Pharmaceutical Toll Manufacturing

Cost is Not the Only Consideration

Posted: December 20, 2016

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API Manufacturing and Pharmaceutical Manufacturing

If you have questions about the toll of Pharmaceutical Manufacturing, please contact us

As sponsors look at ways to closely manage drug discovery, some look to toll manufacturers. Toll manufacturers, like PCI Synthesis, essentially provide the lab, manufacturing facility and scientific knowledge required to process a sponsor’s compounds or semi-finished products, churning out Active Pharmaceutical Ingredients (APIs) in kilo quantities.

This article provides some insights into the advantages and potential risks of toll manufacturing. With toll manufacturing, sponsors have only the variable cost of “renting” our facility without the need for capital investment in equipment and infrastructure to build their own facilities. Designing and equipping a plant takes not only financial resources but also a great deal of time. There are long lead times for ordering and installing equipment, and for building a first-class team of experienced scientists. By partnering with a toller, your products can be brought to market faster.

The way a toll manufacturing arrangement is supposed to work is this: the sponsor provides its raw materials or semi-finished product to a third-party service provider. The service provider, using its specialized equipment or infrastructure, provides a subset of manufacturing processes for a fee – or toll.

But in reality, it’s not that simple. Pharmaceutical-grade drug manufacturing is not as easy as developing an industrial chemical. And the process is rarely straightforward. In some instances, the sponsor provides the toll manufacturer with processes that simply don’t work. In others, the sponsor’s analytics don’t transfer to manufacturing.

Key considerations for choosing a toll manufacturer

In the instances cited above, some service providers are stymied, unable to go further and leaving the sponsor to start over with a new lab. Rather than losing time, here are factors to consider when choosing a toll manufacturer.

  • Experience. Problems are inevitable in developing drug compounds. What matters most is working with a tolling partner that is flexible and has the technical capabilities to get the job done. Ask about problems faced by past sponsors and whether they were successfully resolved. Having to start over with a more skilled lab takes way too much time.
  • Analytics may not work if the toll manufacturer does not have the right equipment for your project. Make sure the equipment is a good fit for the project.
  • A toll manufacturer’s capacity is key to your project being completed in a timely manner.
  • Is the toll manufacturer knowledgeable about, and capable of performing, the analytic tests that regulatory agencies require?
  • Typically, toll manufacturing is a six- to eight-month process. Understand that the toll manufacturer has invested heavily in infrastructure, people, training, maintenance, supply chain, etc. so you don’t have to. PCI Synthesis’ price is straightforward at $75,000 a week. If your project is time-sensitive, as most projects are, you are also paying for priority. We have built capacity so there’s no standing in line. We pride ourselves on serving our sponsors well and meeting all their needs in a timely fashion. To give your project the priority it deserves, understand that both sides need to meet business goals. In the end, everyone wins.
  • Sponsors are forever asking us for a per kilo price. Here’s why we don’t do that until at least three batches of pharmaceutical grade compounds are made, typically in 5-6 weeks. Initially, we have no way of knowing what the problems or throughput will be until we begin. In toll manufacturing, we have not done the process research and may need to tweak or revamp manufacturing. Usually after we get three batches under our belt we know how the process works, whether it’s scalable and if it’s possible to get the yield needed. Not until then can tolling take on just the responsibility of manufacturing—and offer a price per kilo.
  • Trust between tolling partner and sponsor is essential, and it’s all about a relationship built on open and frequent communication. According to law firm Skadden, Arps, Slate, Meagher & Flom, toll manufacturing represents unique risks for the potential loss of trade secrets and, consequently, the enablement of a new competitor. After all, you are giving the toll manufacturer proprietary trade secrets, know-how, processes data and materials. At PCI Synthesis, effective controls are in place so that access to these is not inadvertently passed along to would-be competitors.
  • PCI Synthesis’ internal controls to safeguard IP include restricting access to information, use of password protected e-vaults, and control of documents via an integrated QA system. In addition, we do not engage in any aspect of drug manufacturing for our own profit. Nor do we seek or participate in joint ventures. We work only on behalf of our sponsors, whether in toll manufacturing or custom synthesis of pharmaceutical products.
  • Check and double-check the toll manufacturer’s reputation. Once you teach the secret sauce to a less-than-reputable company, there’s not much you can do to stop them from making that product or selling it to someone else. Bringing suit in Far East foreign courts is nearly impossible as compared to the West. Unfortunately, stealing is not uncommon.
  • Resourcefulness is not something much talked about but can be essential in protecting your trade secrets and IP. One of PCI Synthesis’ big customers, a publicly held company, didn’t want anyone to know how their product was made – including those at the company’s own plant in China! As an extra precaution, we disguised what was in the drums by labeling in such a way so that the product within was less obvious.
  • Location. European regulations prohibit selling or distributing material from drugs still under patent protection. European drug developers can and do partner with PCI Synthesis, taking advantage of the U.S., where there is no such regulation. We can legitimately make the drug substance here and ship it to a U.S. pharmaceutical customer. Once the API is produced, the European sponsor can thus supply their U.S. based customer with the materials needed to develop the formulation for submission to the FDA, starting as early as two to three years before patent expiration. Unless there’s a patent challenge the FDA may get multiple applications for the same drug, so speed to market is of the essence.

Key difference between toll manufacturing and custom synthesis

Though custom synthesis and toll manufacturing are somewhat similar, they differ in a key way. Like toll manufacturing, custom synthesis involves outsourcing production to a third party. But in custom synthesis, the third-party company is also developing the manufacturing processes and typically sources many, if not all the raw materials. When synthesizing pharmaceutical products, the lab is responsible not only for making the product to specification and meeting the delivery time requirements, but ideally is knowledgeable about and responsive to the regulatory pathway. This combination of skills offers sponsors a fast and effective method of developing their product(s) with minimal capital investment and a raw material supply chain in place.

Whether for custom syntheses of New Chemical Entities (NCE’s) or toll manufacturing of APIs, for the past 20 years PCI Synthesis has been an essential partner with the right capacity, equipment, technical expertise and regulatory know-how for completing these large project in a timely manner and at a reasonable cost.

For more information about how to minimize costs during outsourcing, check out
Four Ways the Kilo Lab Development Phase of Drug Manufacturing Can Save Time and Money and How to Keep CMO Costs Down During the Process Optimization Stage of Drug Development.

About the Author

Ed Price CEO of PCI Synthesis
Ed is the President and CEO of PCI Synthesis (PCI), he serves as a co-chair of the New England CRO/CMO Council and sits on the Industrial Advisory Board for the Department of Chemical Engineering at UMass, Amherst. Ed is also a long standing member of the American Chemical Society and advises the Bulk Pharmaceutical Task Force of the Society of Chemical Manufacturer’s and Affiliates (SOCMA).

Do you have questions? Talk to Ed.