A study by Dr. Joakim Larsson etal (1) in September 2007 has suddenly become an eye of a storm in India (2, 3, 4, 5, 6, 7). There are denials of the scientific study as it exposes weak links. For the long term, these issues have to be addressed. If the problems are not corrected, the area could be equated to Chernobyl of the fine/specialty chemicals and pharmaceutical industries. There is a solution out of this quandary.
Solution touches the heart of manufacture of active pharmaceutical ingredients and their subsequent formulations. Using Professor Larsson’s study, I have presented potential scenarios for Patancheru problem and solution (8). The process yield can be improved. Effort is needed. Depending on total ciprofloxacin capacity, which is a quinolone, the companies can collectively reduce out fall by 30-60 kg/day. This might not look a big number but based total daily production this is big. Based on toxicity this is significant. Similar saving can be achieved on other quinolones and other drugs.
In the recent brouhaha ciprofloxacin has been identified as the culprit. Actually the problem is much bigger. There are other quinolones and actives pharma ingredients being produced and formulated by many companies in the Hyderabad and vicinity. Not only there are producers of these products, there are suppliers of the necessary raw materials for these products in the area. Effluents from these chemical plants also discharges in water bodies of the area. Even if the effluent meets the established local standards of chemical discharge, no one has established the toxicity of every chemical that is trickling in the ecosystem.
If we want to salvage the Patancheru eco-system, we should establish toxicity levels of associated chemicals and use them rather than the current chemical limits to control effluent. We have to recognize that every active pharmaceutical ingredient is toxic to varying degree and their toxicity kills the disease causing bacteria. The lessons learnt from Patancheru could be applied globally.
Why we have a problem?
High levels of chemicals entering the effluent treatment plant point to inefficient manufacturing technology and low yields of the manufacturing process. Questions should be asked that why we have a problem and if the yields could be improved to reduce the effluent load, why it has not been improved. There is a simple answer to these questions and it encompasses the following.
1. Since high profit margins are made with the existing processes, there is no incentive to improve them. If the companies can meet the local water, solid and air effluent standards, there is no need to worry about the eco-toxic or toxicity effect, as there are no standards.
2. The current process with their current low yield produces a chemical that meets a certain impurity profile that has been approved the drug regulatory agencies. If the yield is improved, the producer should be able to reduce the chemical discharge load. This improvement could change the impurity profile of the active ingredient. Under the current regulatory laws of various countries (9), the producer might have to re-qualify the higher drug produced by an improved process for its performance and efficacy. This is an expensive and long drawn process. In addition, processes might have to re-audited. No one wants to invest any money in this effort.
3. Since the current processes are not efficient, the product quality is controlled at every intermediate step and this is called quality by analysis. Reasons of low yield i.e. high amount of chemicals in the effluent are that the processes are not completely understood. Lack of complete process understanding and control can result is a product that is made on day 100 of one year and day 200 of the same year to be slightly different or might not meet specifications. If the product does not meet the defined specifications that have been filed and approved, the product could be reworked or disposed. These products and their intermediates are equally or more toxic and could leach out in the soil and water. Quality by analysis insures high quality and this is expensive. These costs can be contained or eliminated if we understand have repeatable processes.
Problems identified by Professor Larsson do exist in many areas of the world where active pharmaceutical ingredients are produced. However, they have not been studied. I am sure we will find similar problems.
Solution:
Only solution out of the dilemma in Hyderabad is to improve the process manufacturing technologies. This has to be done for the short and the long haul. If the manufacturing processes can be improved, depending on the total capacity of the quinolone plants in Patancheru area, significant quantities of ciprofloxacin instead of going to waste water and solid disposal can be recovered as a product. It will make a big impact on the local ecosystem. Ciprofloxacin is one of the many quinolones being produced in Hyderabad. The plants producing ciprofloxacin also produce other quinolones. In addition, we have to recognize that there are ancillary plants in the area that produce raw materials for these products. Their effluent is part of the wastewater and solid sludge system. There are many other actives produced in the area and their levels have not been tested.
