Biopharma growing fast due to lower generics threat

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Biopharmaceuticals, which are the fastest growing sector of the pharmaceutical market, are causing demand and manufacturing capacity issues, delegates heard at the Visiongain 3rd Annual Contract Manufacturing Conference meeting in London, UK, this week.


Biopharmaceuticals are complex to manufacture and test, and options for manufacture can be limited, said Mr Steve Musgrave, Executive Director of Unicorn Biologics, a biopharmaceutical services company. The manufacturing technologies are diverse and evolving rapidly, and as a change of manufacturing site can be undesirable, outsourcing relationships will be long-term, he said. However, outsourcing can provide opportunities to mitigate risk and reduce cost.

The global biopharmaceutical contract manufacturing market is set to grow from US$2.6 billion (Euros 1.73 billion) in 2009 to US$4.3 billion (Euros 2.86 billion) in 2011, and to US$5.4 billion (Euros 3.6 billion) in 2014, according to HighTech Business Decisions (see Tables 1 and 2 for a distribution of bioreactor capacity by CMO and product company). Outsourcing has shown a stable increase since 2003, driven by decline in R & D productivity, increased competition from generics and increased development costs and pipeline issues, said Shiva Khalafpour, Vice President for Europe business development for the Contract Manufacturing Organisation (CMO), CMC Biologics.

The interest by the pharmaceutical industry in biopharmaceuticals can be seen in the numbers: at the moment biopharmaceuticals contribute about 15% of global pharmaceutical sales, with annual revenue growth of 15–18%. IMS health predicts that by 2010, 60% of revenue growth of big pharma will come from biopharmaceuticals.

More than 4,500 out of 14,000 plus investigational new drugs in clinical trials are large molecules. More than 43% of preclinical trials involve large molecules and almost 25% of US FDA filings are large molecules, according to CMC Biologics.

Biopharmaceuticals are popular as they face less threat from generics, and as they are complex molecules, this can make comparability difficult. “So from an investor's [point of view] it is an attractive class...unsurprisingly, most large pharmaceutical companies are investing in biopharmaceuticals,” said Mr Musgrave.

Companies decide whether to in-house or outsource manufacturing based on four issues: capacity, capital investment, technical capability and development phase, according to CMC Biologics. The lead times for biopharmaceutical processes are typically long. “From thawing a vial of cells to release of a drug product batch to clinic or market can be eight to 12 months,” said Mr Musgrave.

As there is constrained global manufacturing capacity, there can be “delays to get a product to market”, he added. He believes that all parts of the manufacturing process stage can be outsourced – some firms want the fermentation, purification or device assembly stages to be outsourced – and in the end a team of contractors will be producing the product.

Traditionally, some 10–15 years ago, bio-outsourcing went to firms in the EU and the US, but new CMO players have emerged in Ireland and Singapore, which are low-tax destinations, or low cost CMOs in China, Eastern Europe, India, South America and South Korea, said Mr Musgrave.

Mr Nick Hutchison, Technology Transfer Lead with Lonza Biologics, a CMO with a large bioreactor capacity, said that contract manufacturing for biologicals occurred mostly in the EU and the US, but that CMO firms there must not be complacent as India could be a competitor.

Ms Khalafpour told the meeting that there had been key developments in India, such as strong growth in the biopharmaceutical sector, where more than half of biopharmaceutical products and services were exported, and the addition of quality and regulatory improvements. While in China, there has been investment and growth in vaccine production.

Talking about generics, Mr Laurent Pinchard, Director of EU operations for India's Glenmark Generics, told the conference that although India could no longer be ignored, the constant growth rate of the Indian economy would inevitably lead to rising prices for APIs and finished-dose formulations.

He believed that the next countries for lower cost production would be Bangladesh and China, but would only be used for the ‘less valuable’ parts of the supply chain and for manufacturing old drugs. He also pointed out that “no-one would have believed a couple of years ago, we would have an NCE [new chemical entity] coming from India”.

Many CMO delegates expressed concern about the length of time it took some large pharmaceutical companies to sign contract manufacturing deals. One delegate said that some of the questions asked in a “request for quote” could be unreasonable, and the pharmaceutical firm would have so much information that they could not make a decision. Mr George Macleod, an third party adviser on CMO-pharma deals, with V2 Bio-Consulting Inc, USA commented to Scrip that pharmaceutical companies could create problems for CMOs when they changed the manufacturing schedule of a product.

Table 1: Bioreactor capacity distribution by product company in 2010
Company Bioreactor capacity (estimated)
Genentech 24%
Amgen 12%
Roche 10%
Wyeth Biotech 10%
Biogen Idec 9%
Bristol Myers Squibb 6%
Imclone 6%
Other 21%

Source: Bioprocess Technology Consultants, 2008 (data presented by CMC Biologics).

Table 2: Bioreactor capacity distribution by product company in 2010
CMO Bioreactor capacity (estimated)
Lonza Biologics 32%
Boehringer Ingelheim 23%
Celltrion 16%
Human Genome Sciences 7%
Baxter Biosciences 4%
Other 18%

Source: Bioprocess Technology Consultants, 2008 (data presented by CMC Biologics).

Sukkar E. Biopharma's fast growth causing manufacturing concerns. Scrip News. 2009 Nov 19.

Source: Scrip News

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