To assess current trends in single-use bioprocessing equipment, 

, director, Mobius single-use processing systems, Millipore Corporation; 

, director, fluid management technologies, Sartorius Stedim Biotech North America; 

 associate director, market management; Thermo Fisher Scientific; and 

 product manager, New Brunswick Scientific.

Q: Single-use equipment continues to make strong inroads in bioprocessing. What application areas are currently growing the fastest? 
  

 We are seeing strong growth across all of our product lines. We are seeing a substantially higher level of interest in applications such as tangential flow filtration, final formulation and filling, and mixing.
  

 The fastest growing application segment of single-use systems is in downstream processing, primarily for pool conditioning steps between columns. The proliferation of mixing technologies, sensor technologies, and the general overall comfort level of the end user community with single-use systems are all contributors to this trend. The financial drivers for these applications also are very strong (higher facility capacity and lower investment in CIP/SIP and validation) and we are seeing implementation in both green field facilities as well as retrofits.
  

 We have seen contract manufacturing organizations gravitate toward single-use systems rapidly and appreciate many benefits, such as the time savings associated with eliminating CIP/SIP process in traditional bioreactors. Also, vaccine manufacturers are rapidly incorporating single-use systems as a means of driving down costs and regionalizing manufacturing. 


 The integration of single-use equipment into both research and production facilities has grown substantially over the last several years. However, because of the reduction in validation costs that single-use technology affords, the largest growth area has been in cell culture, specifically for the production of vaccines and antibodies. 

Q: Many end users are concerned that adopting single-use technologies may require reliance on a single source. How big a risk does this pose and do equipment manufacturers offer any guarantees to reduce this risk? 
  

 Most large manufacturers of single-use equipment do have strategies in place to mitigate this risk, with either multiple manufacturing or storage sites. They also have developed detailed plans for their own key raw material suppliers. It is however important to recognize that the risk of single sourcing exists with all products, not just single-use equipment. Critical filters, chromatography media, process excipients, and cell culture media and additives, generally are single-sourced because of the substantial effort involved in developing and validating multiple cell culture and purification processes. Therefore, it is important to understand what the true risks are and develop rational and implementable risk-mitigation strategies.
  

 Security of supply is a major topic that end users must confront when implementing single-use technology. The transition to single-use systems is very much like an outsourcing exercise because the drug manufacturer becomes reliant on suppliers to run his process. This burdens the drug manufacturer's procurement and supplier quality functions to examine the security of supply risk-mitigation strategies within a single supplier and to consider the qualification of a second source when that is possible. Each single-use supplier has different strategies, and it is up to the end user to determine if they are satisfied that the risk of supply interruption is properly managed.
  

 Assuring supply is a key element to end users incorporating single-use systems into bioproduction processes. A number of elements can off-set this, including the establishment of redundant manufacturing sites and long-term supply agreements. As such, while concerns exist over being single-sourced on any element of the bioprocessing system, measures can be taken to minimize the impact and ensure continuity in production.

Q: Another area that presents challenges for disposables is large-scale chromatography. Does the cost involved-particularly with Protein A columns-make single-use columns prohibitive? 
  

 That depends on the number of times the column with that batch of Protein A or any other media is used. For a molecule in early-phase clinical trails, one may be able to make a case that running cleaning validation studies to operate a column for 5–10 batches is not very economical. However, for a drug that is produced commercially in 100 or so batches per year, single-use technology will be difficult to justify. The same is true for all downstream purification technologies.
  

 Single-use membrane chromatography is already well established for flow-through polishing applications and the economic drivers are very strong. However, the cost of Protein A makes it unlikely that this capture step will ever be truly single use. One could imagine columns being campaigned and discarded after a campaign is complete, but I don't think anyone thinks of this as single-use system.

Q: To what extent is cost a factor in making decisions about whether or not to implement single-use technologies? In which applications do you think disposables make the most economic sense?
  

