Lonza's commitment is based on its own analysis that shows that demand for biomanufacturing capacity is running well ahead
of estimates it made a year ago, and may exceed supply before the end of this decade. The acceleration in demand is demonstrated
by the fact that just two years ago, Lonza could not sell unused capacity in its two 5,000 L bioreactors at Portsmouth and
mothballed its 2,000 L bioreactor there; now it is tripling the number of 5,000 L bioreactors and reactivating the 2,000 L
unit. When the currently announced expansions are completed, Lonza will have 200,000 L of commercial-scale cell culture capacity
and 30,000–45,000 L of microbial capacity, rivaling BI Biopharmaceuticals for total contract manufacturing capacity.
ALTERING THE BALANCE OF POWER
Lonza's big commitments to new biomanufacturing capacity stand at a time when most of its major competitors have shied away
from the business. In the last year, Dowpharma (Midland, MI), DSM (Heerlen, the Netherlands) and Cambrex (East Rutherford,
NJ) have all announced that they no longer intend to invest in large-scale biomanufacturing capacity. DSM and Dowpharma will
focus their efforts on developing and promoting expression technologies, while Cambrex is still deciding what to do about
its biomanufacturing business.
Why is it that the companies that already have so much capacity available are committing to build even more? Much of the explanation
relates to the nature of the products the companies are bringing to market:
- Biopharmaceuticals targeted at autoimmune diseases and cancer have been very successful in gaining new indications. So commercially
successful products need ever-growing amounts of capacity
- Many of the new drugs are monoclonal antibodies that are given in large doses. The large volumes required, and the fact that
the production processes for these MAbs are often low-yielding, means the companies need a lot of biomanufacturing capacity
to meet demand. Most are meeting the need with a combination of in-house and contract capacity
Another reason for the concentration of capacity is that biomanufacturing facilities are hugely expensive to build. Even the
richest biopharmaceutical companies are willing to build in-house capacity only when they have some proof of commercial success.
Among contract manufacturers, Lonza has been able to proceed because it is adept at managing its risk by getting clients to
guarantee utilization or finding partners to underwrite part of the cost.
The concentration of capacity certainly bestows some market power on those companies that have capacity. It will help them
gain market share over competitors that cannot expand production as rapidly (which is likely to be critical in hotly competitive
indications like the autoimmune diseases). It will give them some advantages in negotiating alliance and in-licensing deals
over companies that may not be able to bring new products to market as quickly. Biomanufacturing capacity may alter the balance
of power in the biomanufacturing industry.
Jim Miller is president of PharmSource Information Services,Inc., Tel. 703.383.4903, Fax:703.383.4905, Jim.Miller@pharmsource.com