Trends Driving Increased Outsourcing and Partnering in the Biopharma Industry
The growth in specialty and more patient-centric medicines, and the need for specialized enabling technologies with which to bring these to market, are driving an increase in outsourcing and partnering across the pharmaceutical industry. The technologies, assets and expertise needed to fulfill increasingly complex formulations require substantial capital investments, leading more and more small and mid-size players to turn to contract development and manufacturing organizations (CDMOs) that can offer end-to-end solutions at scale. Mergers and acquisitions within the CDMO space are also on the rise, a natural outcome of this growing demand and need to increase investments in specialized technologies.
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We spoke with Christian Dowdeswell, head of the Dosage Form and Delivery Systems business unit at Lonza Pharma & Biotech, about the factors driving these trends in the CDMO industry, as well as innovations in the small molecule, API and solid oral dosage form spaces.
What are the key trends driving the outsourcing /partnering by the pharmaceutical industry?
There are several trends impacting outsourcing needs in the pharmaceutical industry, with some of the trends observed having a more immediate impact on the market than others.
First and foremost is the need for specialized enabling technologies to address challenges in the increasingly complex molecules in the pipeline today. Many candidate compounds are poorly soluble and most of these are what we call “brick dust” compounds (low lipophilicity), which means they generally dictate a solid dispersion approach to improve solubility and bioavailability (BA) to an acceptable level. We are also seeing more and more compounds that require specialized handling, e.g., highly potent API (HPAPI), driven by the continued investment in all facets of oncology. The assets and expertise required to develop and manufacture HPAPI, enabling drug product intermediates and enhanced dosage forms, are highly specialized and require substantial investment – not only in assets, but also in the expertise of those that operate the asset.
Compounding the above trend is the move towards more specialized and patient-centric medicines. Specialized medicines are continuing to drive industry growth and roughly half of specialty medicines are small molecules. These products tend to be higher-value and lower-volume than standard drug products. This trend further discourages biopharma companies today from investing in expensive assets that would typically be heavily “under-utilized.”
Also, today’s early-stage pipeline is largely in the hands of small to mid-sized biopharma. In 2017, we tracked almost 4,400 small molecules in preclinical evaluations and more than 1,300 in phase I. This represents a very healthy early-stage pipeline with >10% CAGR since 2014. Small- to mid-sized biopharma players tend to have little motivation for investing in assets. The need for partners is clearly there and our analysis suggests that more than 70% of these players tend to outsource their development and manufacturing. We see a similar trend in big pharma, with many companies downsizing their specialist areas and looking to outsource candidate compound development in certain indications.
There has been a lot of M&A within the CDMO/CMO space, including Lonza’s investments…What are the key drivers?
We have seen a lot of investment in specialized technologies, especially in particle engineering. Lonza’s acquisitions have brought particle size reduction, spray drying, hot melt extrusion and melt-spray-congeal technologies into our portfolio. These technologies were key strategic components of forward integrating our custom API development and manufacturing offer. They also play key roles in addressing the BA challenge within today’s pipeline and enabling our customers to bring their complex small molecules to the patient.
Particle engineering – especially jet milling and spray drying – has also been the driver of a number of other CDMO investments and acquisitions in the past few years. There were very few specialist providers of these technologies and the major ones have now been acquired or allied with major CDMO service providers. However, having assets in this area isn’t enough – the real challenge is developing expertise, having skilled and experienced personnel and building a track record of success.
Geography also plays a role. It’s critical to have assets in the US and Western Europe, where the majority of specialty medicines are produced and consumed. CDMOs need to build capability and capacity for key enabling technologies on both sides of the Atlantic.
How does having API and drug delivery services as an offer bring value to customers?
Two facets form the value proposition of forward integrating from API to drug product intermediates and finished drug product. First, having an integrated offer is increasingly critical, but flexibility is key. The need for speed is paramount, with an increasing number of candidate compounds having orphan, fast-track or breakthrough status. The 505(b)(2) pathway also demands rapid screening and development. Biopharma companies – especially the small and mid-sized players driving the early-stage pipeline – cannot afford to work with multiple partners due to cost, complexity and risk. CDMO players are therefore investing to provide end-to-end offerings. While some companies value an integrated service, other companies – or indeed individual programs – simply need access to a specific enabling technology and service.
Second, a CDMO needs to look to understand a customer’s target product profile and commercial objectives at the earliest stages of development. For us, this starts with the API. A better understanding of the ultimate goals vs. a ‘manufacture to spec’ mentality can facilitate the incorporation of improved API and/or drug product intermediate properties. We find that by engaging customer teams in defining problem statements across the API, drug product intermediate and through to the finished drug product, we can work in partnership to optimize the result and pathway.
You mention “enhanced dosage forms” – how does the industry define these?
“Enhanced” is two-fold. First, it means a focus on specialty areas where enhanced technologies are required in one or more aspects, including:
- highly potent or other API that require specialized handling
- particle engineering to tailor particle size distribution to enable certain functionality, e.g., respirable fraction for dry powder inhalant applications
- enabling technology to address either dissolution rate or solubility challenges
- specialized dosage forms for tailored drug delivery, e.g., osmotic dosage forms for zero order release or multiparticulates for pediatric applications or fixed-dose combinations
We are finding that the majority of today’s pipeline has a need for at least one enhancement technology and, increasingly, several technologies or services in combination. Only a handful of CDMO players today can provide this range of technology, and even fewer can provide the technology along with expertise, track record and specialized, phaseappropriate processing equipment to advance a compound from concept to clinic and commercialization.
Enhanced can also mean an accelerated pathway. Today, we see hundreds of programs demanding not only enabling technology, but also the ability to reach first-in-human, clinical studies and scale up to commercialization on an accelerated basis. It’s become more routine and, again, only a handful of partners have the expertise and phase-appropriate capacity to accelerate the development and commercialization timeline. Reaching the market early can mean the difference of many millions of dollars in revenue to our customers.
What is new in your offer and what’s next on the horizon for Lonza?
Early intermediates comprise our latest launch. We have seen the need to secure non-GMP early intermediate supply for our API business, and have used Lonza assets in Visp, CH to produce these intermediates in house.
We now offer this option to customers on a direct basis, which addresses some recent industry challenges – namely, ensuring security of supply and quality of ingredients. Early intermediates is another aspect of our integrated offer, spanning from EI to API through drug product intermediates and specialized finished dosage forms.
We are also investing to expand our capacity in HPAPI, drug product intermediates and finished drug products. One example is adding spray drying capability and capacity in Europe to meet the technology’s growing utilization in addressing poorly soluble compounds.
New applications are coming from our R&D team, and we are working to test and launch these technologies. One example is lipophilic salts, which we see expanding the application space for lipid-based approaches to improving solubility for BCS II and IV compounds.
In the midst of these initiatives, we are still integrating our service offering to ensure that customers receive the service level, results and quality that is expected of the Lonza brand.