 More than cost, the reluctance to implementing single-use systems appears to be coming from the availability of legacy stainless steel equipment. Certainly in areas where process bottlenecks are present, justifying the migration to single-use technologies is relatively straightforward. For a facility that runs multiple manufacturing campaigns of different drugs, adoption of single-use technologies clearly provides them enhanced flexibility, product safety and, in some cases, better capacity utilization. The adoption of single-use systems is now not really limited by application but by scale. There are limits as to how big the single-use containers are going to get. Beyond that scale, we need to develop better ways to operate in a single-use mode without necessarily going bigger.
  

 Cost is the number one driver toward single-use technologies. Of course, the elements of a cost calculation can be very complex. There are straight cost of goods models, but other cost drivers are not so straightforward. Time savings on a project, reduced investment risk, and increased capacity of an existing facility are examples of cost savings that may be hard to quantify. The applications where single-use systems make the most economic sense generally are in sterile operations where the risk of cross contamination is the greatest. Here the capital and implementation costs of the CIP/SIP facilities are eliminated, as well as the ongoing cost of performing and verifying these operations. Periodic revalidation efforts also are eliminated. 
  Pence: Although performance was critical when single-use systems first emerged, cost is an increasingly important factor in the selection and use of single-use technology. Cell culture applications (e.g., single-use bioreactors) appear to be less cost sensitive compared to mixing applications, which can vary on cost sensitivity based on the material being mixed.

Q: One of the challenges with implementing single-use technologies has been sensors. Where do we stand with that today? 
  

 Many companies are making some headway in this field. Although there are technologies coming of age for use in the bioreactor for measuring pH and dissolved oxygen, reliable sensor technologies for measuring pH, flowrate, optical density are still in early development. It is only a matter of time.
  

 This is an area of a lot of innovation and development, but the supplier base is not there yet. We are still in the infancy of single-use sensor technology for non-cell culture applications. 

Articles

Trends

Single-Use Bioprocessing Equipment

To assess current trends in information technology, automation, and process control, 

 director of life sciences industry solutions, Emerson Process Management, 

 information solutions technical consultant, Rockwell Automation, and 

Q: What are the key considerations biopharmaceutical managers should keep in mind when developing an overall strategy for automation? 
 Patnaik:

 Biopharmaceutical managers must ensure that plants don't become islands of automation. Biopharmaceutical manufacturing is a unitized floor. The process flows from unit to unit such as bioreactor, filter, harvest, centrifuge, chromatography, etc. The process engineer has a big say in selecting the unit manufacturers. After the project is over, the plant ends with islands of automation, which affects many things including integrity of data, total cost of ownership, and change management. The managers should take a holistic view of the floor during the planning stage.
 There are two types of data: molecule-centric and manufacturing-centric. Molecule-centric data carries the fundamentals of science from R&D through fill–finish. In other words, a horizontal flow of data. Manufacturing data flow vertically from ISA S95 level 0 through 4. The process intelligence comes from devices to controller to MES to ERP. In this scenario, the standardization of technology and protocols are critical. For example, managers should identify the type of bus required in level 1 (devices) instead of the type of device manufacturer. This selection requires a holistic view of core business objectives. 
 Technologies and companies change faster than manufacturing principles. A plant is a multi-decade investment. Managers should look at the obsolescence curves of each technology and develop a philosophy ahead of time so that the supplier is committed to the plant requirement. 
 

 Biopharmaceutical managers must consider future needs of their facility, both in terms of flexibility to incorporate new products, as well as the information requirements for better analysis of process performance.


 The most important thing biopharmaceutical managers need to keep in mind about automation is that automation won't help-and may even do more damage-if core manufacturing processes aren't rock solid. It's critical that companies evaluate all their manufacturing and compliance processes to ensure quality before even considering automating these processes. 

Q: How important is the role of information technology (IT) in improving process development? 
 

 A typical biopharmaceutical floor has 40 to 70 systems such as LIMS, PLCs, barcode scanner, weigh scales, DCS, and MES. Each produces data. At the end, we have a pile of data that becomes a regulatory concern and consumes time to review and understand. Data provide process intelligence. A platform that collects data from all these systems and deciphers patterns and identifies improvement areas would be very good for the floor.
 

