BioPharm: Over the years, outsourcing has grown from being a short-term tactic into a long-term strategic alternative. What are the
two or three key factors that have contributed to this change?
Hancock: This is an obvious trend that we have observed. [Companies] really want to get fixed costs off of their balance sheets; they
don't want to continue investing in bricks and mortar any more. They want to focus their resources on their R&D pipeline,
especially as blockbusters are coming off patent. The outsourcing world has grown up tremendously in the last 10 years for
biologics and pharmaceuticals in general, so companies have a lot more outsourcing options. So, I think [the factors are]
moving fixed costs off of their balance sheets, focusing their energy on building their pipeline, marketing their existing
products, and that there are many more good options for outsourcing.
BioPharm: Are certain types of companies—start-ups versus established companies, for example—more likely to have long-term outsourcing
contracts?
Hancock: Thirty years ago, the model followed by many small companies was to raise as much money as possible, and then attempt to
become a fully integrated pharmaceutical company, with in-house development and manufacturing capabilities. That model is
no longer an option for small companies. Investors aren't willing to invest in infrastructure; they want to invest in technology.
Most small companies that we work with have research capability, but frequently they outsource all development activities.
They'll come up with a molecule, do some early animal work, then outsource everything else; process development, analytical,
manufacturing, and regulatory and clinical. What's changed is that the larger companies are beginning to adopt this model,
outsourcing more and more. We have observed a 20–40% increase in outsourcing development and manufacturing among our larger
clients, and believe the trend is continuing. There are challenges with this model also, in that they're giving up a lot of
control and they need to mitigate that risk the best they can, by working with CMOs they can trust.
BioPharm: There has been movement among manufacturers towards consolidating their contract services and securing strategic relationships
with a single or so-called preferred provider. Has your company increased its offerings to accommodate this trend, or does
it plan to?
Hancock: In the past, we offered only clinical manufacturing, for Phase I, Phase II, and a bit of Phase III. We now have everything
in place to support commercial manufacturing projects as of April [2011], when we completed our first FDA pre-approval inspection.
We'll continue to support early development products, but now we're working with both our existing client base and new clients,
to assist in the commercialization of several exciting therapeutic products. We have in place all the commercial capabilities
to do fill-finish projects in either syringes or vials. And we're moving towards commercial production with some of our biologics
clients, as well.
To further complement our expanded production capabilities, we've added additional development resources. About a year and
a half ago, we partnered with a company called WindRose Analytica, in Camarillo, California. They provide analytical services
from early development through commercial validation. The collaboration has allowed us to quickly expand our capacity and
our service offering for product release testing as well as for process development of biologics.
Another area we needed to add as we moved into commercial [manufacturing] was packaging. Again, we decided that was not one
of our core competencies. Rather than starting from scratch internally, we partnered with a company called Sherpa, that located
their packaging and labelling facility right next to our campus. We've also really expanded our process development capabilities.
We can now take a molecule that a company has made on bench scale, and scale it up to commercial manufacturing scale, do all
the process validation involved, and support the regulatory submissions as well.
We've continued to focus on biologics manufacturing, which for us is in microbial systems as opposed to mammalian [systems].
We decided not to go into mammalian production, but to focus on microbial and do it very well and at larger scale. We used
to be at 100-L scale for fermentation, but are now at 1000-L, which gets us to commercial manufacturing scale. On the fill-finish
side, we had a very nice clinical business that we've expanded to commercial production for both vials and syringes. We can
fill batches up to 100,000 units per batch in either vials or syringes.
