Biopharma CMO Update

By William Downey , HighTech Business Decisions | June 3, 2014

Increased demand is driving higher capacity utilization and more partnerships

For the past three years, demand for biopharmaceutical contract manufacturing services has continued to grow, due to new drug commercialization, higher funding rates of biotechnology companies, and expanding service offerings for novel therapeutics. As business conditions continue to improve, the market should reach $2.7 billion this year, recording 7% annual growth.

Our projections and report are based on interviews with six senior executives at biotechnology companies and CMOs, as published in our latest report, Biopharmaceutical Contract Manufacturing: Best Practices Pricing Study 2013/2014. 

Current Expectations
CMO leaders we interviewed saw sales grow in 2013 and expect to see continued growth this year, with demand for services expanding across the board. Higher sales are being seen, both for clinical and commercial production from both small biotechnology firms and large pharmaceutical and biotechnology companies. The CMO managers interviewed for this article attributed their improving business outlook to new service offerings, acquisitions, greater demand for later-phase material, and approvals of commercial products. They also report higher demand for biopharmaceutical production using mammalian cell culture and microbial fermentation processes.

More Capacity is Being Utilized
As a result of higher demand, CMO capacity utilization rates have increased by roughly 5% this year, to 75%, according to the study, due to higher production levels, and steps that CMO’s have taken to balance supply with demand.  This practical utilization rate is higher than the nameplate or theoretical capacity utilization rates based on bioreactor tank-liter capacity utilization. Further analysis shows tank-liter capacity utilization rates are also improving this year. In 2014, overall tank-liter utilization rates remain in the mid-60 percent range—with higher utilization rates for microbial fermentation compared to mammalian cell culture. Not only do utilization rates vary between production technologies, but also between large and small CMOs. For large CMOs, tank-liter utilization rates are 81% for microbial fermentation and 71% for mammalian cell culture. 

New Funding Levels
Increased investment in biopharma is also having a positive impact on biopharma CMOs, particularly for contract manufacturing. For this analysis, funding includes debt, equity and grants from either public or private sources such as commercial, non-profit or government organizations. 

In 2013, 171 biotechnology companies producing or developing large-molecule recombinant vaccines or therapeutics raised $19.4 billion, a 20% increase from prior year (Figure 1). While the number of companies receiving new funding in 2013 was down slightly from 2012 levels of 194 companies, average funding per company increased 36%. In 2013, the majority of new funding went to large, established pharmaceutical and biotechnology companies, while new funding for smaller biotechnology companies equaled $4.1 billion. 

This is the second year in a row that total funding for smaller biotechnology companies topped $4.0 billion. Most large-molecule biotechnology companies funded in 2013 are developing recombinant proteins or peptides, while others are developing vaccines or novel therapeutics using recombinant processes.

Novel Therapeutics
The biopharmaceutical contract manufacturing industry continues to see increasing interest from their clients for novel therapeutics, such as antibody drug conjugates (ADCs) and pegylated biopharmaceuticals. To serve these new market segments, many CMOs are investing in new production facilities, or collaborating with companies who have developed ADC technologies or pegylation technologies. For example, Catalent Pharma Solutions licensed Redwood Biosciences’ SMARTag technologies, while Fujifilm Diosynth Biotechnologies entered into a strategic alliance with Piramal Healthcare UK Ltd. for the contract development and manufacture of ADCs. In addition, Wacker Biotech and XL-protein GmbH have a long-term cooperation agreement to produce pegylated biopharmaceuticals using XL-protein’s PASylation technology.

As noted by Steve Bagshaw, chief executive officer, Fujifilm Diosynth Biotechnologies, “We have seen an upsurge in interest in the ADC space and our ADC one-stop-shop offering with Piramal has been well received. This arrangement allows our customers to have an ADC process developed and GMP manufacture carried out by Fujifilm Diosynth and Piramal in a single coordinated program.” Mr. Bagshaw also mentioned that Fujifilm Diosynth Biotechnologies continues to see growing interest in cell-line development services, which they have recently begun to offer to their clients.

CMOs also note an increase in the development of antibody fragments. “We observe a strong increase in antibody fragment programs (Fabs) entering into preclinical and clinical development,” said Dr. Thomas Maier, managing director at Wacker Biotech GmbH.  “The advantages of Fabs versus mAbs are their cost-convenient manufacturability in E. coli, their amenability for being used as a fusion partner and their tunable plasma half-life.” Dr. Maier also noted that Wacker Biotech’s collaboration with the company XL-protein reached a new milestone when Wacker Biotech achieved titers greater than 4 g/L for pasylated proteins using its proprietary E. coli secretion technology.

