to be keenly dependent on our ability to make API that is more consistent,–which has not always been the hallmark of any API that is manufactured overseas. Overall, I think we’re heading in the right direction. I think the reshoring initiative and the initiative to lower healthcare costs are actually potentially aligned, and so for one to be successful, the other has to be successful also.

CP: With the session also looking at digitisation in the supply chain, can we have your view on real time supply chain monitoring, and does this (re)make a case for globalised production bases – i.e. the opposite of reshoring trends?
 
Bikash: I think digitization is here for many supply chain sectors out there already.  For example, the  Strategic National Stockpile (SNS) program has implemented a supply chain IT control tower that gives them visibility into five different PPE-category manufacturers as well as 38 or so pharmaceutical drug manufacturers. The fact that we need to have forecast-ability and an understanding of where we are at any time in our national stockpile is paramount to our ability to be prepared when/if something happens. I think there’s going to be more emphasis on digitization now in the U.S. There is no way for us to get away from digitization of the supply chain, and I think you’re going to see it more broadly, and more effectively implemented in the years to come.

CP: We are hearing that CDMOs are getting booked out all the time in the U.S. What does that mean for next 2-3 years? Are we just going to build more? Is it going to go back in house?

Bikash: I think it depends on the sector. If you were to look at small molecules, it’s still the predominant component of the CDMO capacity. That’s not likely to change, and with the reshoring initiatives and companies like Civica Rx, who are engaging CDMOs to actually help manufacture drugs on the drug shortage list, capacity is going to be at a premium. I think if you look at other sectors such as Cell and Gene therapy, which is probably going to be the fastest growing sector globally for our industry, there just isn’t capacity. We’re looking at less than 1% of available capacity, and these are highly complex processes. They require potentially bringing in live viruses for the transfection step. You are beginning to see CDMOs bumping them from the queue in favor of simpler or more conventional drug modalities, so yes, if you fall into one of these categories you have very little choice other than to build your own capability or collaborate with other companies to be able to move your programs forward.

CP: What about international CDMOs, do you think that not having a US site is now an existential threat to them?

Bikash: I think there are a lot of complexities when using a CDMO outside the U.S if you’re a U.S company because of the complexity created by additional country-specific regulations when you must import/export different types of products that are manufactured. For example, we supported the CMC and regulatory filing for a Schedule 3 product and were doing our extractables-leachables testing with a European testing lab. The complexity and added time required to deal with both export and import requirements made getting the material in and out of the country an act of God for that particular market.

There are complexities that you buy into when you go outside the U.S. that you may not be fully aware of at the outset. However, you might see a movement between onshoring and nearshoring which may streamline this– for example perhaps Canada for the U.S. or vice versa.

CP: If we go back 4-5 years, it looks a big swing, as American CDMOs looked to be down on their luck and API CDMOs felt like they were in critical decline.

Bikash: I agree with you on that. I would say capacity has been an issue for the last decade in the U.S. Even at Pharmatech, trying to bring in product development programs to the U.S. from overseas we had a great deal of difficulty securing capacity with qualified CDMOs. We were looking to build clinical materials here or do characterization studies here to support the CMC side. It was challenging to find CDMOs that had available capacity in a meaningful timeframe. You can look out a year, and you can’t find CDMOs that have a window in that time period. That’s what we were struggling with. On the biologics side, it’s an even bigger problem. There’s a real demand for biologics capacity. It’s also the same for complex large molecules.

When we talk about the shortages issue out there, you have to look beyond just the drugs. On the Biologics side, because of the vaccine and the demand for single use systems, you are now faced with prohibitively long timeframes. Similarly, component supply chains are becoming bottlenecks. Glass vials are in short supply, and so are some of the polymers required for analytical testing. So when you look at your supply chain risk exposure, you have to look at your total supply chain to be successful in reshoring these initiatives. It’s not just the API, not just the drug product, but all of the elements, all components associated with our ability to make and test and ensure the drugs are effective and safe. In the panel session at CPhI North America I think you are going to get an inkling of what the industry has brought together, its holistic view, and what they now plan to do to achieve these long-term ambitions.