Presented by:
William Downey
408-978-1035
Trends in Biopharmaceutical Contract Manufacturing
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Date Source:
Industry Reports
Biopharmaceutical Contract Manufacturing 2011: New
Participants, Expanded Services and Emerging Markets
Biopharmaceutical Contract Fill-and-Finish : Best Practices
2010
Primary research based on interviews and inputs from
biomanufacturing directors from pharmaceutical and
biotechnology companies and representatives from contract
manufacturing organizations
2
Definition of Biopharmaceutical Manufacturing
The manufacturing of biomaterials proteins, monoclonal
antibodies, plasmid DNA, viral products or other biologics
from microbial or mammalian cells, or transgenics
production methods for therapeutics, diagnostics and
vaccines.
3
Biotechnology Landscape: A CMO’s Perspective
4
Biotechnology
Medical
Diagnostics & Discovery
Therapeutics
& Vaccines
Small Molecules
Chemical Synthesis
Fragments
Large Molecules
Natural
Blood Products
Penicillin
Other Products
Recombinant
Suppliers
Cell Lines
Consumables
Analytics
CMO
API
Fill-and-Finish
Pharma/
Biotech
Innovators
Biosimilars
Agriculture Industrial
Contractors For Biopharmaceuticals
5
CMO
API Fill-and-Finish
• Drug Substance
• Fermentation or Cell Culture
• Limited Fill Capabilities
• Drug Product
• Parenterals/Aseptic Fill
• No Fermentation
Topics
6
API: Growth Drivers in the CMO market
API: Outsourcing to low cost regions
Fill-and-Finish: Outsourcing and Trends
BioCMO Market Size
8
$0.8
$1.0 $1.1
$1.2
$1.4
$1.7
$2.2 $2.1
$2.8
$2.6
$2.1 $2.1
$-
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
1998 2000 2001 2002 2003 2004 2005 2006 2008 2009 2010 2011
Bill
ion
s of D
olla
rs
BioCMO Market Drivers
Underlying Commercial Market
Biotechnology Development Projects
Drug Developer Outsource Strategies
New Services
Productivity
Price
Participants
9
BioCMO Market Drivers: Commercial Market
10
$74 $85
$98 $112
$128
$146
$-
$20
$40
$60
$80
$100
$120
$140
$160
2006 2007 2008 2009 2010 2011
Bill
ion
s o
f U
.S. D
olla
rsBiotechnology Drug Sales
• Biotechnology market growth is projected to continue at a compound
annual growth rate of 7%.
• The growth in biotechnology sales will continue to fuel the growth in the
biopharmaceutical contract manufacturing market.
BioCMO Market Drivers: Commercial Market
11
2433
4662
83100
113128
140153
176193
203218
226235
256 262 265
0
50
100
150
200
250
300
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Cu
mm
ula
tive
Nu
mb
er o
f Ap
pro
ved
Pro
du
cts
U.S. Biotechnology Approvals
1,469 1,484
1,779
2,042
2,239 2,247 2,148
1,850 1,657
1,684
-
500
1,000
1,500
2,000
2,500
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Nu
mb
er o
f Pro
ject
s
Biotechnology Projects in Development
CMO Market Growth Model: Development Projects
12
-26%
Peak-
to-
Valley
Change
CMO Market Growth Model: Development Projects
13
1%
20%
15%
10%
0%
-4%
-14%-10%
2%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
2003 2004 2005 2006 2007 2008 2009 2010 2011
Year
Ove
r Ye
ar C
han
ge
Biotechnology Projects in Development
• Inflection point in 2009
• Positive growth in 2011
• Improved outlook in
2012
CMO Market Growth Model: Outsource Mix
14
0%
10%
20%
30%
40%
50%
60%
70%
80%
2004 2011 2016
Outs
ourc
e S
pendin
g
CMO Market Growth Model: New Services
16
Material Production(incl. DSP)
86%
Process Development
4%
Cell line Development
3%Analytical Assay Development and
Validation3%
Other4%
Current Services Offered
Additional Services Sought
0% 5% 10% 15% 20% 25%
Additional Analytical Services
Conjugation Services
High Yield Expression Systems
Formulation
CMO Market Growth Model: Productivity
17
Microbial 1.9 g/L 2.8 g/L 1.5x
Mammalian 1.0 g/L 2.0 g/L 2.0x
Phase III material
0.0 g/ L
0.5 g/ L
1.0 g/ L
1.5 g/ L
2.0 g/ L
2.5 g/ L
3.0 g/ L
Microbial Mammalian
Yie
lds
2004
2011
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
2002 2008 2011
$ P
er G
ram
CMO Market Growth Model: Change In Price
18
90% Confidence
Market Growth Drivers: Past and Future
19
Growth Drivers
Recent
Past
Current
Outlook
Impact on
CMOs
Commercial Market
Development Projects
Outsource Strategy
Expanded Service Offerings
Productivity
Price
Participants
BioCMO API Market Growth
20
$2.1 $2.1
$2.6
$3.1
$-
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
2010 2011 2013 2016
Bill
ion
s of D
olla
rs
Outsourcing To Low-Cost Regions
21
Would consider outsoucing to
low-cost region, 29%
Would outsource only for local
country requirements,
15%
Would not consider
outsourcing to low-cost region,
56%
Challenges in Outsourcing to Low-Cost Regions
22
5
7
8
8
9
11
13
16
0 5 10 15 20
IP protection
Manpower to deal with oversight, project management support
Cultural differences, integrity
Experience, technical capability
Quality
Regulatory approval, experience
Communication, language barriers
Distance, time differences
Number of Mentions
Reasons for Outsourcing
24
Capacity, including different-sized
requirements, 35%
Special services, different
technology, 25%
Commercial capability, 10%
Historical relationship, long-term contract, 10%
Risk mitigation, redundant supply,
10%
Reduce capital spending, 5%
Tax benefit considerations,
5%
Pricing: Vials
26
y = 18681x-0.829
R² = 0.8109
$0.1
$1.0
$10.0
$100.0
$1,000.0
1,000 10,000 100,000 1,000,000
Price
/Bat
ch/B
atch
Size
Batch Size
n=24
0% 20% 40% 60% 80%
Production liability
Scheduling
Price
Quality specifications
Capacity
Mentions per Contractor Type (%)
F/F
API
Most Mentioned Negotiation Roadblocks
27
CMO: Manufacturing Trends
28
0 2 4 6
Changing regulatory environment
Changing dosage forms, more convenience for patients
Increased adoption of isolator technologies
Growth of biologics sector
Smaller batches of more targeted drugs
Increasing need for specialized handling and technologies
Number of Mentions
Contract Manufacturing Companies: Industry Trends
“Products are becoming more complex all the time.
Recombinant and antibodies will still need to be filled, but new
conjugate drugs and adenovirus-based drugs are coming along.
The challenge will be meeting the demand for these new
complex drugs.”
“The future of the CMO industry won’t be drugs like Enbrel™ and
Humira™ with volume demands for which it makes sense to
build a facility just for one product. That will be the exception,
and the trend will be toward small-volume, specialized drugs
and smaller batch numbers and sizes per product.”
29
Pharmaceutical and Biotechnology Companies: Industry
Trends
“There will be an increased need for fill-and-finish
contractors. There will be some consolidation within the
industry and M&A activity. The future looks good. The
production of biopharmaceuticals and need for fill-and-finish will
increase.”
“There won’t be just one type of fill-and-finish. There will be
more flexibility, broader offerings, more capability to do
small- and large-scale fills in a wide range of containers.”
30