 Testing at the end of a process will provide a "final grade" for the batch, but understanding how that grade was determined requires analyzing quantitative information for that batch and comparing it to that of other batches. To facilitate such analysis, process data must be collected and stored in an easily accessible format. IT provides more options for data storage and sharing. Business managers and automation and IT engineers must work together to make sure process information is available at the business level while maintaining process security. 
 

 IT can be vital to improving process development, but shouldn’t be seen as a cure-all. For example, quality management software solutions can be essential in increasing operational efficiencies and ensuring the quality of manufactured products.  However, quality management solutions need to reinforce and support a culture of quality across the organization-not the other way around. 

Q: What are some of the latest technologies available for real-time process monitoring? 
 

 Techniques for batch data alignment continue to evolve and are key to improving online data analytics for fault detection and end of batch quality parameter prediction. Also, web-based interfaces have recently been introduced that allow online data analytics to be accessed by anyone in a manufacturing organization.
 

 Process historians have long been the repository of choice for collecting and storing process data. Current web-based visualization tools can now model complex data from multiple sources-historians, databases, and real-time control systems-to enable monitoring and analyzing process data.
 

, but more and more we're seeing companies integrate their manufacturing execution systems with their quality management systems. Doing so can ensure that real-time process monitoring also includes product segregation and issue regulation-simply monitoring processes isn't enough.

Q: What are the biggest challenges companies face when automating bioprocessing operations? 
 Patnaik:

 Achieving the challenges described earlier. In a broader context, bringing the following concepts together would be critical to the future of bioprocessing operation: Process analytics: The present manufacturing equation is "variable inputs into a fixed process = fixed output." The FDA has relaxed the equation by encouraging manufacturers to vary their process according to the inputs to achieve the final product quality attributes. The managers should take this into account. Human-centered design: operator interface will be key to efficient manufacturing. Today, human adjusts to technology or machines. Tomorrow, technology will adjust to human behavior. Digitization of quality: Today, quality is paper based, especially the quality assurance. The future is online, real-time quality assurance. Operation managers must think of this trend.
 

 The technology to automate bioprocess operations is mature and continues to evolve. The main challenges that companies face are the ability to completely understand the process, evaluate and articulate their need for automation and information, and calculate a return on that investment.
 

 The biggest challenge is in making the business case for implementing technologies that may not necessarily demonstrate their benefits in terms of dollar figures. There are a number of IT solutions that will invariably help in minimizing long-term risk to the company, but what if these solutions can’t necessarily be counted on as short-term revenue generators?

Q: What are the common errors that companies typically make when automating bioprocessing or laboratory operations?
 Patnaik:

 Achieving the challenges described earlier. In a broader context, bringing the following concepts together would be critical to the future of bioprocessing operation:
 Process analytics: The present manufacturing equation is "variable inputs into a fixed process = fixed output." The FDA has relaxed the equation by encouraging manufacturers to vary their process according to the inputs to achieve the final product quality attributes. The managers should take this into account. Human centered design: operator interface will be key to efficient manufacturing. Today human adjusts to technology or machines. Tomorrow technology will adjust to human behavior. 
 Digitization of quality: today quality is paper based especially the quality assurance. The future is online, real-time quality assurance. Operation managers must think of this trend.
 

 Process control in bioreactors has historically been represented by systems that are focused on controlling the environment of the bioreactor. 
 

 The most common mistake companies make is to try to automate everything at once. It's very easy for a company to want to just automate all processes at the same time, but history has shown that the amount of training, testing and implementation time required to successfully automate processes make it necessary to deploy these automation tools in a phased approaches.

Q. Has recent industry interest in operational excellence (Lean, Six Sigma) spurred greater interest in automation?
 

 The global trends especially increasing patent expiration, changing disease profiles, and increasing grey factors (>60 year old population) are putting cost pressures on drugs. Companies now have operational excellence groups spanning across the functional groups of the enterprise.
 

