Colin MacKay, Symbiosis Pharmaceutical Services06.02.16
There are a number of factors that are influencing the growing demand for aseptically-processed parenteral products. The continued growth of the biotech sector and increased funding available are major drivers, while mergers and acquisitions within the contract manufacturing organization (CMO) space are changing the landscape and service options available for drug developers.
This article explores the trends that are fueling the demand for parenteral manufacturing, the changing structure of the CMO industry and the impact on biotech and small pharma companies needing to outsource their clinical manufacturing requirements.
The biotech boom
The level of growth in the biotech industry is unprecedented. Today, biopharmaceuticals generate global revenues of $163 billion, making up about 20 percent of the pharma market. As the fastest growing segment of the industry, with annual growth rates of 8 percent—double that of conventional pharma—there is a very encouraging investor market.
An increase in funding clearly facilitates the development of more biological medicines than was possible in the previous climate. The availability of finance acts as a regulator to how many drugs progress to the clinical development stage and is increasing the depth of an industry-wide drug pipeline, which includes the manufacture of parenterals. In turn, it is fueling an increase in outsourcing to CMOs with the ability to aseptically manufacture parenterals for use in clinical trials.
However, it’s important to remember that this funding is coming from investors with expectations, in terms of pharmaceutical output, milestone achievements and return on investment.
Investors in the pharmaceutical space will keep a very close eye on drug development projects for successes and biotech companies need to be able to demonstrate their progress. Investors will also regulate those projects that aren’t showing the right indications of success. Although there is more money coming in, there are more investors to answer to, and they are increasingly stringent on future funding for projects if they are not showing early signs of progress, leading to the ‘if you’re going to fail, fail early’ ethos in drug development.
As a result, there is a need for CMO partners that can deliver on tight timescales and meet investor and drug developer expectations. In the area of parenterals, there is increased demand from biotech companies for flexible, small-scale and specialist aseptic manufacturing to support first-in-man clinical studies with challenging timelines and tight budgets.
The evolving CMO landscape
The CMO landscape is continuing to evolve and is a complex mix of players. Many CMOs have been born out of a ‘big pharma’ heritage and have this culture ingrained in their operations.
There is no doubt evidence of consolidation in the CMO space, with a number of high profile mergers and acquisitions taking place. It’s important to remember that consolidation among CMOs doesn’t tend to change the overall manufacturing capacity in the industry, it simply changes the ownership of it. This therefore minimizes how much choice a biotech or pharma drug developer has when deciding who to work with for their promising molecule.
As we move forward, the industry is going to consist of fewer and fewer large CMOs as they are consolidating or merging and fewer small, nimble CMOs due to acquisitions by larger companies. In the case of the latter, the ethos of the parent company will prevail, often making CMOs less able to service small biotechs and pharma companies that are wanting to move fast and meet key milestones to demonstrate their drug product’s worth to their investors.
Specialist versus large CMOs
Despite the growing trend towards mergers and acquisitions, smaller scale CMO players still exist to deliver specialist services and the operational flexibility needed to move biotech and pharma companies through the clinical development stages in a speedy, nimble and agile manner.
In contrast, larger CMOs are looking to extend their service offering to align with the ‘one-stop-shop’ service provider model. Arguably that is an effort to resurrect the all-under-one-roof organizational model, which the big pharma companies had in-house prior to the advent of modern drug development outsourcing as we know it. Ironically those pharma companies moved to dismantle this principal to minimize inefficiency and mitigate fixed cost.
Interestingly, we are also seeing the emergence of more and more alliances between smaller CMOs in a bid to bring specialist expertise together to make life easier for customers that simply don’t have the time to simultaneously juggle several contract service partners. Strong supply chain integration and partnerships between the contracted suppliers is a compelling offering to small or virtual biotech firms that don’t always want to work with ‘the big boys’.
