Today, however, the CMO landscape for biologics is relatively undeveloped. We believe that the biotech industry is well positioned to benefit from companies pursuing a strategy to build a sizable biologics CMO and that there is significant opportunity for such companies to generate substantial returns if they have the necessary capital, a long-term view, and a tolerance for risk.
To support this hypothesis, we will address these key questions:
In the biotech industry's early years, very little contract manufacturing existed for biologics products. This resulted from a combination of regulatory constraints and the immaturity of biologics manufacturing technology.
In those early years, the philosophy that "process defines product" governed regulatory actions.1 Because biologics manufacturing is so complex, the US Food and Drug Administration (FDA) believed it was insufficient to define the product by just its molecular composition. Instead, a product was also defined by the process with which it was made.
The high risk to which biotech companies were subjected as a result of these regulations led to several high-profile failures. One was Synergen. The company was unable to demonstrate the efficacy of Antril in its Phase 3 trials conducted in 1994. Unfortunately, this occurred after the company had already invested in a costly manufacturing facility. The wasted expense of the plant significantly contributed to Synergen's financial distress. Synergen was eventually acquired by Amgen.
Among the most important changes in FDAMA was the replacement of the PLA and the ELA with a single Biologics License Application (BLA). This change allowed companies with well-characterized products to alter manufacturing as long as product comparability was established. Thus, it allowed a company to enhance its manufacturing process or change its facilities without having to conduct additional clinical trials. Manufacturing could finally be outsourced without the drug company losing control of its product.