USA is the largest consumer of Brand and Generic drugs. Discussion here is centered around generics as they are the largest volume (84%) (1) to serve the needs of US population but is very applicable to brand drugs also. Most of the US drugs are imported. Threat of US not having sufficient supply of these drugs has been there and is real. It has been talked about and discussed for quite some time. Conversations and congressional hearings (2) have been held. Projects (3, 4, 5) have been initiated by HHS (BARDA) and others to alleviate problem/s have no meaningful results and the problems still prevail. From my perspective all these attempts have been a charade. There is nothing meaningful on the horizon. With potential of tariffs on drugs, US needs to wake up and remedy the situation before it is too late.
National Academy of Sciences (6) in its most meaningless report even suggested that US should build foreign alliances to curb shortages (7). For national security reasons these recommendations (6) should have been questioned. Different US presidents have issued executive orders as far back as 2011 (8, 9) and nothing meaningful has resulted to reduce shortages or attain self-sufficiency. To bring pharma manufacturing home revamp of pharma’s business model, discussed later, along with US’s creativity and imagination is needed. This is critical. Since the industry is profitable need to change has never been a consideration.
Why US has not made any progress in brining pharma manufacturing home when it can send man to the moon and bring him back. Pharma, my conjecture, has not addressed issue and/or may be does not understand the real root cause of the problem even after repeated discussions and attempts. Perspective presented is my own and is not influenced by any for profit and/or not for profit organization.
Pharma companies are stuck in the current business mode (Figures 1 & 2) since middle of the last century. This is due to what I label as “equipment centricity (10)” (Figure 1) rather than “process centricity (11)”. Since pharma has been profitable it considers itself invincible and no need to change its operating and business model has been on their radar. Figure 2 is the result of Figure1.
Pharma’s “equipment centricity (10)” i.e. fitting different chemistries in the same equipment has forced companies to follow stringent drug safety regulations and prescribed cGMP regimen. Downside has been low asset utilization (12). All the related costs become part of the product cost. It also has the highest hydrocarbon emissions per kilo of product (13). All of the related costs are passed on to the patients. Since the customer pays for the added costs, need for “process centricity (11 )” has not been a consideration.
With the prospect of tariffs on pharmaceuticals unless immediate steps are taken US population could suffer immensely. If US is really serious about bringing generic and brand drug manufacturing home, it has to emulate an effort like going to moon and/or create a consortium that has no outside political and regulatory meddling. Alternate business and operating model, not a rocket science, has to be adopted. Pharma manufacturing has to move from “equipment centricity (10)” to “process centricity (11)”. If it does not this discussion will continue.
Why Equipment Centricity:
Why has the pharmaceutical industry dwelled on and is content with “equipment centricity”? The answer is simple. Since inception (14, 15, 16) manufacture of active pharmaceutical ingredients (API) and their formulations can be accomplished by modifying the processes to fit in the available existing equipment. This minimized new capital investment. With this pathway it accepts rigorous drug safety regulations and less than optimum use of processing equipment (12). “Equipment centricity (10)” related costs are born by the patients.
Process Centricity (11):
This is not a new concept for the chemists and chemical engineers. It is pure and simple application of fundamentals of chemistry, chemical reaction engineering, processing and economics taught in our business, science and engineering curriculums (14, 15, 16) to create an excellent process. It is widely used in the fine/specialty chemical industry, older cousin of pharma. It is ironic that every reaction chemistry tells us how the “process centricity (11 )” works and how it can be exploited. Even then pharma lives in its old tradition of fitting a square plug in a round hole “equipment centricity (10)” (Figure 1).
By overlooking “process centricity (11)” especially in active pharmaceutical ingredient (API), pharma is not involving the “village” (14, 15, 16)from product inception. As a result it misses out on applying nuances of mutual and social behavior of chemicals, Sociochemicology (14, 15, 16, 17), to create excellent processes. Some might consider this combination to be difficult. It is not. We are taught everything we need to know but have not fully capitalized on their value. We have the knowledge, creativity and imagination to accomplish the impossible.
Path Forward:
If US wants to bring pharma manufacturing home, companies will have to internalize move from “equipment centricity” (10) to “process centricity” (11). My estimate at least 180 days working 24/7 hours might be needed for each product provided it has the needed processing equipment, infrastructure, available raw materials, approved site and process. It is very possible that US might not have properly trained manpower for such task.
In order for US to bring pharma manufacturing every “t” will have to be crossed and every “i’ will have be dotted. Brand and/or generics cannot be manufactured tomorrow in any available equipment . It will take time as the process and the facilities have to be approved. Processes to manufacture products just cannot be fitted in any available equipment. On top of it US does not have much of any raw materials needed for the drugs. Processing methods, equipment centric or process centric, have to be tested. Drug efficacy has to be tested. All of the above issues have to be dealt with and addressed.
Companies interested in reducing/alleviating drug shortages and bringing pharma manufacturing to USA should be carrying the baton from product identification, process development, their commercialization and distribution. They have to transition from “equipment centricity” (10) to “process centricity” (11) based model for the API and their formulations. Village (14, 15, 16) would have to be involved. This can happen by as stated earlier by capitalizing on mutual social behavior of chemicals (14, 15, 16, 17), proper unit operations (18) and incorporating “process centricity” (11). It will be able to accommodate variable volumes to meet patient needs in a properly designed plant.
