Sourcing the Raw Materials for an API — How it’s Done!

How does an API company source raw materials during early development stages? Where do the raw materials come from and how do we ensure our suppliers are reliable?

It is all in a day’s work for Sharon Millrod, Senior Director, Head of Teva api Category Management, R&D Sourcing & Biologics and his global procurement R&D sourcing team. In this blog, we’ll discover what it takes to find the right starting materials to get an API off the ground and ready for mass production.

The early beginnings

Producing 350 active pharmaceutical ingredients is no easy feat. And it all starts with the 6 research and development (R&D) sites that Teva api has around the world. Once a product is approved for development, Sharon and his team jump in and begin sourcing the main starting materials and advance intermediates – which are the main building blocks in API production.

Their role is to support all stages of R&D, from initial feasibility lab trials until the API is launched in the main market — that’s many years of support! It starts with a few grams of starting materials for initial lab samples, then larger amounts for non-GMP pilot production, and finally GMP raw material for the scaled-up process in one of Teva api’s commercial GMP production sites.

Once an API ‘goes commercial’, the responsibility is transferred from Sharon’s team to the local procurement teams in Teva api’s commercial production site, who will continue the relationship with the suppliers that has been created and nurtured during development.

Reliability is key

The main goal of the team is to find reliable, high compliance, cost competitive, strategic suppliers from day one. The procurement team has a solid, comprehensive selection process in place to identify reliable partners to ensure smooth launch and supply in the long run.

In addition, the team ensures a minimum of two suppliers for each material needed. In the case of a single source, they always push to approve a second source to reduce future supply disturbances. “We have to make sure we don’t have all our eggs in one basket”, says Sharon.

“This means a minimum of two different suppliers for each starting material and intermediate, in two different geographic locations. We’ve always known it, but the corona pandemic has proven that’s it’s always better to have options.”

The thorough interview process

Teva api works with around 700 raw materials suppliers, and of these, approximately 200 are suppliers for starting materials. Once the procurement team gets the list from the R&D team of what they need to source, they work with both public and private databases and the Teva api local procurement offices, to start the process of finding reliable suppliers.

Questionnaires are sent to the companies of interest, to get a broad sense of who they are and their background. The questionnaire covers everything, from financial, EHS, compliance, and regulatory information. It also has product specific questions, such as: how many customers do you have, what’s your scale up, how many batches do you produce, what are the prices, how many suppliers do you have for your starting materials, and do you sign quality agreements for your starting materials.

The suppliers are then scored using specific metrics. Samples are tested internally by Teva api’s Quality Control and MS&T departments, and are audited by the QA team to get final approval.

It’s a lengthy process, but evidently one in which each part is necessary and valuable.

The China Crisis and what it means for procurement

It’s not just the day-to-day sourcing that keeps Sharon on his toes. It’s also global changes and challenges that are making their impact on the pharmaceutical industry.

As the world slowly emerges from the pandemic, there’s been an upsurge in economic activity but a new set of challenges. Logistics prices have gone up, in large part due to stuck containers at sea or at ports and a lack of manpower to offload from the ships; solvents prices are going up, and the energy sector is experiencing high demand and a shortage of energy sources.

The Teva api procurement team are keeping their eye on the pulse and constantly seeing how they can mitigate the risks to supply.

The team is also working with the global supply chain team internally, to map all single-source Chinese suppliers, and mitigate the risk by approving alternate suppliers from other countries. They are also looking to produce starting materials in house.

Being on the procurement team is certainly quite the job, but clearly the global procurement R&D sourcing team know what they’re doing and are doing it well!