The CMO Advantage in Biologics Manufacturing - The biologics CMO market—especially in mammalian cell culture—is still relatively undeveloped and represents a significant opportunity. - Bi


The CMO Advantage in Biologics Manufacturing
The biologics CMO market—especially in mammalian cell culture—is still relatively undeveloped and represents a significant opportunity.

BioPharm International

Jayant Lakshmikanthan
Biologics manufacturing is a technologically complex, highly regulated process. In comparison to small-molecule manufacturing, biologics manufacturing requires far more planning, investment, and skilled personnel and, therefore, can be much riskier. For biotech companies requiring such manufacturing capabilities and experience, partnering with a biologics-focused contract manufacturing organization (CMO) can be a good solution.

Today, however, the CMO landscape for biologics is relatively undeveloped. We believe that the biotech industry is well positioned to benefit from companies pursuing a strategy to build a sizable biologics CMO and that there is significant opportunity for such companies to generate substantial returns if they have the necessary capital, a long-term view, and a tolerance for risk.

To support this hypothesis, we will address these key questions:

  • Is there a need for new biologics manufacturing capacity? If so, what type of capacity is needed?
  • Do CMOs provide strategic value to the biotech industry?
  • Are there CMO models that are economically viable and sustainable?
  • If CMOs do provide value and are economically viable, what will they look like?


In the biotech industry's early years, very little contract manufacturing existed for biologics products. This resulted from a combination of regulatory constraints and the immaturity of biologics manufacturing technology.

In those early years, the philosophy that "process defines product" governed regulatory actions.1 Because biologics manufacturing is so complex, the US Food and Drug Administration (FDA) believed it was insufficient to define the product by just its molecular composition. Instead, a product was also defined by the process with which it was made.

As a result, early manufacturers were required to perform pivotal Phase 3 trials in the same facility used for final commercial production. This required companies to invest in full-scale plants before entering Phase 3. Further, companies were required to file two license applications for a biologics product, a Product License Application (PLA) and an Establishment License Application (ELA). The PLA and the ELA had to be held by the same company. The company also had to perform a significant portion of the manufacturing itself to hold the ELA. This regulatory environment made it impossible for contract manufacturers to exist.

The high risk to which biotech companies were subjected as a result of these regulations led to several high-profile failures. One was Synergen. The company was unable to demonstrate the efficacy of Antril in its Phase 3 trials conducted in 1994. Unfortunately, this occurred after the company had already invested in a costly manufacturing facility. The wasted expense of the plant significantly contributed to Synergen's financial distress. Synergen was eventually acquired by Amgen.

Evidently, experiences such as Synergen's forced the FDA to rethink its policies. The FDA Modernization Act (FDAMA) of 1997 changed manufacturing regulations and significantly bolstered the growth of CMOs.

Among the most important changes in FDAMA was the replacement of the PLA and the ELA with a single Biologics License Application (BLA). This change allowed companies with well-characterized products to alter manufacturing as long as product comparability was established. Thus, it allowed a company to enhance its manufacturing process or change its facilities without having to conduct additional clinical trials. Manufacturing could finally be outsourced without the drug company losing control of its product.

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