In recent news we have read that some of the major pharmaceutical companies are getting out of, or realigning their API manufacturing. This can mean that we are going to loose additional jobs. In the last few years about 150,000 jobs have been lost. Pharmaceutical companies have been increasingly acquiring their API needs from the developing countries. Up until about ten years ago members of SOCMA (Society of Chemical Manufacturers and Affiliates) and ECFG (European Fine Chemical Group) used to manufacture many APIs. Their volume has been decreasing, with increasing amounts being sourced from companies in China or India. The justification for this has been cost.

Companies in the developed countries could have retained API manufacturing provided they were technologically aggressive and cost competitive. Now, through their associations, they want to use regulations to curtail imports and the strategy could backfire (1). This article, in brief, discusses how companies, by incorporating QbD practices, can become competitive again and bring jobs home. This article will focus on APIs but the observations can apply to formulations also.  

In a recent magazine article, Quality by Design (QbD) was labeled as a technology that will improve product quality. Other magazine articles labeled PAT (Process Analytical Technology) and continuous processing as new technologies. These connotations to many purists in manufacturing and quality management would be like saying the earth is flat. PAT is a recent, but fancy name, for known analytical methods and tools used in process development that have been around for at least fifty years or more. Continuous processing has been around for about the same period. It seems that in the pharma world a new spin has been put on known and proven practices.

The generally accepted definition of QbD is “one has to have a thorough understanding of the product and the developed process that is used to manufacture it”. These concepts have been well acknowledged ever since manufacturing has been around. Dr. J. M. Juran (2) formalized the practice. I believe it is necessary to expand on what “the understanding” means in the manufacture of APIs. 

“Understanding the product” to me means how the product is going to be used and its functionality. “Understanding the process” means the ability to control various operating parameters that include how the relative quantities of different chemicals, their flow rates, and operating conditions such as temperature and pressure effect the manufacturing process and product quality. Another factor that influences process and product development is our own ability to understand and manipulate nuances such as reaction kinetics, process operating conditions, physical and thermodynamic properties (3) “sociochemicalogy” of the chemicals that are involved and produced in a reaction process. 

Understanding of sociochemicalogy of chemicals is fairly simple and if applied properly, can not only produce quality product from the onset, but results in processes that have lower production costs, are sustainable and safe, and are a perfect recipe for keeping or bringing home the jobs that have been lost.

If companies set product quality as their religion from product inception, they will achieve a technological and cost edge over their competitors. Lower factory costs should increase profits from the current levels and lower selling prices that could relieve government pressures. Lower drug costs will also increase the size of the customer base.

Due to competitive nature most companies in manufacturing, distribution and service industries use QbD methods for their operations. However, pharmaceuticals, which have to sell consistent quality product by law, have not fully incorporated QbD in their business routine. Had this been done, this QbD discussion would not have been on the forefront. My conjecture is that since the inefficiency costs can be recouped, achieving quality on the first go is not part of the business practice. This is manifested by quality by analysis “QbA” practices.

Regulators have in the last ten years been cajoling the pharmaceutical industry to adopt and implement quality practices and move away from QbA methods. However, the industry is still in discussion phase as evidenced by the considerable conversation in the chat rooms. When questions like “What is QbD” come up, it clearly suggests that many involved in pharmaceuticals are not familiar with the terminology, its fundamentals and value. When experienced people raise the question of “quality by design” it is suggestive of lack of implementation consideration at their companies.

Why Shrug Off QbD?

Money is of great value to all of us. The simplest way to comprehend the value of QbD is “making more money” than pre-QbD environment. If a QbD philosophy is incorporated in business practices from the onset it will result in companies having the best technology and supply chain platform for its processes resulting in much higher profits (4). I have revised the savings to about $150-$200 billion dollars. These savings come from process yield improvement, better asset utilization, supply chain management and reduced regulatory paperwork. With QbD in place, time to market can be reduced and production capacity can be improved with no or minimal investment. Such savings would not only improve company profits but will also lower drug prices and lighten the pressure from governments and NGOs. Money saved by various NGOs and foundations could expand their programs to assist additional people. It would be a win-win. 

With benefits outlined a question remains. Why is there no mob rush to incorporate QbD? The answers are simple and in front of us.

We all know that the current manufacturing processes are not the most efficient and sustainable and that the supply chain can be significantly improved. If companies are able to make profits in today’s environment, the need to improve technology is not a priority. If a company does decide to improve their technology, they have and will make sure that the drug performance has not changed. Still regulatory bodies, for public safety, might want re-approval. I am sure that no one including the regulatory bodies has monetized the cost of time and effort that is needed for the re-approval. Regulatory bodies are pushing new quality related directives. They can be applied for new processes and products only.

