The biopharmaceutical industry continues to grow at a healthy pace, with the biosimilars market predicted to expand even more rapidly. As biologic drugs become more complex, biosimilars become more important, and downward cost pressures from both governments and payers increase, biopharmaceutical manufacturers are turning more often to custom service providers to assist in the development and manufacture of biotherapeutics.
While cost savings continue to be a driver for increased outsourcing, the actual selection of a contract development and manufacturing partner is more often today based on other factors, including their technical capabilities, reliability (such as financial robustness), the quality of their products and services, and their history of achieving on-time delivery.
The value of the global biologics market reached approximately $230 billion in 2014 and is expected to grow at a compound annual growth rate (CAGR) of just over 10% to nearly $390 billion by the end of 2019.1 Biosimilars accounted for nearly $2.0 billion of the biologics market in 2014, and that number is predicted to double by the end of 2019, growing at a CAGR of 15%.2 One market research firm estimates that there are 280 biosimilars in the pipeline, and the number of biosimilars in clinical trials is increasing at a rate of 20% per year.
The strong growth rates for the biopharmaceutical market as a whole are in part due to the aging of the global population and a worldwide increase in chronic diseases, including diabetes, heart disease, and arthritis, that are better suited for treatment with biologic drugs. In addition, continued expansion of the middle class accompanied by growing wealth and improving healthcare systems is leading to increased demand for biopharmaceuticals in emerging markets.
More significant growth is anticipated for the biosimilars market because numerous monoclonal antibody (mAb)-based drugs are coming off patent by 2020, including several with annual sales greater than $5 billion each in the year of US expiry. The first mAb biosimilar was approved by the European Medicines Agency (EMA) in 2013 (Remsima/Inflectra from Celltrion/Hospira, a biosimilar of Johnson & Johnson’s infliximab product Remicade). Now that the US Food and Drug Administration’s Oncologic Drugs Advisory Committee has approved the first biosimilar drug in the US (Sandoz’s Zarxio biosimilar of Amgen’s Neupogen [filgrastrim]), more companies are expected to submit applications through this new regulatory approval pathway, including mAbs, which account for approximately 40% of the biosimilars in development.
Biopharmaceutical Outsourcing On The Upswing
With demand set to rise at a healthy pace, biopharmaceutical manufacturers are increasingly turning to service providers for assistance with all aspects of the drug development process, from discovery through to commercial manufacturing. In fact, the biopharmaceutical outsourcing market has increased at an annual rate of approximately 10% and is expected to grow at a similar pace for the next several years.9
Many companies are investing in additional capacity as a result, but it can be difficult to know what specific capabilities will be required in the future given the variable lead times for biotherapeutics. In fact, biologics manufacturers are turning to service providers to avoid the very high capital expenditures and long lead times needed to construct, equip, and validate manufacturing facilities.4
In addition, as biologic molecules become increasingly complex and often more potent, branded drug manufacturers are also looking to contract development and manufacturing organizations (CDMOs) that have the specialized expertise needed for such projects. A 2013 survey of biopharmaceutical companies revealed that they are increasingly outsourcing more challenging processes to service providers with the appropriate technical expertise.10 A more recent study also revealed that biopharmaceutical companies taking the lead in the market are doing so through the development of new products based on innovative new science that have demonstrated value for patients, rather than through a diversification strategy. These companies will clearly need the support of contract manufacturers with advanced technical capabilities.
CDMO Selection No Longer Driven Mainly By Cost
The shift in interest to CDMOs with advanced technical capabilities rather than the lowest-cost bid was recently found to be occurring along with a growth in interest in developing strong relationships with true outsourcing partners. The survey of “outsourcing facing pharmaceutical and biotechnology executives” also revealed that biopharmaceutical companies, and in particular emerging biotechs, are also interested in developing strategic partnerships with service providers that offer integrated services from process development through to commercial manufacture.
There are also many other reasons biopharmaceutical companies outsource to service providers. Some are looking to improve quality, while others hope to achieve faster time to market, particularly those outsourcing processes based on mammalian cell technology. Outsourcing can also enable more efficient use of in-house expertise. In addition, service providers can help biopharmaceutical manufacturers gain a competitive advantage, improve their regulatory positioning, and mitigate supply chain risk.
Characteristics Of A True Contract Biopharmaceutical CDMO Partner
Many of these benefits are not realized unless a true partnership is formed between the CDMO and the sponsor company. Such partnerships require commitment and trust on both sides. That trust and commitment develop over time and as the CDMO demonstrates that it can meet or exceed the expectations of the biopharmaceutical manufacturer.
First, of course, the CDMO must clearly have the operational, methodological, and therapeutic experience and expertise that pertain to any project under consideration. A strong quality record and positive regulatory history are equally important. The demonstrated ability to meet project deadlines and deliver product on or ahead of schedule is also a must, as is previous success in commercial manufacturing. Financial stability is another key quality; without it, a CDMO will often be passed over for short-term projects, and certainly won’t be considered as a candidate for long-term strategic relationships. Finally, a CDMO must have adequate capacity and equipment and the ability to rapidly meet the changing requirements of its potential strategic partner.
It should also be noted that biopharmaceutical companies looking to outsource mammalian and microbial projects often consider different CDMO characteristics as more important than others. So-called “soft traits” are also important to sponsor companies. Good communication skills, a good understanding of customer requirements, and knowledgeable and professional experts are all very important. Transparency, a good reputation, and a willingness to go beyond the specifics in the contract are also very positive characteristics for CDMOs.