 There has always been a great interest in automating bioprocess applications. However, increased emphasis on operational excellence has now focused teams on tangible goals of automation, those that tie back business drivers. Companies are conducting more extensive ROI investigations before deciding how much automation will be implemented in a system. 
 

 Absolutely. Companies are using these methodologies to drive process improvements across the supply chain, including automation. A clear tenet of these strategies is continuous improvement and we see companies consistently prioritizing the changes and adding incremental automations, or improvements of existing automations, to realize true business value.

Q. A few years ago, PAT was a hot topic. What is the current state of PAT implementation across the biotech industry?
 

 It is still a hot topic. Industry seems unable to bring the gap between science and engineering and quality with a regulatory bridge. As this is a regulatory guidance versus a regulation the adaptation is slower but we think it will continue to catch up.
 

IT, Automation, and Process Control

To assess current trends in separation and purification, 

director, purification technology, Sartorius Stedim Biotech North America and 

manager, process R&D applications group, Bio-Rad Laboratories. 

What are the two biggest challenges in downstream processing today? 
 

For monoclonal antibodies (MAbs), high titer (5–10g/L) and cost ($/g MAb produced) are probably the two major challenges now. For other biologics, vaccines, and recombinant proteins, time to 
 develop a production-scale process (speed to market) and cost may be on top of other challenges.


Probably the biggest challenge is to make facilities as multifunctional as possible, with the minimum amount of equipment. The second biggest challenge is the amount and number of buffers required for any purification step; this, in turn, puts more pressure on process development to come up with a robust process, which ultimately leads to increased reliance on design space as a tool for process understanding. 

 Many biopharmaceutical companies are considering alternatives to Protein A today. Do you see any particular alternative gaining traction? Do you think the industry will move completely away from Protein A in the next decade?
 

Though precipitation and ion exchange chromatography for MAb capture have been considered and tried with some acceptable results, Protein A would still be the work horse for its ease of use and consistency in performance. The major complaint for Protein A resin is its cost, and with the patent expiring soon, varieties of Protein A media and suppliers may be seen, which can certainly change the situation and bring the price down.
 

Some pharmaceutical companies are already using high-capacity ion exchangers as a platform alternative to Protein A and I expect this trend to grow. The industry is highly unlikely to move completely away from Protein A in the next 10 years owing to legacy processes and the fear of change.

What are some of the alternative technologies being developed to improve downstream processing operations?
 

One new technology would be membrane chromatography, which has much higher throughput (50–100x faster than traditional resin columns) and is great for polishing and contaminate removal. Crossflow filter membrane chemistry also has been improved from PES to regenerated cellulose. The membrane chemistry has low protein binding, consistent and high sample flux, and can be cleaned by NaOH. 
 

Substitution of membranes for resin-based steps; increased capacity resins; new, orthogonal resin chemistries; use of multiple viral inactivation steps in a single process; and single-use technology.

MAbs still dominate the biopharmaceutical market but we are seeing a growing interest in MAb fusion molecules and MAb fragments. How much of a challenge do these present to traditional downstream platforms? 

MAb fusion and MAb fragments purification will not be too bad if they can still be captured by Protein A. Otherwise, the current MAb downstream purification platform needs to be redeveloped, which would be a big challenge.
 

Probably the greatest challenge will be in the initial capture step because Protein A will not work with these molecules. The challenge will be to get the target molecule to a relatively high level of purity; after this point, traditional methods of chromatography can continue to function as they always have.

Is the growth of vaccines affecting the growth of certain types of downstream technologies over others?
 

Many vaccines are based on viruses. Some are polysaccharide based, some are protein conjugates, and some are DNA based. Current resin-based purification technologies do not do well with most of the giant molecules. Traditional resins with diffusive pores show very low binding capacity and are slow in process. To deal with these new challenges, new technologies, such as membrane chromatography and monolith columns, will be more competitive against the resin columns.
 