Manufacturing technology improvement is the only solution to reduce chemicals in the eco-system. Drug regulatory agencies have lately suggested that manufacturing improvements should be done. Formulators and producers of actives pharmaceutical ingredients claim that there are hurdles of bureaucracy and insufficient ROI. I have difficulty believing that. Meeting chemical effluent standards at Patancheru would be the first step. Unless effluent toxicity standards are established, not much will change. Intervention is needed to rationalize toxicity and address the “Patancheru problem”. We have to maximize our effort to improve manufacturing technologies.
1. D.G. Joakim Larsson, Cecilia de Pedro, and Nicklas Paxeus, Effluent from drug manufactures contains extremely high levels of pharmaceuticals; Journal of Hazardous Materials, Volume 148, Issue 3, 30 September 2007, Pages 751-755
2. Margie Mason, Associated Press, Drug waste creates highest disaster zone in Andhra Times of India, January 27, 2009
3. Rajeev Deshpande, TNN, PMO orders testing of Patancheru water, Times of India, January 28, 2009
4. Manjula Kolanu, TNN, Officials sleep as pollution sinks Patancheru Greens To Step Up Anti-Pollution Drive, Times of India, January 29, 2009
5. Times of India, Independent lab to test Patancheru water, Jan 31, 2009
6. Times of India, Silent streams turn Patancheru's sorrow, January 31, 2009
7. Times of India, Drug traces in Patancheru wells, February 17, 2009
8. Girish Malhotra, Pharmaceuticals, Their Manufacturing Methods, Ecotoxicology, and Human Life Relationship, Pharmaceutical Processing, pg 18-22, November 2007
9. Link to global regulatory bodies
Pharmaceutical, Specialty and Fine Chemicals and Coating process and manufacturing technologies have to be simple to have the best possible process. Processes have to be safe and best of the methods need to be included to minimize the environmental impact due to air, water or soil discharges. Conservation is a necessity. Simple and good technology will result in a profitable and consistent quality product. This is the intent of every developer, chemist and chemical engineer.
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Wednesday, February 25, 2009
Monday, February 9, 2009
Why Have the Fine and Specialty Chemical Sectors Been Moving from the Developed Countries?
I am sure we all have been wondering about the shift. I have my own rationale, potential solution and would like to share. I believe there are opportunities to innovate and we can capitalize on them.
I speculate and believe the industry moved for combination of the following reasons.
1. Environmental laws
2. Health and Safety laws
3. Significantly lower labor costs in the third world countries.
4. We did not invest in the technologies to improve processes.
In early seventies, the developed countries were adopting new environmental protection laws. They seemed unrealistic and unachievable [this is based on my being at a state EPA] to some. Many complied. For some it was easier to shut down rather than invest in the complying technologies. In my view, improving process technologies was a missed innovation opportunity. The chemicals were needed and since there was a need, companies in China and India filled in the supply gap.
India and China also had advantage of Rupee/Yuan/Dollar parity. This made investments in their country cheaper.
Laxity of health and safety laws persists in the developing countries. The associated expenses are low compared to the developed countries. In my recent trips, I saw workers with open toe shoes, without safety glasses, wearing street cloths and eating meals on the operating floor. These might not be across the board but is there. Human life needs to be valued as an asset.
Environmental laws are comparatively lax also compared to the laws in the developed countries. Thus, the respective investment in pollution abatement is lower. I have seen multi-colored water bodies next to the plants. Abatement of eco-toxicity is not a high priority. In the developed countries endocrine disruptors have been found in the drinking waters. I am sure these and other chemicals exist in the water in the developing countries also and the scale is different.
Labor costs in China and India are magnitude levels lower than the costs in the developed countries e.g. a plant operator in India could be paid $200 per month (we have to recognize high Yuan/Rupee/Dollar parity) compared to $4000.00 per month or more in US.
Combination of the above factors has resulted in China, India and some of the East European countries making the fine and specialty chemicals to feed the insatiable need for these chemicals in the developed countries.
As the time has progressed, these suppliers found that their products were being used to produce the active pharmaceutical ingredients or other higher valued products i.e. moving up the supply chain. These companies also moved up the supply chain. These have resulted in additional plant closures in the developed countries.
With time the costs in the developing countries are going up as they incorporate better safety, health and environmental laws but are not to the levels in the developed countries. They still have price advantage and customers wiling to purchase their products.
Now we have a situation where many of the pharma APIs and other strategic drugs and products are coming from China and India. This is discomforting as expressed in a recent New Times article. Drug Making’s Move Abroad Stirs Concerns.
