Outsourcing Report: Contract Biomanufacturers Turn Conservative, but New Players Add Options - - BioPharm International


Outsourcing Report: Contract Biomanufacturers Turn Conservative, but New Players Add Options

BioPharm International

More Clinical Opportunities While investment in commercial capacity has slowed, capital is pouring into development and pilot-scale manufacturing, mostly from companies not involved in commercial-scale biomanufacturing. Biopharmaceutical companies now have the option of placing development projects with high-profile public companies like Cardinal Health, Baxter, and Cambrex Bio Science, or technology-driven entrepreneurial companies like Laureate Pharma, Althea Technologies, and Formatech.

The allure of bioprocess development and clinical-scale biomanufacturing seems to stem from a combination of factors, including the following.

Pipeline Revival. Thanks to the re-opening of capital markets, early-stage biopharmaceutical companies feel comfortable restarting their mothballed R&D programs. These companies lack internal capabilities and are comfortable with outsourcing their requirements, but they need mature outsourcing partners.

Getting Clients Early. Contract manufacturers view development services as an effective way to build a client relationship that can lead to lucrative commercial contracts at a later date. Even if only a small fraction of early-stage clients make it to commercial approval, the development services business can be profitable on its own — and future commercial opportunities are a nice upside. This is especially true for contractors offering fill and finish services. Cambrex Bio Science, in biomanufacturing, and DSM Pharmaceuticals, in fill and finish manufacturing, are examples of companies following this approach.

Affordability. Whereas commercial facilities require investments of hundreds of millions of dollars, development-scale facilities can be set up for under $10 million — and usually in a leased, rather than purpose-built, facility. These pilot-scale facilities often can be used for product launch until larger facilities are brought online.

Participation Opportunity. Early development services often allow contractors to gain a stake in the success of the product through royalties or other performance-based payments (usually granted in exchange for pricing concessions) or by licensing a proprietary technology that improves process performance (such as improved expression levels).

One-stop Shop. Several contract manufacturers are offering a complete manufacturing solution to clients — manufacturing both the API and the finished dosage form. This model is considered especially attractive to smaller biopharmaceutical companies and allows the contractor to capture more of the client's development spending and secure a long-term relationship. Cardinal Health and Baxter are proponents of this strategy.

Making the Right Choice These developments in commercial- and clinical-scale biomanufacturing make it clear that development and manufacturing executives need to choose carefully when selecting contract services providers. Business considerations must be weighed equally with technical considerations: the issue is not just whether the contractor can meet your needs in the near-term, but whether the contractor will be an appropriate partner over time. Some key questions you will need to ask include:

  • Is the contractor's business strategy consistent with yours? Will they make investment decisions that support your requirements?
  • Does the contractor have the financial means to continue to support the business? Will they make the necessary capacity and capability investments?
  • Does the value proposition make sense? Are you paying for a package that includes more services than you need? Are you locking yourselves into a business relationship that may not be appropriate to your long-term needs?

The biomanufacturing industry offers more good choices than ever, but making the right choice has become more complicated.

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