It is important to realize, however, that poor performance in many of these areas can be a source of dissatisfaction for biopharmaceutical manufacturers. Failing to meet quality specifications and provide the product on time are severe negatives for CDMOs, as is the inability to provide the expected range of services and capabilities. A lack of timely follow-through with respect to documentation, poor customer service and technical support, and poor performance in safety audits can also be very detrimental to any potential long-term partnership.
Demonstration Of Commitment
Possessing the above attributes is not sufficient for developing a true strategic partnership, however. A CDMO must be able to demonstrate its willingness to make a long-term commitment to the biopharmaceutical manufacturer. There are several ways that a CDMO can do so, such as working with the sponsor company to develop operating procedures in a collaborative manner, providing a project/program manager who is dedicated to supporting the biologics manufacturer, developing customized protocols, and providing dedicated development space and/or production lines.
Understanding The Marketplace
As mentioned above, the interests of biopharmaceutical companies looking to outsource mammalian and microbial processes often differ. An effective CDMO must understand those different needs and preferences and be prepared to provide the expected capabilities and services. For instance, preferences for the stage of outsourcing, the use of stainless steel vs. disposable equipment, and the types of services needed can vary widely for mammalian cell and microbial processes and even from one customer to another.
Cost Is Still A Factor
Finally, it should also be noted that, although cost is often considered to be less important than quality and reliability when biopharmaceutical manufacturers are selecting a CDMO, cost is still a factor, particularly if two CDMOs have equally attractive attributes otherwise. There are few cases in which cost is not considered at all, but it is also unlikely today that cost will be the only factor on which a CDMO is selected.
It should also be noted that biopharmaceutical companies looking to outsource mammalian and microbial projects often consider different CDMO characteristics as more important than others. So-called “soft traits” are also important
to sponsor companies.
The Benefits Of Big Biopharma Backing
It can be challenging for CDMOs to possess all of the desirable attributes outlined above. There is one very effective way to do so: have a connection to an established world leader in the development and scale-up of biologics. This type of CDMO offers the flexibility of an agile service provider combined with the financial stability and depth of technical expertise, development, and manufacturing resources associated with an established global manufacturer. Such a CDMO is able to provide services from earlystage development to commercial production using world-class, state-of-the-art equipment and facilities. In addition, because such a CDMO has a tremendous depth of scientific expertise in both mammalian and microbial technologies, biopharmaceutical manufacturers can minimize the risk of outsourcing more challenging processes. Access to top regulatory experts and analytical support is yet another benefit of partnering with a CDMO that is associated with a major biopharmaceutical company. Global marketing support is another. Of course, such a CDMO must have appropriate controls in place to ensure that the work it does for its customers remains confidential and separate from the activities of its parent company.
- BCC Research, “Biologic Therapeutic Drugs: Technologies and Global Markets,” Jan 2015; http://www.bccresearch.com/market-research/biotechnology/biologic-therapeuticdrugs-technologies-markets-report-bio079c.html. Accessed 2/15/2015.
- BCC Research, “Biosimilars: Global Markets,” Jan 2015; http://www.bccresearch.com/market-research/biotechnology/biosimilars-global-markets-report-bio090b.html. Accessed 2/15/2015.
- Daedal Research, “Global Biosimilar Market Trends & Opportunities: 2015 Edition,” Jan 2015; http://www.daedalresearch.com//global-biosimilar-market-trends-opportunities-2015-edition. Accessed 2/15/2015.
- Challener C. How Will CMOs Provide Sufficient Capacity for Growing Biologics Demand? BioPharm International. Jan 31, 2014; http://www.biopharminternational.com/howwill-cmos-provide-sufficient-capacity-growing-biologicsdemand?rel=canonical. Accessed 2/16/2015.
- Challener C. Monoclonal Antibodies Key to Unlocking the Biosimilars Market. BioPharm International. Apr 1, 2014; http://www.biopharminternational.com/monoclonal-antibodies-key-unlocking-biosimilars-market. Accessed 2/16/2015.
- Celltrion, “Celltrion’s RemsimaTM(infliximab) receives positive opinion from EMA’s CHMP,” Press Release, July 29, 2013; http://www.celltrion.com/en/company/notice_view.asp?idx=364&code=ennews&intNowPage=3&menu_num=&align_year=all. Accessed 2/16/2015.
- FDA, “FDA approves first biosimilar product Zarxio,” Press Release, Mar 6, 2015; http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm436648.htm, March 6, 2015.
- Dalgaard K, Evens M, da Sikva JS. Biosimilars seven years on: where are we and what’s next? Feb 2013; http://www.mckinsey.com. Accessed 2/16/2015.
- HighTech Business Decisions, “Biopharmaceutical Contract Manufacturing: HighTech Business Decisions’ New Report Indicates Improving Demand for Outsource Services,” Oct 22, 2014; http://www.businesswire.com/news/home/20141022006728/en/Biopharmaceutical-Contract-Manufacturing-HighTech-Business-Decisions-Report#.VOE4nC6YYuc. Accessed 2/15/2015.
- Langer ES. Outsourcing Trends in Biopharmaceutical Manufacturing. Pharmaceutical Technology. Feb 1, 2014; http://www.pharmtech.com/outsourcing-trendsbiopharmaceutical-manufacturing. Accessed 2/15/2015.
- Accenture, “Four Keys to Biopharma High Performer Success,” Oct 15, 2014; http://www.accenture.com/us-en/Pages/insight-trends-life-sciences-four-keys-biopharma-highperformer.aspx. Accessed 2/15/2015.
- National Law Review, “Nice Insight on Trends and Expectations for Outsourcing in the Biopharmaceutical Industry,” Feb 6, 2015; http://www.natlawreview.com/article/nice-insight-trends-and-expectations-outsourcingbiopharmaceutical-industry. Accessed 2/16/2015