Biomanufacturing capacity drives regional clustering
Creating the Index
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Numerous studies and articles have portrayed biopharmaceutical revenue (and profits) as the key factor in the development
and success of regional clusters. Factors such as company profitability, access to funding sources, and access to high-value
employee expertise are certainly related to company location. The primary factor for regional growth, however, appears to
be presence of biomanufacturing facilities. Manufactured products, not R&D, make money, and profitable companies tend to
attract or support co-location of other similar companies. The biopharmaceutical industry appears to prefer co-locating where
others have had manufacturing success. Lower cost regions do not appear to effectively attract high value manufacturing operations.
To this point, we note that much biomanufacturing capacity is located in California and other global regions where costs of
business operations are relatively high.
There is obviously a good reason that the majority of successful companies (with marketed products) have and continue to invest
in building their own facilities, while now often shifting their resources and activities out of R&D. Biopharmaceutical R&D
involves developing knowledge and intellectual property which, ultimately, only have value when products are manufactured
and sold. R&D centers and staff are cost, not profit, centers and are only as valuable as the commercialized products they
produce. Manufacturing facilities are profit centers, and generally remain this way for decades. Related to this, manufacturing
facilities are tangible assets that hold their value, even when resold. In contrast, biopharmaceutical R&D is increasingly
something being contracted out, and sometimes abandoned. It is increasingly being replaced by licensing and collaborations
with small R&D-intensive companies, with even the largest international companies now taking this approach to their long-term
development. However, these and other companies, particularly including the more successful (profitable) ones, for good reason
tend to build their own captive manufacturing facilities (or in some cases, contract out to just a few major CMOs with experience
in commercial product manufacturing).
Global distribution
Table I: Concentration of biopharmaceutical manufacturing capacity (accessed June 20, 2011).
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The
http://Top1000bio.com/ site shows current, real-time distribution of biopharmaceutical manufacturing. Table I shows major regions of the world ranked
by their relative BioManufacturing Facility Index Score.
Industry views on market priorities
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The relative concentration of biomanufacturing facilities generally parallels the number of facilities operating in each region
and the regional market for biopharmaceutical products. Thus, it is no surprise that the US and Europe are the primary driving
forces in biomanufacturing. Together, the US and Europe account for 62.4% of the worldwide total (based on cumulative facilities
index scores).
Industry views on the roles of China and India
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For the foreseeable future, other regions, notably China and India, appear to have little chance of catching up with this
lead, assuming that operations continue to be structured as they are currently. However, as the local industries grow in these
and other developing regions, manufacturers and regions will surely gain more world-class-sized facilities and will increase
their relative Index scores. The current lack of precedents for FDA and European Medicines Agency approval of biopharmaceuticals
manufactured at facilities in India, China or other developing regions will create a hurdle for Western companies seeking
to supply major world markets from manufacturing bases located in these countries. Any facilities based in developing countries
that target lesser-regulated international markets will likely also be smaller scale, perhaps biogenerics manufacturers.
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