Thought Leader: Q&A with Joel A. Tune - Pharmaceutical Executive

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Thought Leader: Q&A with Joel A. Tune
More Than a Safety Valve


Pharmaceutical Executive


Doesn't the end of the blockbuster era mean Big Pharma has excess capacity once the large plants go off line?

Only a very, very small percentage of their capacity is suitable for injectible products or many other new drugs. We've talked to a couple of customers who say their cost to upgrade a facility—maybe one they built 25 years ago—is as high as building a brand new facility from scratch. So you're actually starting to see a number of facility closures.

All that really goes back to two issues: the transition from orals to injectibles, and with it, the development of complex regulatory standards for biologics. Even sterile manufacturing from 20 years ago is much different in terms of standards and requirements than it is today.

So what's the next frontier for you? How do you have to change to compete with other contract manufacturers?

I actually think we're in the lead in one aspect: Baxter is one of the few companies that has actually designed and built facilities from the ground up solely for the purpose of contract manufacturing. So we design in flexibility that you don't have available when you're retrofitting an older facility.

How do you do that?

In the formulation suites, you set yourself up so you can move multiple tanks in and out. Customer A wants to use its own formulation tank to prepare the drug for filling. Customer B and customer C want their own, too. So you have to have the flexibility and infrastructure to move stuff in and out very easily and still meet the regulatory requirements.

One of the challenges that faces all of us is an increased pressure on flexibility. You may run the very first product for a company. When they launch the product, it's in a vial and it's lyophilized [freeze-dried to preserve macromolecules]. But within less than five years, they've moved into a liquid-stable version that they want in a syringe. Shortly thereafter, they want a sustained-release formulation in an auto-injector pen. That migration and change within a single compound will get faster, so responding with specialized processing and packaging, as well as capacity, is more important now than ever.

Do you have to have more facilities scattered around the country or do you move the drug after you make it in a centralized place?

Years ago, drug companies made the active ingredient in one or two places and they'd do the local fill and finish. They've migrated to regional operations, and now more and more of them talk about a primary global source, in part to get economies of scale from a small-volume drug. But also because technical knowledge is much more critical now. They are centralizing the expertise, not the product.

So the location of the knowledge is most important?

Yes. But I think there are some folks who will tell you that where the compound ends up is important, too, because it reduces the cost of managing their supplier. So there is only one place to audit as opposed to three or four. That's another reason to use a contract manufacturer. They are used to that regulatory scrutiny.

Is regulatory expertise so important?

When companies approach what they call the "make/buy decision" to go out and hire somebody, the one factor that shows up at the top of all our surveys with pharma and biotech companies is regulatory reputation and knowledge. Hiring a manufacturer must not induce more risk in the fallibility of their product than running it themselves. So regulatory and quality reputation is the first screen that a lot of folks go through.

Given how much the sector has changed over the past decades, what do you expect in the years ahead?

I think there is a swing going on from people who just extend pharma's capacity—to fill the dead spots in their manufacturing operations, if you will—to people who get up every morning and that's all they do. Now you've got a group of people who are building a core skill set. They handle the multiple changeovers and small batches that new, specialized, targeted therapies and niche drugs are bringing.

It's part of a change in Big Pharma. Where it historically wanted to be very vertically integrated, I think the challenge of smaller drugs and biologics has led the industry to think about how it creates the most value for patients and shareholders. And making the product and filling it is not necessarily it.

Joel A. Tune is vice president/general manager, BioPharma Solutions at Baxter Healthcare Corporation. He joined the company in 1978 and held a variety of R&D positions related to medical devices. In 1988, he began working in marketing, and by the mid 1990s, he turned his attention to strategic development in the US Healthcare Group. Since 2000, Tune has helped shape the strategic direction of global marketing, R&D, and finance at Baxter.


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