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Co concentrates on API manufacture, says his company takes the same approach to quality for all its pharmaceutical actives, whether they are made for internal use or external customers. "We designed our facilities and organization to ensure high quality--and quality and compliance have a cost," he says. Co. admits that cost structure can be higher than that of a chemical company that doesn't operate in a cGMP-compliant environment. Customers are concerned about costs, he says, but they are even more concerned that the facilities where their products are made pass the rigorous preapproval inspection (PAI) the Food & Drug Administration conducts before they are allowed onto the market. "If a customer's supplier fails a PAI, the impact in terms of lost sales is dramatic. In addition to the cost issue, the contract manufacturing arms of drug companies must also address the concern of potential drug industry customers that their trade secrets could leak to an arch rival--that is, the pharma side of the contractor. Co. has spent more than $70 million over the past three to four years just on its Petersburg, Va., facility, one of four Co.'s API plants. The money went to expanding the site's manufacturing capacity for complex APIs, highly potent compounds, and Drug Enforcement Agency Schedule II controlled substances, both for Co.'s own business and its external customers.
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