We have to recognize that the pharmaceutical and other companies are buying products (API, intermediates and fine specialty chemicals) from the companies in India and China who are alleged not to be playing by the rules companies in the developed countries have to live by. It is a demand and supply question and rules in every country are different.
Can this be reduced, prevented or stopped? Do we have a way out of this quandary? Yes we do, but it would require an effort. We have to have total involvement of the suppliers and buyers, which might not be easy. If such an attempt is made, I hope it would not turn out like “the Doha WTO negotiations” as many companies/countries have lot to loose and/or gain. I doubt if any trade organization can influence any country’s environmental, health, safety and pay scale policies. Those changes have to come from within. Maslow still rules.
SOCMA, CEFIC and other organizations could identify the highest imported chemicals, API or formulated products. Interested companies in the developed countries could develop technologies for these products that will offset the cost advantages of the imported products and convince the companies in the developed countries to buy their products. Every advantage perceived or otherwise from the developing countries will have to be offset by cost and quality through better technologies.
Partial protectionism under a “strategic defense initiative” could be a temporary alternate for certain chemicals or drugs. Such a program cannot be government subsidized. This could give interested companies a “time window” to develop better technologies. With many countries now part of WTO, such an initiative is not going to sit well with many countries, companies and organizations.
Competing technologies that will offset the costs due to local wages, environmental, health and safety rules and methods is the only answer. If this does not work safeguards leading to continuous supply of strategically vital products can be implemented but there are costs associated with that strategy. A win-win strategy needs to be developed.
I speculate and believe the industry moved for combination of the following reasons.
1. Environmental laws
2. Health and Safety laws
3. Significantly lower labor costs in the third world countries.
4. We did not invest in the technologies to improve processes.
In early seventies, the developed countries were adopting new environmental protection laws. They seemed unrealistic and unachievable [this is based on my being at a state EPA] to some. Many complied. For some it was easier to shut down rather than invest in the complying technologies. In my view, improving process technologies was a missed innovation opportunity. The chemicals were needed and since there was a need, companies in China and India filled in the supply gap.
India and China also had advantage of Rupee/Yuan/Dollar parity. This made investments in their country cheaper.
Laxity of health and safety laws persists in the developing countries. The associated expenses are low compared to the developed countries. In my recent trips, I saw workers with open toe shoes, without safety glasses, wearing street cloths and eating meals on the operating floor. These might not be across the board but is there. Human life needs to be valued as an asset.
Environmental laws are comparatively lax also compared to the laws in the developed countries. Thus, the respective investment in pollution abatement is lower. I have seen multi-colored water bodies next to the plants. Abatement of eco-toxicity is not a high priority. In the developed countries endocrine disruptors have been found in the drinking waters. I am sure these and other chemicals exist in the water in the developing countries also and the scale is different.
Labor costs in China and India are magnitude levels lower than the costs in the developed countries e.g. a plant operator in India could be paid $200 per month (we have to recognize high Yuan/Rupee/Dollar parity) compared to $4000.00 per month or more in US.
Combination of the above factors has resulted in China, India and some of the East European countries making the fine and specialty chemicals to feed the insatiable need for these chemicals in the developed countries.
As the time has progressed, these suppliers found that their products were being used to produce the active pharmaceutical ingredients or other higher valued products i.e. moving up the supply chain. These companies also moved up the supply chain. These have resulted in additional plant closures in the developed countries.
With time the costs in the developing countries are going up as they incorporate better safety, health and environmental laws but are not to the levels in the developed countries. They still have price advantage and customers wiling to purchase their products.
Now we have a situation where many of the pharma APIs and other strategic drugs and products are coming from China and India. This is discomforting as expressed in a recent New Times article. Drug Making’s Move Abroad Stirs Concerns.
We have to recognize that the pharmaceutical and other companies are buying products (API, intermediates and fine specialty chemicals) from the companies in India and China who are alleged not to be playing by the rules companies in the developed countries have to live by. It is a demand and supply question and rules in every country are different.
Can this be reduced, prevented or stopped? Do we have a way out of this quandary? Yes we do, but it would require an effort. We have to have total involvement of the suppliers and buyers, which might not be easy. If such an attempt is made, I hope it would not turn out like “the Doha WTO negotiations” as many companies/countries have lot to loose and/or gain. I doubt if any trade organization can influence any country’s environmental, health, safety and pay scale policies. Those changes have to come from within. Maslow still rules.
