Biopharma Fill Finish Contract Manufacturing Market

By Cindy Liu and William Downey, HighTech Business Decisions | November 9, 2016

Outsourcing strategies and areas of market opportunities

The increased demand for biopharmaceutical drugs and funding for the biotech sector are contributing to the greater number of biopharmaceuticals in the pipeline. These trends are driving the growth in the biopharmaceutical fill-and-finish contract manufacturing market. As small, nimble companies choose to avoid capital investment and larger pharmaceutical companies tap the contract manufacturers for specialized capability, these decisions impact the fill-and-finish contract manufacturing market. This article examines how these companies’ outsourcing strategies and their outsourcing needs affect the fill-and-finish contract manufacturing market and the opportunities they present.

Information source
The source of data comes from HighTech Business Decisions’ recent report, “Biopharmaceutical Contract Fill-and-Finish: Best Practices Study.” This report documents the current and future trends for fill-and-finish contract manufacturing services for biopharmaceuticals, market capacity and size, and pricing. This report is based on primary research through interviews and inputs from biomanufacturing directors from pharmaceutical and biotechnology companies and executives at contract manufacturing organizations.

For purposes of our study, HighTech Business Decisions defines biopharmaceuticals as complex molecular structures including proteins, peptides, monoclonal antibodies, plasmid DNA, viral products or other large molecules created through the genetic manipulation of living cells or organisms used for therapeutics, diagnostics or vaccines. For this article, the CMOs are defined as those contract manufacturing organizations that provide drug product manufacturing services for biopharmaceuticals, including formulation, fill, packaging and labeling, lyophilization, and other services related to the final production of biopharmaceutical drug product.

Outsourcing strategies
Generally speaking, companies outsource their biopharmaceutical fill-and-finish manufacturing needs because they need access to capacity or technology. Many of the small, virtual biotechnology companies, who tend to be venture-capital funded, and whose focus is on early-phase products, do not have in-house manufacturing capability. In our study, 88% of the respondents that do not have in-house filling capability are virtual and do not have plans to add in-house fill-and-finish manufacturing capability. These companies outsource 100% of their fill-and-finish production needs. This outsourcing strategy is summed up in one biomanufacturing director’s comment, “It is our intention to be a virtual company and we will not build our own facility. Our strategy is to identify and qualify acceptable CMOs we can work with: from clinical to commercial to launch. We generally qualify a single source early on because our volumes are so small. Depending on product success or volume increase, we may qualify a supplier’s second site or a second supplier.”

However, our study finds that a small percentage (12%) of these virtual companies plan to build capacity in the future. The timing is predicated upon when their drug products enter commercial production and garner critical mass so that the facility can be reasonably utilized.

Furthermore, the outsourcing strategy for virtual biotechnology companies with early clinical products leans toward using CMOs with smaller facilities geared for clinical supply initially, then switch to another CMO capable of large production runs and with experience moving products through the clinical phases. This sentiment was expressed by another biomanufacturing director., “For early-stage projects, we tend to go to small CMOs that are nearby. For commercial products, we try to find a top tier CMO with expertise in vials, experience with the FDA, and no 483s. We don’t want to blow a lot of product for someone to learn the regulatory landscape.”

For mid-size biotechnology or large pharmaceutical companies that have in-house fill-and-finish capability, their outsourcing decision is influenced by capacity constraint or the need to access specialized capability that they do not have in-house. From our study’s findings, the respondents who have in-house production capability outsource on average 35% of their fill-and-finish manufacturing needs, with a range from 15% to 50%. 

In addition to the need for additional capacity and special technology, dual-sourcing and external backup sourcing requirements are also contributing factors as to why a company with in-house filling capacity might outsource. As one biomanufacturing director noted, “Business continuity, or having external backup as soon as a major brand exceeds a certain threshold, is the reason we outsource.” Another biomanufacturing director points out that, “When a product is medically necessary, regulatory authorities ask companies to have dual sources.” 

Conversely, a company’s outsourcing strategy determines what they manufacture in-house. One strategy is to fill-and-finish in-house for early process development and clinical products in order to develop the manufacturing process in-house where the company can have more control. The plan is to then transfer the process to the CMO when the product is more mature. This approach helps reduce the risk of a catastrophic failure at the CMO where it can be costly.

A list of outsourcing and in-house manufacturing decision criteria for respondents who have in-house capability is shown in Figure 1.


