Build Versus Buy in the Current Biotech Market Environment

Published on: 
BioPharm International, BioPharm International-09-01-2010, Volume 23, Issue 9

How current economic conditions affect your build-or-buy decision.

After your R&D team has had a "Eureka!" moment, the first order of business is to engage in process development and production of the product for clinical supply. Perhaps that moment came a few years ago and now you need to ensure that you can supply enough product to meet commercial demand. Do you choose to build or retrofit your own manufacturing plant or do you buy via outsourcing to a contract manufacturing organization (CMO)? This complex decision shouldn't be made lightly because it could affect nearly everything about your business, including your company's financial situation, intellectual property position, and business and product goals.

Maria Lusk


In 2009, many small- to medium-sized biopharmaceutical companies struggled to raise funds for their product development and manufacturing projects, while large, financially stable companies reigned in spending and reassessed their pipelines. The building of new manufacturing facilities decreased, possibly reflecting changes in business philosophies as well as a reduced ability by the pharmaceutical and biotech companies to progress with construction.1,2 At the same time, the global CMO market declined to approximately $2.6 billion, a reduction from years past.3 In general, CMOs saw a drop in requests for proposal, more sensitivity to pricing from potential clients, and there was (and continues to be) increased level of competitiveness amongst CMOs. At least one CMO closed its doors (QSV Biologics). Mergers and acquisitions also changed the landscape of the CMO business, as CMOs of all sizes and capabilities were integrated into larger pharmaceutical or biotech companies (Watson Pharmaceuticals/Eden Biodesign; Merck/Avecia; Recipharm/Cobra).

Today, the business environment seems to be on the rebound: interest in pipelines including biologics remains strong, and for companies considering outsourcing, CMO capacity is broadly available (though, perhaps because of the acquisitions of 2009, capacity may not remain readily available). Process economics continue to improve through leaps in productivity and the acceptance of new production technologies. There is a wider array of product types requiring cGMP manufacture, including the emergence of biosimilars as originator product patents expire. But the industry has learned some valuable lessons as a result of the tumult of 2009. Companies remain cautious when evaluating requirements for risk sharing, product quality compliance, and business partner compatibility. Cost-containment is still paramount and everyone is looking to manage their project budgets efficiently.



When deciding whether to build your own capacity or buy it from a CMO, prioritization of what is most important to you as a company should be key. Although your available budget and the return on investment must be considered, your choice shouldn't be made on potential costs alone. Several factors should be weighed before you make your choice:

  • Risk tolerance: Are you willing to put some (or all) of the responsibility for product development and manufacturing into the hands of a trusted partner?

  • People/expertise/core competencies: Can you assemble a team to execute various project tasks, or do you require support from an external source for things like basic process development and manufacturing, or for specialized activities like fill-and-finish?

  • Manufacturing scale and production forecast: How much of your product will you need to complete your clinical trials or to support commercial demand? Will your company have available capacity at the proper production scale to meet your needs?

  • Technology: What technologies will be required to manufacture, test, and finish your product? Do you already have the appropriate science and equipment in place? Do you have the budget and time to obtain the required technology, or is partnering with a CMO the best option?

  • Timelines: Is there pressure from investors or the market to achieve a clinical or commercial milestone by a particular date? How will the required project tasks fit with the expected timeline? Will building or retrofitting a facility fit with the timeline, or do you need to use a CMO to achieve your milestones?

  • Geography/cultures/currencies/ communication: Does closer necessarily mean better? Are currency exchange rates critical to your project budget? Are you prepared to communicate across various time zones and possibly cultural influences?

  • Regulatory affairs (RA)/clinical sites: What is your target market and will you need to include several locations around the globe in your plan to submit a regulatory filing? Do you need to have your own facility and RA staff in the same location as the clinical sites? Is there a CMO out there that can fully support your regulatory plans?

  • Intellectual property/control: Does your company wish to control its IP completely, or are you willing to share your know-how with a trusted CMO partner? Will you grant a license to a business partner who will take your product through to commercialization, or do you prefer to maintain control, including manufacturing, throughout the product's lifecycle?

  • Number of products and their development/clinical phase: You should plan for success, but the "what ifs" of failure also need to be considered. Do you have one or two products in the early phase of development, or is your portfolio well balanced with products in all stages of clinical development and clinical trials? It does not make sense to build a new facility if your pipeline cannot support it.


If you have the option to build a facility from scratch ("greenfield") or to retrofit an existing space, you must carefully scrutinize what is available to support the production of your product. A greenfield facility will be fit for purpose from the beginning, but various challenges may arise for a company that choses to build, including keeping to the construction budget and timeline; employing people with the proper background to ensure that the facility is fit for purpose; and training staff to install, validate, and operate equipment. On the other hand, it may be more difficult to retrofit an existing space because the existing space must be able to accommodate the new equipment while perhaps maintaining (and re-validating) some of the legacy infrastructure (e.g., clean-in-place and steam-in-place skids, utilities, tanks, water supply). Any compromises in facility design will need to be weighed against planned production and regulatory requirements.

