Biopharma Continues Globalization Efforts
By Eric Langer
The biopharmaceutical industry is still one of the most recession-proof, healthy industries in the United States, if not the world. The pharmaceutical R&D pipeline (small molecules industry) is becoming increasingly dependent on biopharmaceuticals. These large-molecule products are being developed by an ever-increasing cross-section of the established pharmaceutical industry, including Big Pharma and even generic drug companies. In fact, many of these are also in active development as biosimilars.
These sources, along with smaller biopharmaceutical developers, which have been the traditional path for most innovative biopharmaceuticals, are continuing to expand the global biologics pipeline. From our 23 years of industry analysis, and databases1, we expect an increasing number and percentage of new pharmaceuticals entering the market. Many new therapeutics will be biopharmaceuticals versus small molecule drugs.
Within this context, planning and decision-making concerning the manufacture of biopharmaceuticals are becoming more complex as companies focus on productivity gains while implementing cost-saving efforts, including cutting back on the number of products in the development pipeline, and outsourcing many support and even critical tasks. In addition, manufacturers must choose from an ever-increasing number and diversity of bioprocessing options, such as: new and improved cell lines and genetic engineering/expression systems technologies; bioprocessing equipment, including new and improved single-use equipment; and outsourcing manufacturing to contract manufacturing organizations (CMOs) who are expanding their capacity, technologies and service offerings.
The good news is that biomanufacturers’ choices of new technologies are expanding, as suppliers develop new products and technologies. Each year, BioPlan Associates conducts its Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production.2 We call on more than 300 industry participants to report on a variety of areas, from budgets to innovation, hiring, offshoring, and manufacturing capacity constraints.
This year, preliminary results from our study indicate that budgets are rising in a variety of areas. Respondents tell us that they will be investing almost 6 percent more on average in new capital equipment, while increasing budgets by more than 5 percent in key areas such as:
*Upstream and downstream production innovation
* process development, and
* hiring and training new operations staff.
General budgets for in-house biopharmaceutical manufacturing and investments in basic R&D for new therapeutic products are also seeing healthy levels of growth.
Separately, this year, we also conducted a study of the 450 global subject matter experts and senior participants who make up our Biotechnology Industry Council, asking them to identify the key trends and factors they see in the industry.3 Coupled with the results from our annual study, we can develop a robust view of the landscape of the industry’s most important trends.
One of the key trends that emerged from our study of industry experts concerned the growth in industry adoption of disposable devices. Disposables — or single-use systems — in biopharmaceutical manufacturing are used for a wide range of applications including upstream expression, filtration, purification, storage, mixing, processing, and separating biotherapeutics. Single-use systems can provide faster change-overs, and can reduce shut-down times in production of monoclonals, vaccines and other biopharmaceuticals. These products offer distinct advantages compared to fixed stainless steel systems in cleaning and validation, and can significantly reduce the time and investment required to get a facility up and running, compared to the installation of a fixed, stainless steel facility. As such, they are a key influence in industry capacity and productivity.
The majority of single-use disposable system use among biotherapeutic companies continues to occur in the scale up/clinical production, as opposed to in commercial applications. This pre-commercial growth will change, though, as more facilities adopt single-use technologies, and as more biosimilars come online. Moreover, as the industry and regulatory agencies gain more confidence, and as scientific information from the use of these single-use systems becomes readily available to industry, we expect their use in commercial applications to increase as well. Due to the ease of use and cost benefits, there are an increasing number of companies that have either adopted these systems in commercial production or plan to do so. The availability of disposable systems has benefited many new biopharmaceutical startups and small to medium companies that are able to spend relatively less capital to quickly advance the development of new drugs through the proof of concept stage and beyond.
This year, more than 40 percent of respondents-to-date from our annual study believe that they will see a 100 percent disposable facility in operation within five years. While that’s a smaller percentage than shared that assessment last year, it indicates that many in the industry foresee the eventual adoption of these devices throughout the manufacturing process.
Driving the shift toward “truly flexible” facilities will be an intense focus on innovation in this area. For several years, we have found that the single-use area is among the most in-demand for innovation. This year proves no different. Survey responses to-date indicate that end-users are seeking innovation in disposable products, bags, and connectors, disposable process and sensors, disposable bioreactors and disposable purification. Vendors are also concentrating on this area, with many reporting that their companies are working on disposable bioreactor bags and consumables, as well as single-use filtration systems.
The Industry Continues to Globalize
Over time, then, biomanufacturers and CMOs will likely integrate disposables into most of their processes. This will be dictated by economics, risk reduction and speed-to-market for new drugs. Another factor to consider is that as new regions such as China and India begin to produce biologics and biogenerics, the need for consistent quality will likely be tied to the use of disposables, because they can be implemented more efficiently, with fewer quality problems. As new biomanufacturers enter the industry and new products enter the pipeline, the disposables option will become part of the decision process from the very start. This can help startup organizations, and those in less developed regions become more effective and more competitive.