Below are some insightful comments from executives at biopharmaceutical companies that discuss their criteria for outsourcing:
  • “We consider our internal capacity and whether we have the capability, i.e., expertise with the technology. In determining where we want to invest our capacity, we prioritize products, considering a product’s future growth potential as well as its competition with other internal processes. If a product is valuable and important enough, we do it in-house. If a product does not have relatively high value in the near-term, then we manage it and the process in-house, but will consider outsourcing. On the other hand, a product might not have the biggest value, but outsourcing it on a technology basis may enable other products to come in its wake.”  Pharma/Biotechnology Respondent
  • “We tend to do fill-and-finish production in-house for the launch of a product unless we do not have the technical capability. We outsource fill-and-finish for our more mature products or products at the end of their life.”  Pharma/Biotechnology Respondent
  • “We prefer to outsource fill-and-finish, although sometimes it is hard to find the right CMO, then we will fill internally. Also, because we have internal capability, we prefer to do the early process development in-house where we have more control and transfer the process to a CMO when it is more mature.”  Pharma/Biotechnology Respondent
  • “Our decision criteria for whether to outsource or do fill-and-finish internally are based on capacity and demand. Presently, we do all fill-and-finish for our clinical products internally, but as demand increases we may outsource this activity. The outsourcing of fill-and-finish for our commercial product is based on stability, our plant utilization, and flexibility as the demand for this product increases.”  Pharma/Biotechnology Respondent

Outsourcing needs
The pharmaceutical and biotech companies outsource a variety of fill-and-finish related services to CMOs. The top three services deemed as important by the biomanufacturing directors and are currently outsourced as reported in the study are:
  • Fill (91% of the respondents);
  • Packaging and labeling (86% of the respondents), and
  • Release and stability testing (86% of the respondents). 
A number of other services are also mentioned by the biomanufacturing directors as services that they outsource, and include: analytical testing, long-term storage, lyophilization, and analytical assay development (see Figure 2 for a list of services and mix of outsource services). Conversely, formulation development and regulatory assistance are two service areas that tend to stay in-house; these services are the top two service areas that are least likely to be outsourced in the future.

Underserved areas and market opportunities
As the biotech industry thrives and continues to grow, outsourcing of fill-and-finish manufacturing is expected to increase. Despite what some may view as a commodity industry or some segments of fill-and-finish manufacturing as a commodity, there are some underserved areas and challenges that deserve a focus from CMOs. One area in particular where the industry is currently underserved by the CMOs is special handling.

One biomanufacturing director said, “Companies that can fill virus are hard to find. Clients become concerned if their CMO fills virus for someone else, so it needs to be a facility that does only viral work.  In many cases, it is the client’s perception that is a problem. The CMO can do all the cleaning and testing required, and clients remain concerned. Also, there aren’t many companies that can handle high potency products.  They need to have employee protections in place, and they are hard to find.”

In addition, filling capacity for newer device technologies and user-friendly formats such as dual-chamber and cartridges are very much underserved, according to the study participants. One biomanufacturing director also pointed out the lack of suppliers that use single-use bag systems where the supplier assembles bags, prepares solutions, fills the bags and sterilizes them. Below are some perceptive quotes from biomanufacturing directors regarding underserved areas in the fill-and-finish contract manufacturing market that highlight potential market opportunities:
  • “Lyophilization is standard technology, but good vendors are hard to come by. CMOs that offer filling of dual-chamber syringes and even prefilled syringes are somewhat specialized. Contractors that can handle high potency products are also limited.”  Pharma/Biotechnology Respondent
  • “We would like to see improved capacity for better temperature control during vialing. We are looking for a company that can handle commercial capacity at low temperature. Also, we would prefer to fill with small volumes. We also need to see expanded lyophilization capacity that matches large-scale filling better.”  Pharma/Biotechnology Respondent
  • “The industry underserves companies whose products require aseptic handling/technology. There are too few players. Aseptic manufacturing has such high standards that not many CMOs are willing to invest. Those who have the technology and regulatory approval have capacity challenges because everyone goes to them.”  Pharma/Biotechnology Respondent
  • “Liquid prefilled syringes are underserved. As lyophilization cycles increase from 12-hours to 48 or sometimes 72-hours, it affects throughput. Improved lyophilization cycle time is a process innovation that can cut manufacturing time down.”  Pharma/Biotechnology Respondent
As the biopharmaceutical industry grows, there will be continued and sustained need for biopharmaceutical fill-and-finish contract services. In addition, opportunities exist in many underserved areas where CMOs can take advantage of and differentiate themselves with services and technologies that meet the evolving needs of the industry. 

Cindy Liu is managing director and William Downey is president of HighTech Business Decisions. HighTech Business Decisions is a market research and consulting firm that recently published the comprehensive industry study, Biopharmaceutical Contract Fill-and-Finish: Best Practices Study. They can be reached at www.hightechdecisions.com.
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