Figure 4. Distribution of biotech drug manufacturing capacities (adapted from reference 4).
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As a first-generation technology, microbial manufacturing is typically less complex than mammalian cell culture, but has limitations.
As a result of less frequent use in new products and the commoditization of technologies, the majority of microbial manufacturing
capacity already resides in CMOs (Figure 4). Thus, the growth potential for microbial manufacturing appears to be limited
(Figure 5). These observations suggest that microbial manufacturing is maturing and there may not be a substantial need for
additional capacity in the future.
On the other hand, mammalian cell culture technologies are still less developed, and most technologies and processes involved
are proprietary. A large portion of manufacturing is still controlled by the product companies (Figure 4). At the same time,
significant expected growth (Figure 5) suggests that opportunities for process improvements are abundant and additional capacity
may be needed. This additional capacity could be built internally or outsourced to a CMO. The following sections discuss how
both alternatives can be pursued.
CMOS ARE CRITICAL TO THE BIOTECH ECOSYSTEM
Figure 5. Estimated size of the CMO markets for biotech drug manufacturing technologies (adapted from reference 4).
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Since the late 1990s, the overall CMO market has grown significantly, to around $2 billion. CMOs now represent 66% of total
microbial manufacturing capacity and 25% of overall mammalian cell culture capacity.4 As shown in Figure 4, CMOs play a dominant role in microbial manufacturing, with the three largest CMOs—Sandoz, Akzo, and
Avecia—representing 40% of the market. On the other hand, mammalian cell culture manufacturing is still largely dominated
by in-house capabilities.
As the biologics manufacturing market matures, we believe that CMOs will continue to grow and provide compelling value propositions
to biotech companies, both small and large, for the following reasons:
Figure 6. Cash reserves of biotech companies. Of a sample portfolio of 41 companies, only eight have cash reserves above
the $400 million required to build a plant (adapted from reference 5).
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1. CMOs can provide access to capacity with lower investments. For small-to-medium-sized biotech companies, or large biologics companies that prefer to focus on drug development rather
than manufacturing, CMOs can provide access to capacity without having to invest in a plant. Significant investment is usually
still required for upfront fees, contract management, and technology transfer, but these expenses generally amount to about
$40 million—considerably less than the cost of setting up a plant, which is typically about $400 million (Figure 6). Contracting
with a CMO can help a biotech company share the risks of building manufacturing capabilities for an unproven product. If the
product does not pass Phase 3 clinical trials, the company has lost only its initial investment with the CMO, not an investment
in an entire manufacturing plant.
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