Monitoring HPAPI trends and evaluating suppliers in a dynamic pharmaceutical ingredients market

In a fragmented HPAPI market, finding the right supplier can be difficult. We examine the current trends – and explore the best way to choose a partner.


The market for highly potent active pharmaceutical ingredients (HPAPIs) is set for high growth over the next few years. Approximately 25% of drugs currently in development worldwide are classified as highly potent, and an estimated CAGR of 8.7% (2018-2023) will result in the market having a global value of almost $27 billion by 2023.

The growth in the HPAPIs market is largely driven by expansion of the oncology pharmaceuticals sector, and continuous investment in manufacturing capacity and technologies. There are significant developments both in well-established European and North American markets, as well as in emerging markets such as India, where pharmaceutical infrastructure is improving all the time.

The landscape itself is incredibly fragmented – and will likely become more fragmented as it evolves – with a wide range of industry players offering drastically different approaches to developing and producing HPAPIs. This can make it difficult for pharmaceutical companies to evaluate whether outsourcing makes strategic sense – and which provider to choose.

In-house production versus outsourced production

Though outsourcing HPAPI manufacturing can significantly reduce the costs for pharmaceutical companies, it can also dramatically increase lead times for production. From our primary research, we found that in-house teams are able to produce an HPAPI in as little as four months, while an outsourced team regularly takes at least 18 months.

However, doing this work in-house requires major investment in specialised R&D and containment facilities, production capabilities and highly specialist research scientists – not to mention the actual production costs. Although slower, outsourced production transfers much of the risk, resource investment and product complexity onto the contract manufacturing organisation (CMO) partner.

There are CMOs of all sizes working in the worldwide HPAPI market. It’s led by large companies like Lonza and Evonik, who can operate at metric ton-scale (MT-scale) capacity, while smaller players like ChemCon and Medichem generally produce exclusively at kilo- or even gram-scale.

These large CMOs may seem like an obvious choice for a pharmaceutical company looking to outsource, as they offer the highest production volumes. But in many cases, this can mean they lack diversity in their HPAPI offering. In fact, it’s more likely that a smaller CMO that works on a kilo-scale will be able to produce a varied range of HPAPIs. When a pharmaceutical company chooses a CMO, it needs to be confident that the provider can deliver its specific HPAPIs at the correct scale.

In response to this, many CMOs are working to expand and strengthen their HPAPI offerings – with a focus on adding diversity to their products and services rather than simply upping their production capacity.

Keeping production scales small

Most of the smaller CMOs produce HPAPIs at a kilo-scale, with some even working at gram-scale. In a lot of cases, as referenced above, this can make more sense – for CMOs and outsourcing pharmaceutical companies alike. In fact, the combination of industry and risk factors that keep production scales small means the global production volume of most HPAPIs is just 50-500kg annually.

CMOs focus on small-scale production for several key reasons, including:

  • Contamination prevention: Small batches are less likely to be contaminated, leading to a more efficient production process overall
  • High potency: HPAPIs are significantly stronger than other active pharmaceutical ingredients, meaning they can be used – and therefore produced – in dramatically smaller quantities
  • Reduced lead times: Smaller production runs require less cleaning between batches – reducing the time between each HPAPI batch run, and cutting down lead times
  • High investment risk: A single kilogram of an HPAPI can cost as much as $150,000 to produce – MT-scale production can put millions of dollars at risk if the batch fails.

For pharmaceutical companies, this means working with a smaller-scale CMO could be a more efficient way to get HPAPIs with shorter lead times and at a lower cost – especially if partnering with a CMO that specialises in the required HPAPI family.

Look for the innovators

During the process of evaluating potential partners, pharmaceutical companies should focus on the CMOs that are actively developing innovative HPAPIs, and improvising production methods, technologies and ingredients within their particular focus area.

The right CMO will be focused on:

  • Robust controls to prevent cross-contamination and protect workers, particularly where HPAPI includes components with stringent occupational exposure limits;
  • Prioritising high-quality processing and handling equipment throughout production;
  • Building capabilities to use sophisticated analytical equipment (e.g. simulated moving bed chromatography)
  • Investing in improving HPAPI composition, and stereoselective manufacturing methods which can shorten the production process and bring down costs.

The task of finding these innovative CMOs poses a challenge in itself. One rich source of relevant and timely intelligence is patent research, which can be used to identify providers with the strongest innovation record via their filed HPAPI-specific patents – therefore pointing to companies with high potential to engage as a partner.

Intelligence to give you an edge

Whether you’re looking for suppliers in established manufacturing hubs such as the US, Switzerland and Germany, or emerging markets like India, we can help you identify the CMOs with a proven track record of successful commercial HPAPI production, comprehensive regulatory documentation and audit history.

At The Smart Cube, our work with leading Life Sciences companies means we get to witness the ongoing transformations taking place across the sector. To learn more about how our procurement intelligence and analytics solutions – including category, patent and innovation insights – could help your business stay ahead, please contact us.


Read some more of our blogs:

Pharmaceutical outsourcing – How to negotiate payment terms with your vendor

How regulatory and economic change in China is impacting the global API market