Many developing countries serving their domestic, regional or lesser-regulated international markets are already experiencing rapid growth, benefiting from increased incomes, a new middle class and improved health care. According to our “Top 1000 Global Biopharmaceutical Facilities Index,”4 (www.top1000bio.com), industry capacity has moved to some extent outside of the traditional hubs of the United States and Western Europe. Now, almost one-third of global biopharmaceutical manufacturing capacity can be found in China (8.5 percent), India (8.1 percent), Japan and other Asian countries (9.6 percent), and Latin America (6.5 percent), with Russia, Eastern Europe, and other smaller players also offering some capacity.
These markets are also being targeted as offshoring destinations. In last year’s study,5 we found that more than one-quarter (26.2 percent) of respondents indicated that there was a “likelihood” or “strong likelihood” that they would outsource production to facilities in China. That was a big increase from 17 percent of respondents a year earlier. Next on the list of top potential outsourcing destinations was India, with 18.4 percent of respondents considering it likely they off-shore there at some point (also up, from 13.2 percent the previous year). Underscoring the increased popularity of China as an outsourcing destination, more European-based respondents cited it as a potential destination (considering at some level) than the United States.
New technologies have had an impact on the outsourcing landscape. As noted above, we have seen the trend toward disposable devices for biomanufacturing. Smaller-scale CMOs, as well as innovator companies, have built expansions to existing stainless steel facilities. Despite the overcapacity at large-scale, this trend is preparing for “international manufacturing capacity” in countries, with companies increasingly targeting international markets.
Outsourcing for biologics will continue as more companies, including virtual companies, work to get their products into clinical trials. Established companies will seek partners to get established products outsourced to free up capacity for new, upcoming products from their pipelines. Additional markets will arise as established “innovator” companies get into biosimilars markets.
It’s worth pointing out, though, that the BRIC countries have yet to pose any real threat to United States and European dominance of the innovative biopharmaceutical industry, particularly as it relates to product development and manufacturing. While foreign-based CMOs and contract research organizations (CROs) will capture market share due to perceived cost-effectiveness advantages, in terms of commercial US/EU-level cGMP manufacturing expertise and infrastructure, companies in those markets still lack the necessary critical mass of established institutional knowledge, business practices, business culture, trained and experienced staff, facilities, information and quality systems, to attain and maintain this level of quality. And so despite the majority of drugs (mostly generics) now being manufactured in China and India, no Asian country yet manufactures biopharmaceutical products marketed in the United States or European Union.
Most likely to occur is that companies from those markets will enter the United States and other major biopharmaceutical markets through development of biosimilars and biobetters, with the primary challenges here involving manufacturing and gaining market share against considerable competition. For many biosimilar/biobetter developers, actually capturing significant market share in the United States, EU and other major markets will likely not be a serious goal. Rather, many foreign companies look upon U.S. product approval, even if only a biosimilar, as validation of that company and its product, facilitating wider sales and at higher prices in lesser-regulated markets worldwide.
The biopharmaceutical manufacturing market remains vibrant, growing and globalizing. The industry this year continues to look at innovative modular manufacturing methods, while also taking a closer look at analytical methods, and maintaining a keen eye on ways to improve capacity utilization by easing downstream processing bottlenecks. The most positive sign to emerge from the preliminary results of our 10th annual report is the continued increase in budgets, which have rebounded from their recessionary tightness and continue their period of expansion. As financial difficulties ease and companies open up spending, innovation ensues, and with it faster drug timelines and more efficient production schedules. All told, this year portends to be another healthy year for the biopharmaceutical manufacturing industry.
Eric S. Langer is the president and managing partner at BioPlan Associates Inc. The company is a biotechnology and life sciences marketing research and publishing firm established in Rockville, Md., in 1989. Contact Langer at email@example.com or call 301-921-5979 or visit www.bioplanassociates.com.
Survey Methodology: The 2012 Ninth Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production in the series of annual evaluations by BioPlan Associates, Inc. yields a composite view and trend analysis from 302 responsible individuals at biopharmaceutical manufacturers and contract manufacturing organizations (CMOs) in 29 countries. The methodology also included over 185 direct suppliers of materials, services and equipment to this industry. This year’s survey covers such issues as: new product needs, facility budget changes, current capacity, future capacity constraints, expansions, use of disposables, trends and budgets in disposables, trends in downstream purification, quality management and control, hiring issues, and employment. The quantitative trend analysis provides details and comparisons of production by biotherapeutic developers and CMOs. It also evaluates trends over time, and assesses differences in the world’s major markets in the U.S. and Europe.
1. BioPlan publication: Biopharmaceutical Products in US and European Markets, 12 ed database.
3. BioPlan Associates’ “2013 Biotechnology Industry CouncilTM Trends Analysis Study”
4. See BioPlan’s Top 1000 Global Biopharmaceutical Facilities Index™, http://www.top1000bio.com. Accessed February 25, 2013
5. 9th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production, April 2012, Rockville, MD www.bioplanassociates.com
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