Expanding pipelines have led to a significant growth in investment activity, as both sponsors and contract manufacturers seek to add production capacity designed to enable commercialisation of the most advanced, complex large-molecule drugs. Many new facilities are designed for flexibility, combined with low-cost, highly efficient manufacturing.
The biopharmaceutical market in 2015 was valued at $200 billion and growing at ~14 percent annually, according to BioPlan Associates . The top 15 biopharma products each have annual revenues of greater than $2 billion and some (e.g. Humira) generate sales of more than $10 billion per year . The clinical pipeline is robust, with 10 to 15 new biopharmaceutical therapies expected to receive approval each year, and greater numbers of biosimilars also are expected to reach the market .
Indeed, the current and future product pipelines of 66 percent of the bio/pharma professionals responding to the 2016 Nice Insight CDMO Outsourcing Survey include large-molecule new biological entities (NBEs), which is significantly higher than the 57 percent indicating that their pipelines include small-molecule APIs . Similar fractions will have small-molecule generics and biosimilars in their pipelines (53 percent vs. 50 percent). Furthermore, at each phase of development from discovery through Phase IV/post-launch, 75-80 percent of survey respondents that are active at these stages indicated that they have biologic candidates under evaluation. The top types of biologic drugs being developed by respondent companies include antibody-drug conjugates (ADCs), vaccines, blood factors, hormones, growth factors, interferon and monoclonal antibodies.
The global biopharmaceutical contract manufacturing market is, consequently, also very healthy. In June 2015, HighTech Business Decisions (HBD) predicted that the market for biopharmaceutical contract manufacturing services would reach $3 billion in 2015 , while Roots Analysis estimates the market is growing at an annualized rate of 8.3 percent . HBD also predicted that the biopharmaceutical contract manufacturing sector will increase its capacity for mammalian cell culture production by 14 percent and for microbial fermentation production by 16 percent by the end of 2016 .
The strong growth in demand, combined with globalization of the biopharmaceutical industry, is driving significant investment in the expansion of existing and the addition of new capacity in many established and emerging markets. Some of this capacity belongs to international bio/pharmaceutical companies looking to establish a presence, as individual governments increasingly require in-country manufacturing of medicines and vaccines.
Indeed, according to BioPlan Associates, bioprocessing-related budgets were higher in 2015 than the year before across all areas, including capacity expansion, equipment expenditures, process design, new personnel hiring, and facility construction, although a significant portion of current investments are targeted at improving productivity through enhanced process development capabilities and the implementation of new technologies, particularly for downstream processing .
Constructing conventional, large-scale biopharmaceutical manufacturing facilities typically costs $200 to $500 million (vs. $30 to $100 million for similar-scale, small-molecule plants) and takes four to five years, according to McKinsey . It is not surprising, then, that many of the new plants under construction are being designed to take advantage of single-use systems, which are now suitable for commercial production of mAbs and other proteins given the 10+-fold increase in titers achieved today. A 2000-L disposable bioreactor can now replace a 20,000-L stainless-steel vessel, allowing for significant reduction in the necessary scale for biopharmaceutical manufacturing facilities. When compared to traditional stainless-steel equipment, single-use technologies have been shown to reduce capital and operating costs by 40-50 percent and 20-30 percent, respectively, and time-to-build by 30 percent .
Biopharmaceutical manufacturers are also leveraging modular technology to reduce the time and cost of constructing new facilities. In November 2015, JHL Biotech’s pre-fabricated KUBio plant manufactured by GE Healthcare Life Sciences was assembled from 62 containers in Wuhan, China, in 11 days . KUBio facilities are based on single-use technology for rapid switching between processes and include all necessary components, such as clean rooms, piping and HVAC systems, and are designed to meet FDA and EMA GMP standards. GE also consulted with China’s Food and Drug Administration. According to the company, the cost of a KUBio plant can be as much as 45 percent lower than a comparable, traditional facility.
Other features and technologies being incorporated into many of the newest facilities include capabilities for continuous upstream (USP) and downstream (DSP) bioprocessing, and for the production of highly potent biologic APIs and drug products.
Investments in biologics facilities by sponsor companies cover all aspects of biologics drug development and manufacturing, including API production, fill-finish and packaging operations. In addition, not only international, big pharma/biotech firms, but also developing start-ups are making these investments. Ireland and Singapore are two hot spots for recent biopharma investment, but dollars are being spent around the globe. Many announcements have been made as recently as December 2015/early 2016.
Recent big pharma/biotech investments include:
Smaller biotech firms have not been idle, either:
Jazz Pharmaceuticals is constructing its first plant in Ireland at a cost of $68 million.
With the high level of in-house investments being made by sponsor companies, it might at first glance be surprising that biopharmaceutical contract manufacturers have also been expanding their capacities. Notably, most of these investments are being made by larger contract development and manufacturing organisations (CDMOs) offering full support to biologic drug manufacturers from discovery to commercial manufacture.
Many of these firms are leaders in the industry and are investing now in order to meet anticipated increased demand for their services. Others are focused on offering contract development and manufacturing services for advanced and next-generation technologies that require highly specialized capabilities, and in some cases the development of new technologies and processes to enable commercialization (such as for cell and gene therapies).
Recent and ongoing biopharmaceutical CDMO investments include:
1. BioPlan Associates Inc. “Top 15 Trends in Biopharmaceutical Manufacturing,” Contract Pharma, Sept. 11, 2015.
2. Otto, R., Santagostino, A., and Schrader, U. “Rapid growth in biopharma: Challenges and opportunities,” December 2014. http://www.mckinsey.com/industries/pharmaceuticals-and-medical-products/our-insights/rapid-growth-in-biopharma.
3. That’s Nice. The 2016 Nice Insight Contract Development & Manufacturing Survey, January 2016.
4. W. Downey, “Biopharmaceutical Contract Manufacturing Capacity Expansions”, Contract Pharma, June 2, 2015. http://www.contractpharma.com/issues/2015-06-01/view_features/biopharmaceutical-contract-manufacturing-capacity-expansions
5. Roots Analysis, “Biopharmaceutical Contract Manufacturing Market, 2015 - 2025”, Press Release, May 5, 2015; http://www.rootsanalysis.com/reports/view_document/biopharmaceutical-contract-manufacturing-market-2015-2025/92.html
6. R. Hernandez, “Top Trends in Biopharmaceutical Manufacturing: 2015,” Pharmaceutical Technology, Volume 39, Issue 6, Jun 02, 2015
7. N. Khan, GE Ships Ready-Made Drug Factories From Berlin to Beijing, Bloomberg, November 1 2015. http://www.bloomberg.com/news/articles/2015-11-01/ge-ships-ready-made-drug-factories-from-berlin-to-beijing.
Andrew is a Wall Street veteran, with a track record and a focus on the drug discovery and biotechnology industry. He brings with him a considerable understanding and experience of the financial aspects of the life science business and markets, including 15 years working with biotech and drug discovery companies as well as small-molecule oncology therapies in phase II-III trials. He has a proven track record of developing and managing relationships in the financial and life sciences markets. He studied neurosciences at the University of Delaware.