To some extent. The ability to include traditional viral inactivation steps in vaccine manufacture can be limited for a number of different vaccine classes. In addition, certain specific resins are known to preferentially interact with viruses and virus-like particles, which will give them continually increased visibility in this market segment. 

Downstream Processing

To assess current trends in cell culture media, 

manager of upstream technology and collaborations, EMD Millipore; and 

 director of development, SAFC Biosciences (a business segment of SAFC).

Q: How has the trend toward high cell density cell culture operations affected user requirements for media or feeds?
 

 The feeds and the media have both become more concentrated. In the case of the feeds, concentrating the media means removing the salts and insoluble components and adding them back in the right ratios for proper culture conditions.
 

 Most customers still run fed batch systems-preferably as chemically defined as possible and certainly animal component free (excluding legacy processes). Most run with leaner base media formulations and then add feeds throughout the course of the bioreactor run to support high cell densities. More feed usage and use of concentrated feeds are seen with higher density culture.

Q: Today, most companies desire to be animal-component–free. Are there any drawbacks to ACF media?
 

 I have found some similar drawbacks in that consistency from lot-to-lot (which does not appear to be vendor specific) is still an issue with a chemically defined medium. The more defined the medium you use, the more sensitive your process can be to variations in the medium.
 

 Animal-component–free is not equivalent to chemically defined. You can still have undefined components like plant hydrolysates or yeastolates that can introduce significant variability. Even in a chemically defined system, you need to make sure you have a fairly robust, optimized formula. If the concentration of some key components is too close to the edge of the effective range (plateau) then you can still have significant variability-this effect can be exacerbated by adding hydrolysates with their undefined nature. This "formulation variability" is different than variability of individual components like you might see with serum, serum proteins, or hydrolysates-but it is still variability and can be subtle.

Q: How far back do most users now want to trace the origins of raw materials, including animal-component–free certifications?
 

 I have always relied on media vendors for assurance of animal-component–free materials. However, I have seen cases where customers want to trace the materials very far back. For example, there is an anti-foam that Invitrogen sells that uses tallow somewhere very far upstream in their process. The Europeans won't touch the stuff, so they buy the animal-free (tallow-free) version. Invitrogen, therefore, sells two version of anti-foam and can charge a premium for the animal-free version.
 

 As far back into the supply chain as you can go. We need to do due diligence with all the vendors in the chain-look at their suppliers, raw materials, processes, quality systems, perform vendor audits, etc., and be able to represent as much of that as possible to our pharma and biopharma customers. For example, we now perform audit services of suppliers in the Asia-Pacific region especially for our customers on a contract basis.

Q: What percentage of your sales now comes from chemically defined media? Is this continuing to grow?
 

 I would say the majority of sales comes from non-chemically defined media. This is largely because of companies with legacy processes. However, movement toward chemically defined media is indeed continuing to grow.
 

 Most customers now wish to try to use chemically defined media in their new processes under development with the idea that they will cut performance variability and eliminate animal-derived pathogen risk. We have several customers in commercial production with chemically defined systems and at all other phases of clinical development. Yes, it is a trend that will continue to expand.

Q: Has the recent growth in vaccines created or increased user demand for different types of fermentation media?
 

 I infer from this question that you mean bacterial or yeast fermentation versus mammalian cells. We've seen increased use of both mammalian cell culture and other prokaryotic systems for vaccine production. In a couple of instances, we've been asked by major vaccine manufacturers to help them develop animal component free, chemically defined media for bacterial fermentation and have been able to do so. There are clearly companies using these systems in addition to mammalian cell culture. 

Cell Culture Media

To assess current trends in fermentation and cell culture equipment, 

 a single-use bioreactor specialist, ATMI LifeSciences; 

 national sales and corporate accounts manager, Nova Biomedical; 

product manager, New Brunswick Scientific;

 product manager, disposable bioreactors Sartorius Stedim Biotech North America.

Q: Increased titers appear to be leading the industry toward smaller bioreactors for commercial scale MAb manufacturing. Yet there is still a lot of existing capacity with very large bioreactors. How long will it take for the move to smaller bioreactors to play out for commercial production?
      

