C& EN TA L KS W ITH
PETER WERTH American entrepreneur reflects on more than 30 years of sourcing PHARMACEUTICAL INGREDIENTS from China JEAN-FRANÇOIS TREMBLAY, C&EN HONG KONG
heparin scandal (C&EN, Feb. 25, 2008, to China to explore sourcing active page 8), both FDA and Western cuspharmaceutical ingredients (APIs) tomers are more vigilant. Several of from the country, everything was diffithe 22 peopleWerth employs in Shangcult. It was 1979, and he needed an inhai are responsible for overseeing how ternal visa to get on a bus, train, or aira drug is made, packaged, stored, and plane. Flying seemed unsafe, so he oftransported.He has hired and posted ten went on long train journeys. Once in Shanghai a former FDA investigator at a plant site, Werth found there were and a former third-party auditor familno phone lines to the outside world. iar with FDA compliance problems. All business deals had to go through Despite these added expenses, gostate-owned Sinochem, which held a ing through a middleman like Chemmonopoly on the export trade. Werth is cost-effective compared Werth, 73, persevered. An Ameriwith buying directly from a Chinese can who had worked at the drug firm company, Werth believes. Over the Upjohn and at the API manufacturer Ganes Chemicals for a total of years, he explains, ChemWerth has developed a system in which 17 years, he saw in China a country that had been producing a variety it costs between $150,000 and $250,000 to get a factory to manuof APIs for many years and that could potentially supply them to facture a drug ingredient in compliance with FDA standards. This the U.S. under Food & Drug Administration standards. Today, his includes identifying marketable APIs, creating standard operating Connecticut-based company, ChemWerth, holds the exclusive U.S. procedures for manufacturing, conducting analytical assessment rights to represent 29 China-based pharmaceutical plants. of quality, filing regulatory documents in the U.S., and training the ChemWerth, he believes, helps to contain increases in the price Chinese workforce. of many drugs sold in the U.S. and other countries. Several times in Werth estimates that most buyers of APIs would end up spendit history, ChemWerth has been the first or one of the first compaing $400,000 to $500,000 if they “went direct” and built up their nies to introduce a generic alternative to a drug in the U.S. market. own Chinese supplier to acceptable standards. “Somebody who His first product from China was the injectable antibiotic lindoesn’t do it all the time like we do—it costs more and it takes loncomycin. Before ChemWerth got involved, Werth recalls, the only ger,” he argues. Chinese companies that sell directly to U.S.-based suppliers of lincomycin were Upjohn, from a plant in Kalamazoo, buyers incur significant market entry expenses, he adds. Mich., and Sinochem, through its agreement with Chinese firms. ChemWerth is far from being the only player that exports ChiWerth managed in 1986 to get lincomycin from a Chinese factory nese APIs. Many wholesalers buy in China, and multinational comwithout going through Sinochem. “It was hard work to break the panies have set up their own purchasing groups. But even in this cartel, but it gave me the money and the impetus to do more prodcrowded field, Werth expects to continue selecting and developing ucts from China,” he says. “We still sell lincomycin today.” for export 10 generic pharmaceutical ingredients annually. Werth went on to succeed in introducing Chinese-made drug inOne trend that will emerge in coming years, he foresees, is a more gredients to the U.S. by focusing on the injectables market. “If I had dominant role worldwide for Indian suppliers of generic pharmaoffered an oral product, there would probably have been six comceuticals in finished-dosage form. Indian companies, he says, will petitors: probably two Italians, two Germans, one Spanish, and one both sell drugs under their own names and supply them to multiAmerican. The chance of the Chinese being picked would be zero.” national drug firms. As this trend takes shape, ChemWerth will inIn contrast, there was much less competition in injectables, creasingly target Indian companies as buyers of Chinese-made APIs. and buyers of injectable drug ingredients held fewer preconceived Despite his years of experience, Werth is uncertain about what ideas about China. “The injectable customers are more focused on his firm can contribute when it comes to the generic drug market quality and reliability, not reputation,” he says. in China. “We know people to partner with that we know well and In the early days, Werth would comply with FDA trust, but we don’t know how to partner with them for standards by creating a segregated area within a Chinese the Chinese market,” he acknowledges. supplier’s manufacturing site that lived up to enhanced “The injectable Ironically for a company that specializes in ingreoperating procedures. Back then, he says, it was possible customers are dients for generic drugs, ChemWerth’s main Chinese to do so because FDA did not inspect entire factories but gambit is cooperating with local partners to develop an rather focused on the production, analytical, and quality more focused innovative drug that would be sold in China. Patented on quality and drugs are not Werth’s core business, but they are imporassurance systems for individual APIs. Nowadays, working with Chinese-made pharmaceu- reliability, not tant to his partners. “They want new chemical entities reputation.” tical chemicals is more involved. Following the 2008 in China,” he says. ◾ JEAN- FRAN ÇO IS T R EM BL AY/C& EN
WHEN PETER WERTH first traveled
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