With support from teaching hospitals and other health systems, Denver-based STAQ Pharma is expanding into Ohio with a $60 million pharmaceutical facility in Columbus that UH leaders say will help to strengthen its supply chain.
STAQ Pharma, a 503B outsourcing facility registered with the United States Food and Drug Administration, produces sterile injectable drugs compounded under Current Good Manufacturing Practices (cGMP) pharmaceutical production standards.
UH was part of a health systems group (along with Froedtert Health, UNC Health and LCMC Health) that led STAQ Pharma’s Series C funding round, which closed in December 2021 and will support the construction of the 137,000 square foot facility, west side of Columbus.
Neil Wyant — vice president of investments and commercialization at UH Ventures, the system’s commercialization arm — said the investment made operational and financial sense.
“When we’re evaluating opportunities — STAQ and the like — we put both goals in,” Wyant said. “An investment must be a good investment, but it must also have strategic implications for the system if we invest in an outside organization.”
STAQ’s Series C funding also included backing from Rev1 Ventures, Nationwide Children’s Hospital and Cincinnati Children’s Hospital. Beyond the healthcare systems that have invested, STAQ Pharma has other clients in Ohio and Northeast Ohio, including the Cleveland Clinic.
“STAQ Pharma’s commitment to producing a quality product and attention to the needs of the pediatric community aligns with Nationwide Children’s goal of providing innovative care and achieving the best outcomes for young patients,” said said Chet Kaczor, vice president of operations at Nationwide Children’s Hospital, in a statement provided. “STAQ is helping solve a critical supply chain problem facing all hospitals.”
Dealing with shortages is “the nature of the pharmaceutical business”, but the problem has worsened during the pandemic with supply chain challenges, staffing constraints in pharmaceutical companies and increased utilization, in particular during COVID surges, said Henry Burgess, chief pharmacy officer for UH.
“I’ve been in pharmacy management since 2009, and the last two years have been the worst I’ve seen in being a pharmacist,” he said. “It’s really something we haven’t seen in the market before.”
To alleviate shortages, UH has restricted the use of certain products when clinically appropriate, instructing clinicians to use alternative products where they can or only use them in certain situations, making providers’ jobs harder. difficult, Burgess said. And the system faces high costs when it buys drugs when it is in short supply or from suppliers it does not have a contract with when trying to source the needed product.
UH management seeks “as secure a supply chain as possible,” Wyant said. “Certainly we on the investment side have become more tuned in to looking for those kinds of opportunities where we can help reduce risk to the system.”
Burgess said UH will have the opportunity to have a preferred allocation due to its equity partnership, as well as its participation on the company’s product development committee. The group, which will ultimately advise the company’s two facilities, meets regularly to advise the STAQ and share their current or potential product needs.
The committee currently has about 10 systems represented — a number that STAQ Pharma CEO Joe Bagan said he plans to keep small.
“That’s the whole point of this meeting: getting together, talking about what we need to do to help hospitals, and then STAQ responds with what they can or cannot do,” Bagan said. “And then we get to work trying to do that.”
When UH Ventures was first introduced to the opportunity to invest in STAQ, healthcare system participation was a key part of that vision, Wyant said.
“They thought it would give them a strategic advantage in terms of understanding the market, and so far it seems to have worked,” he said.
UH Ventures anticipates either an exit or the company continues to pay dividends to shareholders, which “we are comfortable with, as investors,” Wyant said.
UH has a primary relationship with McKesson as a wholesaler, where it sources the majority of its pharmaceuticals, Burgess said.
A small percentage of what the system buys overall comes from 503b installs, he said. UH currently has contracts with 10 different 503B facilities, but intends to make STAQ their preferred partner for this type of compounding product.
Bagan said STAQ plans to produce its first drug in the first quarter of 2023 at the Columbus plant, where STAQ expects to employ up to 300 people at full capacity.
Making STAQ a preferred partner would help UH avoid potential product variability while simplifying supply chain and administrative work for its 503B purchases, Burgess said.
“We hope that with our relationship with the STAQ, we will have the ability to protect ourselves from these shortage problems in the future, the ability to be proactive when we anticipate shortages in the market,” he said. declared. “And I think that will help us avoid the situation that we have had for the past two years in the pandemic.”