Quality requirements and barriers to entry
Regardless of the size of the CMO, pharma and biotech companies rightly expect a high level of service when outsourcing parenteral manufacturing, with quality a key priority. Parenterals are by definition the highest risk medicinal products due to the form of administration direct into the bloodstream or tissue. In addition, they are often used by patients with compromised immune systems and pre-existing medical conditions, creating an even greater need for an aseptic manufacturing process to achieve sterile products and safeguard patient health.
As a result, there is a requirement to maintain the highest regulatory standards—while for some CMOs, factors such as ageing facilities, lack of operator training and outdated quality systems are proving a barrier to being able to deliver a compliant service.
Quality concerns in the sterile manufacturing market have remained an issue in the U.S., EU and in traditional low-cost economies over the past few years. The high profile actions from the Medicines and Healthcare Products Regulatory Agency (MHRA) and Food and Drug Administration (FDA) illustrate the point. Although regulators have arguably become increasingly pragmatic over the past 10 years, their pursuit of absolute compliance is undiminished.
Manufacturers in the U.S. and EU must be able to demonstrate robust and continuously improving quality systems, along with a strong regulatory track record with the MHRA, FDA and/or the European Medicines Agency (EMA), in order to reassure pharma and biotech companies when outsourcing their manufacturing requirements. It is this demand for quality, a solid track record and the necessary systems to overcome the inherent risks of parenteral manufacturing that has proven to be an unappealing barrier to entry for some aspiring small-scale sterile parenteral manufacturers.
The majority of drug product manufacturing companies have been born out of ex-big pharma manufacturing capacity, which means they were in essence previously subsidized and built to meet the prevailing quality standards. It has been harder for smaller players without the cultural and operational legacy of ex-big pharma facilities to break into such a specialist sector.
However, when done well, small-scale sterile parenteral manufacturers can deliver real benefits to the industry. The mind-set to challenge traditional timescales for drug production means biotechs and pharma companies can benefit from quicker access to manufacturing slots and faster times to clinical and market release.
Purpose-built facilities and operational set-up are designed to handle smaller batch sizes in shorter timescales. For example, the use of restricted access barrier systems (RABs) in place of more cumbersome vaporized hydrogen peroxide (VHP) isolators can deliver great time savings to the industry, speeding up the manufacturing process and offering the flexibility to deliver product in a responsive manner, without compromising on quality. They also eliminate exposure of product to VHP, which is often a degradation concern to those developing biological drugs.
How quickly the CMO can offer access to its services, along with an absolute ability to consistently demonstrate regulatory compliance, are two key factors that influence partnership decisions. This is where the bar is set now and it will only heighten in the future.
The future of the parenteral manufacturing sector
Quality will continue to be a major factor in the parenterals market indefinitely, due to the inherent infection risk of administering drugs by injection, along with the absolute need for sterile manufacturing to minimize those risks. As regulations continue to evolve and tighten, meeting stringent quality standards will remain a major challenge for many CMOs. Given quality issues elsewhere in the industry, clients are rightly vigilant when placing their projects with CMOs with sterile product manufacturing capabilities.
The substantial barriers to entry and increasing quality requirements mean it’s not a market to consider lightly, hence the number of companies who have shifted their focus away from sterile manufacturing in recent years or who have been closed down. Very few parenteral manufacturers consistently get it right given that the nature of the work is complex and includes a range of inherent technical, regulatory and service-delivery challenges.
That said, the outsourcing sector continues to grow annually and specialist parenteral manufacturing has grown annually in a similar way for many years. The opportunity for growth in the global parenteral sector is significant provided that as a CMO you can leverage a source of differentiation, which the client defines as truly value-adding. The probability of succeeding is most likely for those CMOs that see niche sterile manufacturing as their core service, as this is the level of priority and business focus that sterile manufacturing demands.
With over two decades of experience in the life science industry working for small and large organizations at an international level, Colin MacKay, founder and chief executive officer of Symbiosis, has spent most of his career helping clients overcome drug development challenges within the sterile pharmaceutical manufacturing sector. Symbiosis is a CMO that specializes in GMP manufacture and sterile fill/finish of vials for clinical trials and low volume commercial supply in the U.S., Europe and Asia.
