As costs increase, it can be challenging for contract service firms to keep pricing in check. Maintaining consistent pricing is a formidable challenge, given soaring raw material costs and the need to ensure regulatory compliance and quality control.  As they invest in improving processes and technologies, some companies have come up with new twists on traditional contract manufacturing definitions.

A new acronym is shaping up: that of the PFI, or pharmaceutical formulation intermediate specialist. The science behind what PFI service providers do may not represent a change, but they have grouped key processes and activities in a different way, offering manufacturers a way to cut the cost and time required to make finished dosage forms.

PFI service providers focus on the stage just before finished product production, and the blending of actives and excipients in a form that is ready for the final tableting process.

In order to produce PFIs in-house, companies need to source the required excipients, just like APIs, and test them for quality. Each active pharmaceutical ingredient and excipient has unique features of flow and compressability, and there can be compatibility questions as well. Manufacturers usually deal with scores of products at a time, making inhouse PFI development very expensive.

Players in the new PFI outsourcing space view their services as saving formulation departments significant time and resources. So far, several companies sell PFI’s commercially but only a few companies are targeting this area as an outsourcing niche. Very few have been able to demonstrate the ability to produce a PFI blend for an end user.

But one of them is Granules India, Ltd., a contract manufacturing organization that is focusing on PFIs.  The primary cost-benefit driver for PFI outsourcing is the ability it gives companies to manufacture efficiently on a large scale says C. Krishna Prasad, managing director of Granules.

Analyzing the dollars and cents behind PFI makes for a compelling case. PFIs take more than 80% of the total production cost of a finished dosage, Prasad says. A typical oral solid dosage contains at least one API and a minimum of four excipients.

Outsourcing PFIs can therefore lower supply chain costs in several ways, Prasad says.  First, it results in lower vendor qualification costs. Instead of qualifying and maintaining several vendors, which includes vendor development, supplier audits and stability data, manufacturers will only have to qualify the PFI source which will bring down costs, according to Mr Prasad.

Also, direct procuring of PFIs will save in sampling and testing costs, Prasad explains. By limiting tests to just one material instead of testing several excipients, customers can also cut down on their own internal QC staffing requirements. Purchasing PFIs can also increase flexibility in case of an increased demand, he says.

Mr. Prasad says that his company’s service portfolio has been the result of over 20 years of process optimization. Based in the southern Indian city of Hyderabad, Granules currently supplies APIs, PFIs and finished dosages to over 300 clients across 60 countries. Claiming to own the largest PFI facility in the world, Granules works on select but high-volume products such as paracetamol, ibuprofen, metformin and guaifenesin.

As a concept, PFI outsourcing falls somewhere in between API and finished dosage contract services. Most outsourcers today seem to prefer to stick to their familiar domain, however, lately more traditional CMOs have begun to study the idea of PFI manufacturing. Their formal entry to the market may take a little time.

However, the PFI market seems promising, as API procurement costs rise.  Outsourcing PFI’s reduces costs and reduces the need in investing in more modern in house granulation equipment, a significant capital expense.

Seeing a greater demand, Granules is currently expanding two facilities capable of manufacturing single and multiple active PFIs up to 18,000 tons per year. The company also plans to forward integrate Actus, an API maker which Granules recently acquired. Currently, Granules does about $200 million in annual business.