Patent life dictates product life, brand/ethical companies have very little or no interest in improvements during a product’s short life. However, with the best technology from the onset, brand companies can ward off generic entries. 

Generic drug producers have a better opportunity to incorporate QbD practices. However, they also have little interest due to the following factors.

1. Lack of economies of scale

2. Investment needed to have equipment that is API specific

3. Why change when the costs can be passed on

Is There Hope?

Definitely yes! Justification for QbD (5) exists and the benefits are significant. However, it will take a very different business model, approach and thinking to get there. Creative disruption (6, 7) might be the way. QbD is an effort, a way of life and not a magic wand. Effort is needed to cure the ills of process inefficiency. We can exceed regulatory expectations, simplify supply chain management and improve asset utilization.

Regulators and product safety advocates have to understand that it will take a concerted effort to incorporate QbD in API manufacturing and formulations. It has to be incorporated by the companies from the start of the product development process. In order for QbD to be adopted for existing products and processes, regulatory bodies will have to facilitate the process. Checks and balances will have to be put in place. Regulatory bodies working with the industry to improve product quality through manufacturing technology innovation might not sit well with the media and industry watchdogs. Any quality related incident, due to public outcry, could become an obstacle and result in legislative intervention. 

An API manufacturing company can be the dark horse and show the world how QbD can be incorporated from the start. There is no cookbook recipe for QbD. It is dependent on sociochemicalogy of the chemicals involved. Design of experiment (8) strategies will assist to have the best process that will produce quality product not needing repeated in process analysis.  

Lack of QbD can be illustrated through the following example. Pricing information is a tell tail sign of how the process is being managed.

Six different companies producing Nevirapine, part of the HIV/AIDS drug regimen, were contacted by the WHO to quote their API price (9). The Boehringer Ingleheim price of $1400.00 per kilo compares to $200.00-$275.00 per kilo from Chinese and Indian companies. This difference is significant. Boehringer held the original patents and they have expired. Had the company incorporated process improvements and QbD their price would have been in line or lower than their competitors unless Boehringer’s profit margin is extremely high or the process is extremely inefficient. With their price being so high I wonder how they still have Nevirapine customers.

Based on my knowledge of the chemistry and how I would manufacture the product, the selling price after reasonable profit should not exceed $120-$130 per kilo. Demand is sufficient to suggest that the global need could be satisfied from not more than two plants with possibly one being enough. Having six plants is suggestive that the processes are inefficient, significant effort is needed to comply with cGMP regulations, the supply chain is inefficient and profits are low. This suggests that there are consolidation, technology and supply chain improvement opportunities that can make QbD a way of life (10, 11).

How does this discussion and analysis bring jobs home? Pharma companies never thought they would see competition from the developing countries to the degree they are seeing today. Had the companies been diligent and farsighted about their business model from the start, they would have always been competitive while under patent and could have easily warded off competitors from the developing countries after patent expiry and kept jobs at home.

The combination of drying pipelines and expiring patents are forcing companies to review their business model. Companies fulfilling the needs of more than 10% of the global population will have a sustained increase in revenue, profits and will create much more jobs than companies fulfilling the needs of 1% or less of the population. In either case QbD Is a must. Companies have to decide their course as their longevity might depend on the strategy they choose. One thing is sure  - that if they incorporate QbD from the start, they will have the best technology and may not need CMOs and retain jobs at home. 


1. Malhotra, Girish Can Falsified Medicine and Other Directives Backfire? January 31, 2013

2. Juran, J. M. Juran on Quality by Design, The Free Press, 1992

3. Malhotra, Girish: Focus on Physical Properties To Improve Processes: Chemical Engineering, Vol. 119 No. 4 April 2012, pgs. 63-66

4. Malhotra, Girish Are The Savings of $120-$150 Billions Worth Having? August 30, 2012

5. Malhotra, Girish Financial Justification for QbD and Cost of Regulation Compliance May 22, 2012

6. Malhotra, Girish: Does the Pharmaceutical Industry Need A Steve Jobs, Profitability through Simplicity, November 8, 2011

7. Schumpeter, Joseph A. Capitalism, Socialism and Democracy, Chapter VII: The Process of Creative Destruction 3rd Edition 1950, Harper Torchbooks, New York, 1962

8. Design of experiments, Accessed February 21, 2013

9. World Health Organization, SOURCES, QUALITY AND PRICES OF ACTIVE PHARMACEUTICAL INGREDIENTS OF ANTIRETROVIRAL DRUGS  Results of a 2012 WHO survey, Accessed February 19, 2013

10. Malhotra, Girish: Chemical Process Simplification: Improving Productivity and Sustainability, ISBN: 978-0-470-48754-9, January 2011, John Wiley & Sons Inc.

11. 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


About the Author:

Girish Malhotra, President EPCOT International can be reached at