Simplifying The Pharma Value Chain


The pharma value chain refers to the series of activities involved in the creation, production, distribution, and delivery of pharma products to consumers. It encompasses various stages, from drug discovery and development to manufacturing, marketing, distribution, and ultimately, patient access and use. Each stage adds value to the product and involves different stakeholders, including pharmaceutical companies, research institutions, regulatory bodies, healthcare providers, insurers, and patients.

In this concise exposition, we shall exclusively address the constituents integral to drug formulation. The purpose is to provide a simplified explanation required for pharmaceutical production without being verbose.

1. Key Starting Materials (KSM):

KSMs act as a feedstock for the Intermediates. These are the raw materials used in the production of active pharmaceutical ingredients (APIs) or drug substances, thus important to the value chain. They are usually commodity/ bulk chemicals.

For example – DMCC Specialty Chemicals manufactures Sulphuric Acid as Bulk Chemicals or their feedstock. They then use the Sulphuric Acid chemical to manufacture downstream chemicals viz. oleum, 3,3’ Dinitro Diphenyl Sulphone, and Chlorosulphonic acid.

Fun fact: DMCC Specialty Chemicals (Earlier known as Dharamsi Morarji Chemicals) was the first producer of Sulphuric Acid and Phosphate fertilizers in India

2. Intermediates:

As the name suggests, these are derived from KSMs that undergo specific reactions and processes for many applications. They serve as raw materials for API production, independently or combined with other intermediates. Intermediates are formed at various stages of drug synthesis before ultimately yielding the final API.

For example, Ami Organics is known for manufacturing intermediates like 2-(BROMOMETHYL) BENZONITRILE, used to manufacture Alogliptin API, an oral anti-diabetic drug.

Fun fact: Ami Organics is supplying import substitute intermediates to domestic pharma companies

3. Active Pharmaceutical Ingredients (APIs):

This is the most critical component of the pharma value chain. APIs are key components in pharmaceutical formulations responsible for the therapeutic effects. For example, a painkiller contains an API that relieves pain. The amount of active ingredient included in medicine, also known as its strength, defines the strength of the formulation.

They are distinct from excipients, which are inert substances added to formulations to enhance product stability, appearance, taste, or other characteristics.

For example – Laurus Labs, a leading Indian firm, manufactures APIs like Tenofovir Disoproxil Fumarate, which is crucial in HIV/AIDS treatment.

Fun Fact: Laurus Labs is the world’s largest third-party supplier of APIs for anti-retrovirals. Anti-retroviral Therapy: The treatment for HIV

4. Formulations:

Formulations are the final Pharmaceutical products, comprising APIs and excipients, which are formulated into dosage forms such as tablets, capsules, or injections. It is a mixture of ingredients prepared in a specific way and used for a particular purpose. Formulations are designed to deliver APIs to patients in a safe, effective, and convenient manner.

For example – Sun Pharma creates drugs such as Tamsulosin Hydrochloride capsules for treating benign prostatic hyperplasia also known as prostate enlargement.

Fun Fact: Sun Pharma is the largest pharmaceutical company in India, and the 4th largest specialty generic pharmaceutical company in the world

Disclaimer: This article is provided for informational purposes only and any companies discussed here should not be considered investment advice

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