If you do decide to build, consider that there are several manufacturing technologies to choose from:

  • Disposable, single-use, or limited-use manufacturing equipment: Some of the benefits of these components and systems include a low initial capital outlay, fast installation, and reduced routine operating costs, because these can reduce or eliminate the requirement for cleaning or cleaning validation. Although the use of a completely disposable production train is not common, biotechnology companies are beginning to investigate this as an option.4 For particular types of products such as viral vaccines, disposables are indispensable.

  • Stainless-steel systems only: Stainless-steel systems are proven for manufacturing products reliably and reproducibly; the technology is common, so process transfer between manufacturing sites (internal and external) is relatively straightforward, and these systems can support various types of products. But consideration should be given to budget and timeline requirements for installation because they tend to be expensive and time-consuming to order, install, and validate. Cleaning will be a continuous challenge for the lifetime of the system.

  • Hybrid systems consisting of disposable and stainless-steel components: This option seems to be the most popular for manufacturing biopharmaceutical products.4 Systems can be designed to meet your facility and product requirements, using a "best of both worlds" approach.

Before making your decision to build or retrofit, consider that regardless of the equipment you choose to install, maintenance and materials supply will be a continuous endeavor. Planning for time and costs to operate and maintain these systems should be included in your overall product lifecycle design.


An alternative to building or retrofitting a facility is to partner with a CMO. Indeed, innovator companies have started looking at the strategic benefits of engaging CMOs to support their products throughout their lifecycle: in general, it is likely that the CMO's facility and quality systems already meet regulatory requirements, including international regulations; an innovator company can choose a CMO in a particular location (or locations) as there continues to be significant CMO business development in Singapore, Israel, Japan, and the BRIC countries (Brazil, Russia, India, and China); CMOs are differentiating themselves by increasingly offering specialized technologies and services, and several major CMOs are engaging the innovator companies by exploring alternative business models. In addition, companies have access to CMOs that are already prepared to not only manufacture a myriad of products, but also provide you with technologies and personnel already in place to "hit the ground running" in support of your project needs.

Expression Systems

One of the benefits of working with a CMO is that in some instances the IP holder for a particular expression system is the CMO (for example, G-Pex/Catalent; GS/Lonza; BI-HEX/Boheringer Ingelhiem; CHEF-1/CMC Biologics), or a technology may be available to the CMO (SURE (Selexis), UCOE (Millipore)/Eden Biodesign) and accessing it through the CMO may allow your company to obtain preferential business terms. Discussion of available options that may be most appropriate for the production of your product should be based on your company's supply requirements (current and future); your available budget; any target product delivery date(s); and your company's risk tolerance and regulatory strategy.


There are a few areas of specialization that commonly are outsourced by innovator companies, including those who have their own internal manufacturing capability. These include:

  • Product characterization: This usually includes highly specialized analytical techniques such as mass spectrometry, amino acid analysis and post-translational modification analysis. Because these analytical methods usually require expensive equipment and highly skilled technicians, many companies choose to engage the services of an external contract testing house.

  • Drug product fill-and-finish: This can include vial fill and lyophilization, combination products, and transdermal patches.

  • Viral product production: There are several product types in development requiring specialized knowledge and expertise. Examples include viral vaccines, gene therapies, and cell culture products comprising or made using baculoviruses, adenoviruses, or a wide variety of other viruses. Some innovator companies choose to outsource the production of these types of product because of constraints in their existing facility (e.g., segregation of production suites and air handling units), technical expertise, or regulatory requirements.


Before making the decision to buy, get to know your potential CMO partner. Ask questions and be prepared to answer some too. You should understand and then share what your expectations are for working with your chosen CMO, and you should have an understanding of how its capabilities stack up against your internal capabilities and project requirements.

In general, those who choose to build tend to be the large pharmaceutical and biotech companies that have sturdy pipelines and plenty of cash on hand. Smaller companies with fewer products and less cash often outsource production of their products. But regardless of who you are, the choice to build or buy is one that could have a significant impact on your present and future business success, and therefore should be made very carefully.

Maria Lusk is a director of client management at Eden Biodesign, a part of the Watson Group, Liverpool, UK, 919.806.4234,


1. Langer E. Build or Buy? Strategic Choices in Biomanufacturing. 2010 BIO International Convention. Chicago, IL. 2010 May 3–7.

2. Bush L. Build or Buy? Strategic Choices in Biomanufacturing. 2010 BIO International Convention. Chicago, IL. 2010 May 3–7.

3. Liu C, William D. State of the bio-CMO market. Contract Pharma. 2010;12(3).

4. Hoffman M. Trends in bioprocessing. Bioprocessing and sterile manufacturing 2010 survey. Pharm Tech suppl. 2010;34(3):s4–s7.