Dr. Barbara Esch, vice president, Marketing Communications and Business Intelligence at Boehringer Ingelheim BioXcellence, also sees a trend towards more novel therapeutics outsourced to biopharmaceutical contract manufacturing organizations. “We are seeing more interest in novel therapeutics, for example high-potency, ADC, ADCC, bi-and multi-specifics, and some fusion proteins,” said Dr. Esch.  In addition to the increasing demand for novel therapeutics, Dr. Esch also notes that there continues to be strong demand for CHO- and E. coli-based products.

New Initiatives
The biopharmaceutical contract manufacturing industry continues to invest in improved quality, productivity, and project timelines. The CMO executives interviewed say that their companies have all taken on new initiatives to meet growing demands from their clients and regulators. Examples of investments being made include new technologies to improve both upstream and downstream processes, adoption of more analytical tools for production and process improvement, and investments in new capacity. 

For example, Catalent Pharma Solutions recently moved into a new facility using single-use bioreactor systems, which, its managers say, has quadrupled its biologics manufacturing capacity. The benefits to single-use technologies include lower upfront costs, flexibility in scale, and lower changeover times. Catalent Pharma Solutions has also established a system that allows its clients to monitor, in real-time, major process parameters such as cell density, cell viability, and glucose levels. “We have purchased equipment to increase our throughput on all the areas above, and have also changed our reporting methods to drive better communication and client satisfaction,” Mr. Michael E. Jenkins, general manager, Madison at Catalent Pharma Solutions said. 

Many of the CMOs interviewed for this article also mentioned investments in technologies to improve cell screening and selection. Gallus Biopharmaceuticals recently adopted the TAP ambr platform that offers high throughput screening for cell selection and optimization of bioreactor conditions. Claire Ruzicka, senior marketing manager at Gallus Biopharmaceuticals notes that the utilization of ambr15 technology allows the company to rapidly analyze cell-growth variables.  “This system runs up to 48 mini-bioreactors simultaneously, allowing us to optimize rapidly multiple cell-growth variables and clone selection,” Ms. Ruzicka said.

Fujifilm Diosynth Biotechnologies is also making use of the high throughput capabilities of the TAP ambr platform. By using this system, they are able to more fully characterize and optimize bioreactor conditions during process development. This allows them to optimize conditions for both E. coli and yeast systems. In addition, Fujifilm Diosynth Biotechnologies also uses a new TECAN platform system for analysis of downstream process development. The TECAN system allows for both characterization and validation studies thereby allowing them to use quality-by-design concepts during process development. Currently, Fujifilm Diosynth Biotechnologies uses this system in downstream process development of the chromatography steps. Next, they will begin using this technology for process development for refolding. The TECAN system helps Fujifilm Diosynth Biotechnologies scientists screen resins to determine the best resins to use for a given project. These new technologies speed up product development, and provide more data, which leads to better understanding of the process and its parameters. As noted by Mr. Bagshaw, “These systems will allow us to further integrate high throughput screening into our process development activities.  They will also allow for streamlining of LPC studies.”

CMOs with large installed stainless steel capacity have also made investments in disposable technologies. Boehringer Ingelheim sees the increasing use of single-use bioreactors for clinical materials. “We have implemented a flexible fully disposable up- and downstream manufacturing platform for biopharmaceuticals. This platform has been established globally in Boehringer Ingelheim’s mammalian facilities and supports clients with the same technology and quality standards,” Dr. Esch said.  “Flexible disposable systems have improved process transfers, and aided in Boehringer Ingelheim’s ‘Lean-to-Clinic’ program.”  In addition, Boehringer has expanded its fill-and-finish capacity and capabilities with a new fill line at their state-of-the-art facility in Biberach, Germany.

The new line provides its customers’ both clinical- and commercial-scale filling for pre-filled syringes, and single- and double-chamber cartridges. In addition to its new fill-and-finish capacity, Boehringer is building a cGMP biopharmaceutical facility in Shanghai, China, and expects this facility to serve both multinational and domestic pharmaceutical and biotechnology companies.

In short, biopharmaceutical contract manufacturing continues to show year-over-year improvements. CMOs’ business levels increased last year, and they are experiencing higher demand for their services this year. As the demand for biopharmaceutical contract manufacturing services continues to grow, there has been an associated increase in capacity utilization rates. CMOs see the greatest opportunities with new drug substances such as antibody drug conjugates and antibody fragments. 

William Downey is the president of HighTech Business Decisions, a market research and consulting company that has been publishing reports on the biopharmaceutical contract manufacturing market since 1997.  For more information, visit www.hightechdecisions.com or call (408) 978-1035.
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