 It will take years, because processes and platforms need to be altered and redeveloped.
Schneider: We foresee this change happening in the next 5 to 10 years.


 We do see the industry moving to smaller-scale bioreactors. There are still very large system installations which also have a seed train attached to them, so customers are just not using the larger tanks and continue to use the smaller vessels they already have in place.

Q: What is the current level of interest in perfusion systems?
  

 The same it has always been. I am not hearing about many companies trying to make a move to perfusion. It has its niche, however.
  

 From what we see, interest in process development using cell culture perfusion systems is low.
  

 Currently, there is strong interest in perfusion systems. The perfusion process increases the product output that is normally achieved from batch-style processes without increasing the overall system capacity. Perfusion processes are currently being used in the development and manufacturing of vaccines in many global markets.
  

 We see perfusion to be a growth area at the moment. The market has increased about 30 to 40% in the last few years.

Q: Scale-up always presents challenges for cell culture. Are we making any significant advances toward making scale-up easier?
  

 Yes, there now exist different models that can analyze data and better predict a process at scale. New technology for rapid processing and scaling systems down will aid in making scalability a more predictable piece of the development process.
  

 There has been a lot of progress in the last few years. More precise small-scale bioreactor systems, better control, and extensive data logging lead to a much better process understanding. Parallel setups and systematic design of experiments (DoE) approaches help bypass the 5–20 L scale and allow rapid scale-up from 1-L bench-top bioreactors directly to pilot scale.
  

 Yes, we offer multi-use systems, and customers can purchase one system with additional vessel accessories and different gas flow rates, which allow them to do both cell culture and fermentation in one system. Additionally, we are developing single-use vessels that can be interchanged very easily.

Q: Currently, there is a lot of interest in applying Quality by Design (QbD) methods such as DoE and multivariate data analysis (MVDA) to bioprocess development. Is this having any effect on the decisions manufacturers make about cell culture and fermentation equipment?
  

 Single-use technologies allow for more rapid development. When combined with QbD, DoE, and MVDA methods, there will positive impacts on development timelines.
  

 Yes, today's laboratory equipment is used to support QbD and MVDA. For this reason, open information exchange and (software) interfaces are in high demand.
  

 Yes, we sell a lot of small-scale screening systems that allow multiple replicates to be developed at the same time. These small-scale systems offer process monitoring and control so growth parameters can be modeled.

Q: What is the current state of monitoring and control systems for cell culture operations? Are there still significant gaps, either in the ability of available systems to meet industry needs or in the industry's application of existing methods?
  

 The options on the market are good; gaps may still exist with respect to data collection and finding convenient methods to use that data in process analysis.
  

 Historically, methods for understanding and controlling bioprocesses consisted of instruments from multiple vendors pieced together to form an improvised closed-loop system. Only recently are systems available that automatically sample and measure key process variables such as pH, gases, nutrients, metabolites, waste products, cell count/viability and osmolality, with bi-directional communication to any OPC-compatible controller. The trend is certainly moving toward single, integrated systems that can reliably monitor multiple process variables in real-time from an online sample and provide real or near-real-time process control.
  

 Information management and online data exchange for fermentation and cell culture equipment is essential for state-of-the-art industrial applications.
  

 Yes, there are still some gaps. The main one is 

 analysis. For example, online sensors for glucose and lactate currently are not available. 

Fermentation and Cell Culture Equipment

To assess current trends in laboratory equipment, 

 global product manager, Sartorius Stedim Biotech; and 

 vice president of application technology, Lighthouse Worldwide Solutions.

Q: What are the major trends in laboratory equipment for biopharma process development and quality control?
 

 Analytical devices are used for in- and at-line process analytics. PC-based analytical equipment and bioreactor controllers with online data exchange (i.e., OPC) are getting more popular.
 