SOCMA, CEFIC and other organizations could identify the highest imported chemicals, API or formulated products. Interested companies in the developed countries could develop technologies for these products that will offset the cost advantages of the imported products and convince the companies in the developed countries to buy their products. Every advantage perceived or otherwise from the developing countries will have to be offset by cost and quality through better technologies.
Partial protectionism under a “strategic defense initiative” could be a temporary alternate for certain chemicals or drugs. Such a program cannot be government subsidized. This could give interested companies a “time window” to develop better technologies. With many countries now part of WTO, such an initiative is not going to sit well with many countries, companies and organizations.
Competing technologies that will offset the costs due to local wages, environmental, health and safety rules and methods is the only answer. If this does not work safeguards leading to continuous supply of strategically vital products can be implemented but there are costs associated with that strategy. A win-win strategy needs to be developed.
Wednesday, February 4, 2009
Commoditization of Drugs
Until 2006 low cost drugs could be purchased outside US only. Wal-Mart started to sell 30-day and 90-day supply at $4.00 and $10.00 respectively in 2006. Recently other pharma-sellers have joined to serve the growing market. These prices were unheard of before 2006. Even at these prices respective members of the supply chain (producers, formulators and HMO’s) are making “good” margins.
Commoditization had begun in 2006 and we did not realize it. With the current global economic downturn, an ever-increasing aging population and economic upswing of the under-developed countries demanding common ailment drugs, the commoditization pace has accelerated. As we go forward the number of the drugs in the 30 and 90-day pool will increase. With the larger customer base, the annual volume for many of the active pharmaceutical ingredients (API) will increase.
Fine and specialty chemical companies (e.g. BASF and Albemarle among others are producers of ibuprofen and naproxen (Non-steroidal anti-inflammatory drugs: NSAID)) and generic drug companies are producing common cure APIs (i.e. specialty fine chemicals that have disease curing value). Many generics formulate various dosages for sale. Most of the drugs US pharma-sellers are offering for sale are being produced and formulated outside US. Big pharmaceutical companies are not involved in these programs.
As more brand name drugs become generic and the volume of generics increases, entrepreneurs, existing and new, would want to take advantage of the business opportunity. Market economics and desire for profits will result in the development of better processes and movement from batch processes to continuous processes. Better process technologies will reduce the costs of active pharmaceutical ingredient (API) resulting in higher profits for the members of the supply chain. All this will be result in higher profits and increased commoditization of the “off-patent” drugs.
It is expected that successes of better process technologies for the generic APIs might result in better manufacturing technologies for the ethical/brand drugs also thereby increasing their respective profits. It is possible that the lower costs from better processes for generics and ethical drugs might not be necessarily passed on to the consumers.
Commoditization had begun in 2006 and we did not realize it. With the current global economic downturn, an ever-increasing aging population and economic upswing of the under-developed countries demanding common ailment drugs, the commoditization pace has accelerated. As we go forward the number of the drugs in the 30 and 90-day pool will increase. With the larger customer base, the annual volume for many of the active pharmaceutical ingredients (API) will increase.
Fine and specialty chemical companies (e.g. BASF and Albemarle among others are producers of ibuprofen and naproxen (Non-steroidal anti-inflammatory drugs: NSAID)) and generic drug companies are producing common cure APIs (i.e. specialty fine chemicals that have disease curing value). Many generics formulate various dosages for sale. Most of the drugs US pharma-sellers are offering for sale are being produced and formulated outside US. Big pharmaceutical companies are not involved in these programs.
As more brand name drugs become generic and the volume of generics increases, entrepreneurs, existing and new, would want to take advantage of the business opportunity. Market economics and desire for profits will result in the development of better processes and movement from batch processes to continuous processes. Better process technologies will reduce the costs of active pharmaceutical ingredient (API) resulting in higher profits for the members of the supply chain. All this will be result in higher profits and increased commoditization of the “off-patent” drugs.
It is expected that successes of better process technologies for the generic APIs might result in better manufacturing technologies for the ethical/brand drugs also thereby increasing their respective profits. It is possible that the lower costs from better processes for generics and ethical drugs might not be necessarily passed on to the consumers.