The time when only the US Food and Drug Administration (FDA) performed foreign inspections is long gone and CMOs are increasingly upgrading their level of compliance with other regulators, particularly with European agencies, as globalisation drives competitive pressures beyond commercial offering.
Last week saw two examples of API manufacturers moving forward with a number of European approval and certifications for Good Manufacturing Practice (GMP) standards.
Ubichem Research, the custom synthesis and manufacturing arm of UK firm Ubichem, announced it has completed its first regulatory audit and is now approved by the Hungarian regulator - the Hungarian National Institute for Pharmacy (OGYI) - for the commercial supply of APIs at its Budapest facility.
Thanks to reciprocal agreements between European countries, this approval is effective throughout the EU.
"Having been manufacturing quantities of API for clinical trials, this approval represents a major step forward in our business and is a clear demonstration of our commitment to quality - allowing us to support our clients all the way from candidate nomination to market," said Roger McDonald, Ubichem Research's director, at the recent Informex conference in San Francisco.
The company has been investing $1m (0.8m) in a new and upgraded analytical, development and production facility, which is expected to be completed during 2007.
Meanwhile, Portugal's Hovione has announced it has received a number of European certifications which give the CMO the chance to address pressures from customers, regulators and other stakeholders by providing hard evidence that it operates in full compliance.
The company said its two sites, located in Loures and Macau, have received GMP Certifications from an EU Medicines Agency for a list of 20 APIs. These certificates are valid for three years.
The Loures facility has also received EU GMP certificate for bulk formulated products and for humand clinical trials for oral and inhalation administration.
In addition, the plant has been accredited by the Japanese Ministry of Health as a foreign manufacturer for the production of four drug substances.
"The flood of certifications that Hovione sites have received recently sends a strong message that compliance and the environment are very much part of the agenda," said Guy Villax, the company's chief executive.
Making active pharmaceutical ingredients is a highly specialised niche that requires in depth understanding of chemistry and chemical reactions.
Major operations or steps in an API process may include multi-step chemical synthesis and fermentation, purification, crystallisation, drying, milling, packing, labelling, and testing.
As a result, the extension of Good GMP standards to active ingredients has increasingly been recognised as a necessary element in ensuring the overall quality and consistency of marketed drug products.
The global demand for APIs is forecast to increase at an average annual rate of 8.2 per cent over the next five years, reaching a value of $46bn (€35.8bn) by 2010.
To remain leaders in this booming market, European API producers also need to face another hurdle - ensuring they can compete with their Asian counterparts who enjoy lower production costs.
With sales of $2bn in 2005, the Indian API manufacturing industry is the third largest in the world and is expected to make sales of $4.8bn by 2010, while Chinese API companies are expected to bring in almost $10bn by 2010.