 More monitoring along the lines of process analytical technology (PAT). Also, companies [are] more concerned with the enforcement of Part 11. We see a lot of things that used to just sail through the validation groups getting a lot more scrutiny. 
Lapinskas: Based on user demand, vendors now are incorporating process analytical technologies found in large-scale equipment into process development and research-level equipment. Examples include the miniaturization of bioreactors and the incorporation of optical-chemical sensing technology to create a more efficient, reliable, and cost-effective model for scaling up cell cultivation. 

Q: Is there a trend toward disposables? 
 

 Up to now, items were tied mostly to manufacturing. First, products for R&D were available. Pricing seems to be considered a limiting factor.
 

 Much of the more sophisticated equipment has both a hardware and a single-use component that is changed out with each use. This trend increases as there is a greater customer understanding of the environmental impact and total cost of ownership of reusable components-including the risks of cross-contamination, cleaning costs, and of course, labor.
Polen: More disposables are being used. This is not green. But the industry as a whole is not environmentally focused.

Q: What is the state of the industry in terms of adopting PAT-based methods?
 

 For new product development, the industry is looking into PAT methods. We are still in the early beginnings.
 

 Some companies are pursuing PAT extensively; others have a wait-and-see attitude.

Q: Do you see a lot of interest in laboratory-scale, high throughput screening systems for process development?
 

 Absolutely. When we introduce a new technology for screening parameters for a process step, the first questions from the biopharmaceutical companies we work with are always, "Can we do it with more units?" and, "Can we automate it further?" Screening 12, or even 100 media variations is not enough. Now companies want to do at least hundreds, varying other parameters in parallel, creating potentially many thousands of conditions.

Laboratory Products and Equipment

To assess current trends in outsourcing, 

executive vice president of global strategy, sales and marketing at Patheon;

 chief executive officer of Laureate Pharma; and 

 director of business development at Therapure Biopharma.

Q: Where do things stand now in terms of the recession's affect on outsourcing? 

We certainly have seen a pickup versus last year in our pharmaceutical development services business, which covers formulation, analytical, and clinical trial material manufacturing services. We are not experiencing anything like the cash "freeze" we saw at small and large companies alike. Decisions on outsourcing commercial products, mostly driven by network rationalization plans of the large pharma companies, continue to be slow.
  

: We may have reached a bottom, as we have seen several clients secure new financing to allow them to expand their work with us. Small biopharma companies are becoming more resourceful in their funding sources. Overall, market demand is still well below levels of just two years ago.
  

: The recession and its impact on the biotechnology sector will continue to be felt for years to come. Small companies, which have been the initial source of many of today's commercial proteins and antibodies, have been forced to focus their resources on a single lead candidate. With the historical attrition rates, this strategy will have a few winners and significantly more losers. Also, the smaller, early stage biotechs have had a strained ability to raise funds, which has a trickle-down affect on our business. The number of companies requiring outsourcing services will continue to diminish over the next few years. 

Q: Have you seen important differences in the way outsourcing contracts are being written as a result of the recession? If so, are the changes likely to continue even after we see economic recovery?

: Clients and service providers alike are paying a lot more attention to payment terms and CFOs are becoming aggressive with cash management. I'm not sure this dynamic has been well thought out by the large pharma companies. The large pharma companies have a lot of control in negotiating with service providers, because of the substantial revenue they can provide. What they need to be very wary of is that their short-sighted "win" garnered by stretching their CMO providers (whose liquidity and margins pale in comparison) to something like net 60 days payment terms has the potential to jeopardize the existence of many suppliers and put mission-critical products at risk. 
  

: We have seen increased interest in detailed scoping of work before agreeing to contract terms. This is more effective for both parties, and results in greater certainty in execution, so our expectation is that it will continue after recovery of the larger economy.
  

: In our experience, clients have become increasingly focused on cutting non-essential costs from their development projects. From clone development to GMP manufacturing to aseptic fill–finishing, our clients want to ensure that they are getting the most for their development dollars. Another shift is the movement from time-and-material contracts to fixed-price contracts. These trends are likely to continue for at least a few years post-recession.

