Cytochrome P450 enzymes catalyse reactions of significant industrial interest but are underutilised in large-scale bioprocesses due to enzyme stability, cofactor requirements and the poor aqueous solubility and microbial toxicity of typical substrates and products. In this work, we investigate the potential for preparative-scale N-demethylation of the opium poppy alkaloid noscapine by a P450BM3 (CYP102A1) mutant enzyme in a whole-cell biotransformation system. We identify and address several common limitations of whole-cell P450 biotransformations using this model N-demethylation process. Mass transfer into Escherichia coli cells was found to be a major limitation of biotransformation rate and an alternative Gram-positive expression host Bacillus megaterium provided a 25-fold improvement in specific initial rate. Two methods were investigated to address poor substrate solubility. First, a biphasic biotransformation system was developed by systematic selection of potentially biocompatible solvents and in silico solubility modelling using Hansen solubility parameters. The best-performing biphasic system gave a 2.3-fold improvement in final product titre compared to a single-phase system but had slower initial rates of biotransformation due to low substrate concentration in the aqueous phase. The second strategy aimed to improve aqueous substrate solubility using cyclodextrin and hydrophilic polymers. This approach provided a fivefold improvement in initial biotransformation rate and allowed a sixfold increase in final product concentration. Enzyme stability and cell viability were identified as the next parameters requiring optimisation to improve productivity. The approaches used are also applicable to the development of other pharmaceutical P450-mediated biotransformations.