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Albemarle to hike generic API prices on regulatory costs

By Gareth MacDonald+, 14-Sep-2011

Related topics: Excipients, raw materials and intermediates, Ingredients, Lifecycle management

Albemarle says it will increase what it charges for generic APIs from next month, citing increasing regulatory and testing costs as the main reasons for the hike.

The US chemicals manufacturer, which supplies the pharmaceutical industry with active pharmaceutical ingredients (APIs) for non-branded drugs, said it will increase prices by eight to 12 per cent from October 15, or as soon as existing contracts allow.

Albemarle spokeswoman Jennifer Vaccaro told in-Pharmatechnologist.com that: “Like many companies, we periodically review our products' profitability and the trends in the marketplace.

“We are investing for the future to ensure we maintain our superior levels of quality for the products and services we offer to our customers” Vaccaro continued, but did not specify the precise nature of the investment.

She declined to say how much the sale of generic APIs had contributed to revenues generated by Albemarle's fine chemistry unit, which have increased 30.4 per cent to $177m (€130m) and 30.9 per cent to $185m over the last two quarters.

Regulatory burden

Instead, Vaccaro spoke about the increasing quality challenges and regulatory burden the fine chemicals manufacturing and supply industry faces.

This is a trend we are seeing in the marketplace. All API manufacturers will be faced with the increasing regulatory costs for testing and materials in the coming years. We need to invest in meeting this demand to maintain compliance.

Vaccaro also predicted that increasing regulatory scrutiny “should level the playing field. These regulatory impacts will be felt by all companies involved. Albemarle is in a good position to maintain a long-term presence in the marketplace.“

Cost burden

Albemarle’s move follows just weeks BASF opted to increase its API and excipient prices by 10 per cent, which was the second such hike this year.

But, while BASF also said higher costs were the key driver for its decision, the German firm emphasised raw materials, energy and labour prices rather than regulatory compliance and analysis costs as the main factors.

At the time Ralf Fink, who leads BASF’s pharmaceutical ingredients unit, told in-Pharmatechnologist.com the increases are impacting the whole chemical supply sector.

The cost increases are truly a burden to the overall industry. Hence we constantly look into ways to optimize our cost structure as well as to discuss with our customers potential ways to minimize necessary price increases."