How to Secure a Sustainable Supply of Raw Materials

Author: Kenneth Ball, Commercial Operations Lead, APIs & Intermediates

Sep 2021

The cost of active pharmaceutical ingredients (APIs) across the globe has risen. A number of factors have contributed to higher costs. Supply disruptions due to temporary factory closures and increases in demand for certain APIs and intermediates to support urgent drug production projects have led to supply insecurity around the world. Furthermore, cost increases and limited availability of key starting materials and critical reagents impact the entire supply chain. Often there are fewer qualified suppliers of these key inputs, than there are of API manufacturers.

Higher API prices have implications for the availability of finished drugs, with the potential for product shortages if companies cannot secure their supply of the materials needed to make them. In countries where drugs are price controlled, companies may have to absorb manufacturing cost increases, impacting their profit margins.

It is important for pharmaceutical companies to take steps to secure the supply of vital APIs and intermediates and maintain consistent manufacturing costs and ability to serve their patients with needed medicines. But how can they achieve this?

There are a few steps pharmaceutical companies can take to minimize insecurity in their supply chain even in a rapidly changing market.

Step 1: Find the weak links in your supply chain

It is common to have multiple API suppliers, but what is often overlooked is the diversity of a supply chain, with many companies failing to ask suppliers where their raw materials come from. If your suppliers’ own supply chains are not spread out geographically, with raw materials obtained from the same source, then your supply network is not diverse, leaving you vulnerable to changes in the market.

Talk to your suppliers about their own networks and sources to identify and rectify potential weak points before they become an issue. Doing so will help ensure you have the agility to respond effectively to API supply challenges in the future.

Step 2: Plan ahead and prepare

It’s impossible to know and anticipate every event that may occur, but it is possible to prepare for likely scenarios, such as price rises.

With this in mind, it is crucial to have a plan for mitigating against acute shortages of ingredients to ensure continuity of supply and to absorb temporary price increases. Having back-up suppliers planned, or stockpiles of vital materials, for example, can go a long way towards ensuring you are prepared for any event.

Step 3: Keep quality front of mind

Regardless of the severity of any market disruption, above all, it is important to maintain a continuously high-quality supply of APIs and intermediates. Some API suppliers may take less expensive routes of synthesis that have the potential to cause contamination in products, with financial and safety implications.

When diversifying your supply chain and contingency planning, quality should always be front of mind. Incorporating quality-conscious, trusted suppliers into your primary and contingency networks can help significantly enhance the security of your quality API supply, regardless of what is happening in the wider market.

Partnerships key to a secure future

The pharmaceutical market can change rapidly – increases in demand or restrictions in supply of APIs and intermediates can occur unexpectedly. With this in mind, it’s important to be prepared for all eventualities to safeguard your business operations.

Working with experienced supply chain partners can go a long way towards achieving this goal. At Pfizer CentreOne, we understand that API supply is all about balancing risk. We are committed to supporting our customers in building and maintaining reliable API supply, providing clarity and confidence in their pharmaceutical supply chain.

Partnering with companies like us, you can ensure that your supply chain is secure and resilient, whatever the future holds.

To find out more about how Pfizer CentreOne can support you in securing a safer API and intermediate supply chain, contact us today.