Increased investments at the discovery and early development phases are leading to robust pipelines and creating demand for greater clinical- and commercial-scale manufacturing capacity. While biologic drug manufacturers are expanding their own in-house capabilities, these companies are also increasingly turning to outsourcing partners, particularly for the production of drug substances and products that require specialized expertise.
Increased outsourcing indicated
Estimates of the biopharmaceutical contract manufacturing market vary somewhat, but there is a consensus that the strong growth witnessed in recent years will continue going forward. HighTech Business Decisions (HBD) valued the market at $3 billion in 2015 with the growth of annually.1 The company predicts that big bio/pharma companies will increase outsourcing levels from 16% to 34% from 2015 to 2019, leading to a value for the market of $4.1 billion by the end of the period.2 In addition to the robust biopharma pipeline and greater rates of new drug commercialization, increased funding of biotech companies and a broader array of service offerings by contract manufacturing organizations (CMOs) are considered to be key contributors to this healthy growth.1
Six biopharma CMO /CDMO executives interviewed by HBD indicated that the number of requests for proposals that they received in 2015 was higher than that in 2014, with one company experiencing an increase of more than 10%.1 They pointed to varied reasons for the increase, ranging from a greater number of RFPs for smaller, specific projects to growing interest in outsourcing at early stages to CDMOs with a comprehensive suite of services in order to avoid technology transfer issues and speed time to market. Biosimilar projects are also increasing in number.1
While outsourcing continues to be seen as an effective means of increasing cost efficiency, cost savings is no longer the primary driver. Biopharmaceutical companies are also seeking technical expertise (such as for the manufacture of antibody-drug conjugates and bispecific antibodies), operational efficiency, regulatory support and the advantage of focusing on core competencies, according to Roots Analysis3: “Spanning multiple operations within wider manufacturing processes, outsourcing is increasingly being viewed as a strategic imperative.”
HBD identified over 500 companies that claim to be CMOs/CDMOs, but note that only approximately 90 of them have the actual capabilities needed to manufacture recombinant proteins at large scale. Roots Analysis, meanwhile, says that over 160 biopharmaceutical CMOs offer services ranging from cell line development to biologic API manufacturing to fill/finish operations. These companies include both pure contract service providers such as Lonza and CMC Biologics and large bio/pharma companies that have excess capacity available for contract manufacturing, such as GlaxoSmithKline Biopharmaceuticals and Boehringer Ingelheim BioXcellence.
The extent to which biopharmaceutical CMOs/ CDMOs are benefiting from significant increases in spending by bio/pharmaceutical companies of all sizes is revealed in the results of the 2016 Nice Insight CDMO Outsourcing Survey6 of bio/pharma professionals (n=587). Most notably, 95% of respondents indicated that they currently or intend to use biopharmaceutical manufacturing services. In addition, a similar percentage of survey participants use or plan to use CDMOs /CMOs for clinical- and commercialscale biologic API manufacturing (57% and 30%, respectively) as do for small-molecule API manufacturing (56% and 33%, respectively). With respect to the spending levels for the survey participants using biomanufacturing services, 73% and 26%, respectively, spend over and less than $50 million annually on all outsourcing activities.
Heightened M&A activity
The strong growth in the contract biopharmaceutical market has attracted the interest of new entrants. One notable example is Samsung Biologics, whose success, according to CEO Tae Han Kim, is based on the company’s extensive manufacturing and engineering expertise which was gained in the semiconductor industry. This is coupled with Samsung Biologics’ ability to attract highly skilled industry experts with direct experience in biologics plant design and construction, validation and cGMP operations.4
Merger and acquisition (M&A) activity has also been fairly intense in the contract biopharma sector. The market is fairly fragmented with a large number of players (vide infra), so it is not surprising that consolidation is occurring. There are additional drivers, however — the largest perhaps, being the desire of CMOs to transform themselves into international CDMOs. Such service providers can meet client needs for global partners with small- to large-scale capabilities, expanded service offerings and advanced technologies.
Capacity considerations
Results of two different industry surveys of biopharmaceutical contract manufacturers suggest that CMOs/CDMOs will be expanding capacity in the coming years. Capacities for mammalian cell culture and microbial fermentation in 2015 were reported by BioPlan Associates to be nearly 82% and 68%, respectively, with mammalian capacity utilization in the U.S. (72%) higher than that in Europe (51%), and vice versa for microbial capacity utilization (55% and 66%, respectively).5 In addition, the surveyed CMOs expected on average 5-year planned increases of 49% and 25% for mammalian and microbial bioreactor capacity, respectively. Companies adding notable capacity include Patheon Biologics, AbbVie (for pipeline support and CMO services), KBI Biopharma and Fujifilm Diosynth Biotechnologies.
References
- Downey, W., “Biopharmaceutical Contract Manufacturing Capacity Expansions.” Contract Pharma. Jun 02, 2015. http://www.contractpharma. com/issues/2015-06-01/view_features/biopharmaceutical-contractmanufacturing-capacity-expansions.
- Stanton, D., “Bio-CMO sector to grow over 40% on Big Pharma’s burgeoning pipelines.” BioPharma-reporter.com. Apr 25, 2015. http://www. biopharma-reporter.com/Upstream-Processing/Bio-CMO-sector-to-grow-40- on-Big-Biopharma-s-burgeoning-pipelines.
- Roots Analysis, “Biopharmaceutical Contract Manufacturing Market, 2015 – 2025.” Press Release. Sept 16, 2015.
- Garguilo, L., “Samsung BioLogics: How To Build A CMO Business.” Outsourced Pharma. Jun 26, 2015. http://www.outsourcedpharma.com/doc/ samsung-biologics-how-to-build-a-cmo-business-0001.
- BioPlan Associates Inc., “Top 15 Trends in Biopharmaceutical Manufacturing.” Contract Pharma. Sep 11, 2015.
- The 2016 Nice Insight Contract Development & Manufacturing Survey.