Sterling Pharma Solutions provides pharmaceutical manufacturing of small molecule active pharmaceutical ingredients (APIs), developing drug substances that go into therapeutics across the world. It currently employs over 1,350 people at its sites across North America and Europe.

The company has a strong heritage of more than 50 years in developing and manufacturing small molecule APIs from its headquarters in Cramlington, UK, and in recent years has undertaken a strategic growth program, adding two sites in the U.S. to its global network, and a further, dedicated facility for antibody-drug conjugate (ADC) development, in the UK. In 2023, Sterling also acquired a site from Novartis, in Ringaskiddy, Ireland, in addition to NewChem Technologies in the UK, bolstering its global capabilities and capacity for early-phase API development.

Its team of experts now offers a wide range of API synthesis and development services, which includes enzymatic biotransformations, high potency API handling and manufacturing, continuous flow technologies, and ADC conjugation, as well as solid state science and material characterization.

Contract Pharma had the chance to talk with Sterling’s chief commercial officer, Chad Telgenhof, about the company’s growth, the current state of the small molecule market, and how Sterling has adapted to meet the evolving needs of its customers.

Contract Pharma: Why were your most recent acquisitions important for the business and its customers?

Chad Telgenhof: The Ringaskiddy site was previously a dedicated manufacturing site for Novartis, and with the acquisition came a long-term agreement to continue to supply these products, but we also can utilize the site as a flexible manufacturing facility, providing additional capacity for contract development and manufacturing organization (CDMO) services. Being located within the European Union (EU), the site’s location also has several advantages in terms of supply chain, recruitment and exporting to customers.

The acquisition of NewChem Technologies provided us with a new facility in the UK in which to expand our capabilities for very early-stage, non-GMP projects. The site will operate in tandem with the plant in Cary, NC, which carries out similar projects, and allows us to access customers’ early-stage programs that we will look to develop and grow across our global network, along the drug development program.

Our philosophy is very much to work with clients for as long as possible throughout development, following the molecule as it progresses, and ensuring that we have the capabilities and capacity to do so is vital. These two new sites are strategically important to our organization, increasing our presence and extending the supply chain with current partners, while providing access into a new customer base and complementing the existing capabilities we have at our other sites.

CP: What is the current state of the small molecule market?

Telgenhof: It remains very strong. The number of FDA approvals still sees a greater number of small molecules than biologics, and the clinical pipeline of drugs remains very healthy. The value of the global small molecule innovator CDMO market was estimated at $41.1 billion in 2020 and is predicted to rise to around $74.9 billion by 2030,¹ although we know that the market is, and is likely to remain, fragmented (see sidebar at the end of this article). A large share of that market is held by a disproportionately small number of CDMO players, and this is a trend that, we would suggest, will continue through consolidation and merger and acquisition (M&A) activity between larger companies.

There are numerous macro factors that are helping this growth, including: the ongoing trend of reshoring projects from the East back to western providers; the continued importance of supply chain security; and the need for companies to deliver effective and economical dual sourcing strategies considering lessons learned from the pandemic and the effects that it had on global supply chains.

There is also a change in the type of molecules that are being outsourced, with a growing number of “adjacent areas” to traditional small molecules that necessitate specialized equipment or expertise. These include peptides and oligonucleotides, ADCs, and the growing number of “ultra-high” potent molecules being developed.

Such molecules, combined with an increased demand for outsourced manufacturing, is escalating the pressure on CDMO capacity, and specifically, having the right capacity available, at the appropriate times, to meet customer need.

CP: How have CDMOs such as Sterling had to adapt to meet the needs of customers?

Telgenhof: There is intense competition between manufacturing organizations, and so it is incredibly important for a company to differentiate itself. At Sterling, we believe that while we have technology, capacity, and a broad range of services to offer customers, what sets us apart is our culture and our people.

At the heart of any success is a partnership between customer and service provider. As a company, Sterling originated, and trademarked the acronym PDMO, which stands for Partnership Development and Manufacturing Organization. It is our belief that partnership transcends the contract, and every company should aspire to work in this way—offering the best customer service possible.

There is no singular formula as to how to work with customers, indeed there is no “one-size-fits-all” strategy for API development. Every customer, project and relationship is different and unique, and while some work that is carried out is more transactional and akin to traditional “contract manufacturing,” it is vastly different to working with customers in early-phase development that require close collaboration and a sharing of ideas.

Companies need to be flexible and adaptable to changing needs—be they customers’ demands, evolving timelines, or unexpected circumstances. Agile project management is crucial so that decisions can be made quickly and efficiently, and communication between all stakeholders must be clear and understood. We come back to the point made previously, that it is critical to have the right capacity available at the appropriate time, so ensuring accurate scheduling within manufacturing facilities is vital. Through clear communication, partnerships and understanding, most challenges, and there will always be challenges, can be overcome.

Sterling now has six global facilities, and we see them working very much as one network, where, as they progress, the needs of projects can be matched to sites’ expertise to offer the best service to customers. One example of this is in ADC development: our U.S. site in Cary, NC looks to develop the linker chemistry; our high-potency production facilities in Germantown, WI can synthesize the warhead; and our facility in Deeside, Wales, UK, can undertake the final GMP conjugation steps to complete the manufacturing.

CP: What challenges does the industry face, and how is Sterling looking to address these?

Telgenhof: Time is always our greatest pressure, and through our handling of customer relationships, we ensure that expectations are realistic, and where there may be deviations from a schedule, we can work with customers to ensure the best outcome. Again, working in close partnerships means that programs’ progress is followed by both parties so that most events that can cause delay can be foreseen and mitigated against to a greater extent.

Supply chain security is a key focus throughout the industry, and as CDMOs, we make up a large section of our customers’ supply chain. However, we constantly review our procurement practices to identify any potential risks that could affect our business and customers’ delivery schedules. We also have the flexibility and ability to undertake raw material manufacturing within our own assets to alleviate any potential sourcing problems if necessary.

I have mentioned the importance of the people and culture within Sterling, and recruitment of the best employees with the correct mindset and skills is a constant process. Our talent acquisition team works hard through outreach programs with educational institutions to highlight the benefits of a career within the pharmaceutical industry, and for those who choose to work for us, we invest to ensure they can have access to training and grow within the business. Investment in our workforce is a cornerstone to our business, as we need specialized skills in our employees, which overall, are learned within the work environment through experience.

CP: What is next for Sterling?

Telgenhof: In the short term, our focus is very much on fully integrating the two new sites into our global network and get them aligned on all aspects of procedures and operations. This will then allow us to increase activity across the network and unlock the efficiencies that the additional capacity and technologies at the sites bring to help to grow Sterling’s business.

Looking further ahead, our ambition is to continue what has already been an exemplary growth journey which will be achieved through a combination of organic and inorganic growth, as and when appropriate. Sterling is a small molecule manufacturer—this will remain at the core of the business—and our focus is to continue to do what we do well, while we evaluate and capitalize on opportunities to invest in relevant adjacencies and technologies that add value to and complement our core expertise.

We get to work with projects across the development spectrum, and early-phase projects have a long and uncertain path to reach commercial launch. It is impossible to know which programs will make it, so trying to choose which projects to work on is a gamble. Our goal is to work with as many partner organizations as possible and deliver the best service we can to afford our customers the greatest chance of success based on what we can control. The industry often speculates regarding what “the next big thing” will be. At Sterling, we remain focused on continuing to do what we excel at and doing more of it. 

References

1. https://www.biospace.com/article/small-molecule-innovator-cdmo-market-size-to-hit-us-73-9-billion-by-2030