This article explores the trends that are fueling the demand for parenteral manufacturing, the changing structure of the CMO industry and the impact on biotech and small pharma companies needing to outsource their clinical manufacturing requirements.
The biotech boom
The level of growth in the biotech industry is unprecedented. Today, biopharmaceuticals generate global revenues of $163 billion, making up about 20 percent of the pharma market. As the fastest growing segment of the industry, with annual growth rates of 8 percent—double that of conventional pharma—there is a very encouraging investor market.
An increase in funding clearly facilitates the development of more biological medicines than was possible in the previous climate. The availability of finance acts as a regulator to how many drugs progress to the clinical development stage and is increasing the depth of an industry-wide drug pipeline, which includes the manufacture of parenterals. In turn, it is fueling an increase in outsourcing to CMOs with the ability to aseptically manufacture parenterals for use in clinical trials.
However, it’s important to remember that this funding is coming from investors with expectations, in terms of pharmaceutical output, milestone achievements and return on investment.
Investors in the pharmaceutical space will keep a very close eye on drug development projects for successes and biotech companies need to be able to demonstrate their progress. Investors will also regulate those projects that aren’t showing the right indications of success. Although there is more money coming in, there are more investors to answer to, and they are increasingly stringent on future funding for projects if they are not showing early signs of progress, leading to the ‘if you’re going to fail, fail early’ ethos in drug development.
As a result, there is a need for CMO partners that can deliver on tight timescales and meet investor and drug developer expectations. In the area of parenterals, there is increased demand from biotech companies for flexible, small-scale and specialist aseptic manufacturing to support first-in-man clinical studies with challenging timelines and tight budgets.
The evolving CMO landscape
The CMO landscape is continuing to evolve and is a complex mix of players. Many CMOs have been born out of a ‘big pharma’ heritage and have this culture ingrained in their operations.
There is no doubt evidence of consolidation in the CMO space, with a number of high profile mergers and acquisitions taking place. It’s important to remember that consolidation among CMOs doesn’t tend to change the overall manufacturing capacity in the industry, it simply changes the ownership of it. This therefore minimizes how much choice a biotech or pharma drug developer has when deciding who to work with for their promising molecule.
As we move forward, the industry is going to consist of fewer and fewer large CMOs as they are consolidating or merging and fewer small, nimble CMOs due to acquisitions by larger companies. In the case of the latter, the ethos of the parent company will prevail, often making CMOs less able to service small biotechs and pharma companies that are wanting to move fast and meet key milestones to demonstrate their drug product’s worth to their investors.
Specialist versus large CMOs
Despite the growing trend towards mergers and acquisitions, smaller scale CMO players still exist to deliver specialist services and the operational flexibility needed to move biotech and pharma companies through the clinical development stages in a speedy, nimble and agile manner.
In contrast, larger CMOs are looking to extend their service offering to align with the ‘one-stop-shop’ service provider model. Arguably that is an effort to resurrect the all-under-one-roof organizational model, which the big pharma companies had in-house prior to the advent of modern drug development outsourcing as we know it. Ironically those pharma companies moved to dismantle this principal to minimize inefficiency and mitigate fixed cost.
Interestingly, we are also seeing the emergence of more and more alliances between smaller CMOs in a bid to bring specialist expertise together to make life easier for customers that simply don’t have the time to simultaneously juggle several contract service partners. Strong supply chain integration and partnerships between the contracted suppliers is a compelling offering to small or virtual biotech firms that don’t always want to work with ‘the big boys’.
Quality requirements and barriers to entry
Regardless of the size of the CMO, pharma and biotech companies rightly expect a high level of service when outsourcing parenteral manufacturing, with quality a key priority. Parenterals are by definition the highest risk medicinal products due to the form of administration direct into the bloodstream or tissue. In addition, they are often used by patients with compromised immune systems and pre-existing medical conditions, creating an even greater need for an aseptic manufacturing process to achieve sterile products and safeguard patient health.