Simply said pharma’s marriage and addiction to “equipment centricity” (10) has been insurmountable and inseparable as significantly less effort is needed to commercialize a product. Had the chemical/pharmaceutical industry been “process centric” (11) things would have been different. It would have had the agility to produce many different products with minimal investment. It is possible that the industry would not have gone “offshore” as USA would have led the manufacturing technology knowledge curve.
CDMOs (contract development and manufacturing organization) and equipment suppliers will resist the suggested shift to “process centricity” (11) based manufacturing. For their success they will have to support “process centricity (11). Since CDMOs rely on “equipment centricity” (10) there should not be any surprise if US based CDMOs move overseas. It is time for pharma to consider alternate business model if it wants to bring pharma manufacturing to the largest market, USA.
FDA will have to reconfigure itself and its approval processes for NDA (new drug application) and ANDA (abbreviated new drug application) by reducing their approval times to 90 days (19). Environmental and other regulatory approval times will have to be reworked. Every “K Street” (20) residents would be an influencer. Legislators will have to participate in bringing manufacturing home by creating a FOUR STATE model and rejuvenating “Puerto Rico” (21,22) type model. It will be an added opportunity to bring jobs home.
Companies (pharma and Pharmacy Benefit Managers (PBMs) will have to guarantee product quality and would have to accept sever penalties for any and every deviation (19). Companies will have to have total complete knowledge and command of the production and distribution process. Since every NDA and ANDA drug is FDA approved drug tiers (23) have to go. They artificially raise prices. Direct sales to patients have to be allowed. Price, quality and drug efficacy based competition is the best way to reduce shortages.
Unlike the past efforts that have resulted in nothing a collective thought through effort needs to be made. There will be resistance from every vested interest.
Recent announcements by Eli Lilly (24) $27 Billion, Johnson & Johnson (25) $55 billion, Novo Novartis (26) $23 billion are “equipment centric” (10) projects for their brand products. These are not going to be commercial at least for the next 4-5 years and will not produce products to fill tariff related immediate needs. Once patents for their drugs expire these investments could become the “white elephants” of no value looking for home.
Simply said pharma’s marriage and addiction to “equipment centricity” (10) that has been inseparable and insurmountable needs to change. My conjecture is that “process centricity” (11) effort will be a “win-win” situation for the companies and a BIG win for the patients. Task is going to be challenging. US has never shrugged from any challenge. Let us be brave and get going.
Girish Malhotra, PE
EPCOT International
References:
1. U.S. Pharmaceutical Statistics
2. Woodcock, Dr. Janet: SECURING THE U.S. DRUG SUPPLY CHAIN: OVERSIGHT OF FDA’S FOREIGN INSPECTION PROGRAM December 10, 2019
3. Phlow Corporation Pharmaceutical Technology July 16, 2020
4. DOD Awards $69.3 Million Contract to CONTINUUS Pharmaceuticals to Develop US-based Continuous Manufacturing Capability for Critical Medicines January 15, 2021
6. BUILDING RESILIENCE into the Nation’s MEDICAL PRODUCT SUPPLY CHAINS National Academies of Sciences, Engineering, and Medicine, 2022
7. Malhotra, Girish: Has US lost its Business Acumen, Creativity and Imagination for its Healthcare Needs? Profitability through Simplicity, June 6, 2022
8. EO 13588 Reducing Prescription Drug Shortages October 31, 2011
9. EO 13944 Combating Public Health Emergencies and Strengthening National Security by Ensuring Essential Medicines August 6, 2020
10. Equipment centric https://images.app.goo.gl/Qi2UZKqu4qHdLWvu6
11. Malhotra, Girish: Process Centricity is the Key to Quality by Design, Profitability through Simplicity April 6, 2010
12. Schrader, Ulf: McKinsey & Co. Operations can launch blockbuster in pharma, February 16, 2021
13. Sheldon R.A. The E factor 25 years on: the rise of green chemistry and sustainability, Green Chemistry Malhotra, Girish: Active Pharmaceutical Ingredient Manufacturing: Nondestructive Creation De Gruyter May 2022
14. Malhotra, Girish: Chemical Process Simplification: Improving Productivity and Sustainability John Wiley & Sons, February 2011
15. Malhotra, Girish: Chapter 4 “Simplified Process Development and Commercialization” in “ Quality by Design-Putting Theory into Practice” co-published by Parenteral Drug Association and DHI Publishing© February 2011
16. Malhotra, Girish: Sociochemicology, May 30, 2013
17. McCabe W. L & Smith J. M. Unit Operations of Chemical Engineering McGraw-Hill Book Company Second Edition 1967
18. Malhotra, Girish: ONE PAGE Road Map to Reduce Drug Shortages, Assure Quality and Improve Affordability, Profitability through Simplicity, December 6, 2019
19. K Street
20. Malhotra, Girish: US’s Self Sufficiency for Generic Drugs: A Supply Dilemma and Potential Solutions, Profitability through Simplicity, March 31, 2022
21. MacEwan, Arthur: The Effect of 936 May 2016
22. Understanding Drug Tiers Accessed October 22, 2023
23. Eli Lilly April 14, 2025
24. Johnson and Johnson April 14, 2025
25. Novartis April 14, 2025
