Eric S. Langer

The Index Score is proportional to facilities’/companies’:

Product innovation is the key to industry leadership

Innovation in product development and manufacturing appears to be the best predictor of where a facility, company, region, or biomanufacturing cluster will rank. Companies manufacturing more innovative marketed products clearly tend to have the highest reported capacities and find the highest facility ratings. In simplistic terms, biopharmaceutical products and manufacturers can be divided into two groups.

The first group includes innovative, R&D-dependent products, generally developed and manufactured in the West, and with distribution targeted to major Western markets. This category includes essentially all recombinant proteins and mAbs, and those requiring the largest manufacturing capacity.

The second group includes lesser or non-R&D-dependent products, including most classic, long-manufactured, non-recombinant products, notably many traditional vaccines and blood/plasma derivative products. Most of these facilities, by their nature, produce large numbers of products, but may not depend on product innovation, high-level employment, or labor-intensive operations. This is also consistent with projections that innovation leads to commercial product manufacture and company success.

Using 11 years of product analysis from our Biopharmaceutical Products in the US and European Markets database and other resources, BioPlan finds that product innovation has shown itself to be the primary driver in biopharmaceutical manufacturing (2). The relationship between innovation and superiority in manufacturing capacity and high-value employment also appears to drive long-term company profitability. Examination of the highest-ranking facilities shows that nearly all are US and European biopharmaceutical manufacturers of innovator products, generally developed by these same companies. Thus, companies such as Genentech/Roche and Amgen dominate the top-ranked companies with by far the largest capacities and highest ratings, along with a few major contract manufactruing organizations (CMOs), such as Lonza and Boehringer Ingelheim.

Manufacturing of innovative, rather than me-too biogeneric and biosimilar, products is a primary driver in regional biomanufacturing cluster development. There are a large and growing number of companies worldwide that are developing biosimilars/biogenerics, with some already having progressed to manufacturing. Most companies, however, have yet to advance to approval and commercial manufacturing, and their manufacture is generally on a much smaller scale than innovative product manufacture, particularly as performed by manufacturing facilities based in traditional major (bio)pharmaceutical markets, such as the US and western Europe.

Examination of the top-ranking facilities shows relatively few outside of the US and western Europe, and the higher-ranking facilities elsewhere tend to be vaccine or blood/plasma products manufacturers. These products tend to be less innovative with more competition on balance, bringing fewer regional cluster benefits, (e.g., having lower profit margins, and less high-value employment), to their owners and to the local cluster, region, and country where they are located. Innovative products typically tend to be manufactured on a scale about an order of magnitude (10 times) greater than performed by biosimilar/biogeneric manufacturers. For example, a US or European innovator company might produce most of the world's supply of a potent therapeutic enzyme using a dedicated 500-L bioreactor, while others producing much the same or a similar product for international markets may only be using a 50-L bioreactor. Also, products manufactured at cGMP standards in larger facilities are generally marketed in their home territories and also command higher selling prices and profit margins.

The study's findings generally confirm the well-documented phenomenon that just a few companies, mostly manufacturers of blockbuster mAbs (> $1 billion per year), by far collectively control the most manufacturing capacity, probably on the order of 90% by bioreactor capacity. However, this does not detract from the importance of rankings of the rest of the Top 1000. The largest facilities used for blockbuster mAb manufacture account for relatively few of the total number of global facilities. Further analysis may include evaluating the extent to which the largest blockbuster mAb manufacturing facilities alter regional and parent company rankings. That is, how do these relatively few, but overwhelmingly large facilities affect distribution of global capacity.

Still to be evaluated is the impact that multiple, smaller commercial product biomanufacturing facilities, with low Index numbers (ranking), can have on regional clusters, when compared with fewer, larger facilities with an equivalent total Index number. Small facilities are important in that they create high-value employment and diversity, with each representing significant investment, earning profits for their shareholders, paying regional taxes, and providing steady high-value employment benefits for the regions where they are located.

By examining facilities ranking, we can quantify the extent to which biomanufacturing facilities tend to cluster near each other. We see that factors such as local/regional biopharmaceutical and related R&D appear only indirectly related to biomanufacturing capacity and its regional clustering. For example, the Maryland suburbs of Washington, DC, have by far the largest number of biomedical scientists, with more than 10,000 alone affiliated with the National Institutes of Health, a large number of local biotech companies, as well as FDA. Despite this concentration of biopharmaceutical expertise and companies, the region tends to be made up of smaller facilities with relatively little major capacity in the area compared with many others that have far less local R&D.