As a result, there is a requirement to maintain the highest regulatory standards—while for some CMOs, factors such as ageing facilities, lack of operator training and outdated quality systems are proving a barrier to being able to deliver a compliant service.
Quality concerns in the sterile manufacturing market have remained an issue in the U.S., EU and in traditional low-cost economies over the past few years. The high profile actions from the Medicines and Healthcare Products Regulatory Agency (MHRA) and Food and Drug Administration (FDA) illustrate the point. Although regulators have arguably become increasingly pragmatic over the past 10 years, their pursuit of absolute compliance is undiminished.
Manufacturers in the U.S. and EU must be able to demonstrate robust and continuously improving quality systems, along with a strong regulatory track record with the MHRA, FDA and/or the European Medicines Agency (EMA), in order to reassure pharma and biotech companies when outsourcing their manufacturing requirements. It is this demand for quality, a solid track record and the necessary systems to overcome the inherent risks of parenteral manufacturing that has proven to be an unappealing barrier to entry for some aspiring small-scale sterile parenteral manufacturers.
The majority of drug product manufacturing companies have been born out of ex-big pharma manufacturing capacity, which means they were in essence previously subsidized and built to meet the prevailing quality standards. It has been harder for smaller players without the cultural and operational legacy of ex-big pharma facilities to break into such a specialist sector.
However, when done well, small-scale sterile parenteral manufacturers can deliver real benefits to the industry. The mind-set to challenge traditional timescales for drug production means biotechs and pharma companies can benefit from quicker access to manufacturing slots and faster times to clinical and market release.
Purpose-built facilities and operational set-up are designed to handle smaller batch sizes in shorter timescales. For example, the use of restricted access barrier systems (RABs) in place of more cumbersome vaporized hydrogen peroxide (VHP) isolators can deliver great time savings to the industry, speeding up the manufacturing process and offering the flexibility to deliver product in a responsive manner, without compromising on quality. They also eliminate exposure of product to VHP, which is often a degradation concern to those developing biological drugs.
How quickly the CMO can offer access to its services, along with an absolute ability to consistently demonstrate regulatory compliance, are two key factors that influence partnership decisions. This is where the bar is set now and it will only heighten in the future.
The future of the parenteral manufacturing sector
Quality will continue to be a major factor in the parenterals market indefinitely, due to the inherent infection risk of administering drugs by injection, along with the absolute need for sterile manufacturing to minimize those risks. As regulations continue to evolve and tighten, meeting stringent quality standards will remain a major challenge for many CMOs. Given quality issues elsewhere in the industry, clients are rightly vigilant when placing their projects with CMOs with sterile product manufacturing capabilities.
The substantial barriers to entry and increasing quality requirements mean it’s not a market to consider lightly, hence the number of companies who have shifted their focus away from sterile manufacturing in recent years or who have been closed down. Very few parenteral manufacturers consistently get it right given that the nature of the work is complex and includes a range of inherent technical, regulatory and service-delivery challenges.
That said, the outsourcing sector continues to grow annually and specialist parenteral manufacturing has grown annually in a similar way for many years. The opportunity for growth in the global parenteral sector is significant provided that as a CMO you can leverage a source of differentiation, which the client defines as truly value-adding. The probability of succeeding is most likely for those CMOs that see niche sterile manufacturing as their core service, as this is the level of priority and business focus that sterile manufacturing demands.
With over two decades of experience in the life science industry working for small and large organizations at an international level, Colin MacKay, founder and chief executive officer of Symbiosis, has spent most of his career helping clients overcome drug development challenges within the sterile pharmaceutical manufacturing sector. Symbiosis is a CMO that specializes in GMP manufacture and sterile fill/finish of vials for clinical trials and low volume commercial supply in the U.S., Europe and Asia.