Q: In the last year, several contract organizations folded and others were acquired. How do those changes affect the overall outsourcing environment?

: Overall, the industry has too many providers in both the pharmaceutical development and contract manufacturing sectors. Pricing in 2009 at times was just irrational; we knew people were pricing their services at a loss, which isn't good for the industry or for clients. Today, potential customers are much more focused on your financial stability, quality, and track record than price, whereas 12 months ago price was almost the sole focus of many.
  

: The CMO industry has always been dynamic, with varying players and customers. Market projections continue to be strong for biopharmaceutical outsourcing as biopharmaceuticals maintain their strong growth. We are embarking on a $15-million expansion and upgrade of our operations in anticipation of the market returning.
  

: The shifting landscape has created opportunities in terms of previously signed clients looking for a new CMO as well as the availability of experienced talent. At the same time, it has created new hurdles. Clients have become increasingly focused on the financial viability of their CMO as they recognize that their future success is intimately tied to the ability of their CMO to deliver on their manufacturing commitments. 

Q: Is the financial stability of outsourcing providers a bigger issue than it was before the recession?

: It's now a much bigger issue. This has been great for Patheon given that we're the only publicly traded pure-play CMO in the world. The value of financial transparency and stability, especially when dealing with specialty and large pharma customers, is greater today than it has ever been. 
  

: Yes. As demand fell during the 2008–2009 period, many providers struggled to make money. As a result, capital investment has been delayed. Laureate was cash positive in 2009 and has recently received equity funding to support expansion and upgrades.
  

: No question. Although our capabilities are always the primary focus, having a solid private financial backing has become an increasing important asset for landing new clients. Our continued investment into our facility, coupled with our mix of commercial and clinical clients, has provided Therapure with a strong financial base which has allowed us to secure a number of clients negatively impacted by their previous CMO going bankrupt. 

Q: Today, many CMOs are diversified; some offer technologies such as proprietary cell lines, and others are part of companies that develop therapeutics. Is this a trend that will solidify in the coming years?

: The trend that's here to stay is you must deliver value. Whether this comes in the form of proprietary technology, unique service offerings, creative contracting, etc., is of less importance than the value delivered to the customer for their specific product(s). What is clear is that the industry will no longer support simple fee-for-service that isn't adding value to the product or project in question.
  

: Customers seek CMOs that offer a breadth of technologies and services, so a trend of CMOs providing more service offerings is not surprising. We have found, for example, that offering aseptic filling services enhances our appeal over CMOs that only offer bulk drug supply. While there will always be specialist providers, there is a trend to consolidate activities to garner a bigger share of the customers' business.
  

: One aspect of our value proposition that resonates well with clients is the diversity of services offered. By offering services from clone development to nonGMP or GMP manufacturing to aseptic fill–finishing to lyophilization to in-house analytical development and testing, our clients can mitigate some of the risks and costs associated with technology transfer. 

Q: There has been a lot of talk recently of larger pharma companies embracing outsourcing much more than in the past. Have you noticed a philosophical shift?

: Our experience is there are some who really understand how to partner with an external organization in way that creates value for them and for the provider. I would say that less than half of the larger pharma and biopharma companies truly understand embrace and execute accordingly. Those that do, do it well, and will get the best people, capacity, and service first-which will be an advantage because the list of broad global service providers is a short one.
  

: We have seen more engagement and interest by larger pharma and biopharma customers. We believe that a robust set of providers is a prerequisite for large pharma to outsource development and supply. The risk-management practices of large pharma favor a choice of suppliers and multiple suppliers in the same supply chain.
  

: Although the reasons differ, we have seen an increase in the number of large biopharma and pharma companies looking for a CMO partner. Some of these companies have decided that their manufacturing resources are best used for large-scale production and have subsequently outsourced production of preclinical and early clinical products. Others have engaged us to manufacture commercial products to support their growth into global markets.

Outsourcing

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Industry Directory & Trend Report, 2010 & 2011

BioPharm International-09-02-2010