CEO Insights: Industry Trends Driving Strong Tailwinds for U.S.-based CDMOs

Lifecore Biomedical, a Minnesota-based CDMO, recently celebrated its 60th anniversary, hosting an event on their campus in Chaska, MN, on September 25^th. As a provider of fill/finish services for injectable therapeutics, the current environment is advantageous for a company like Lifecore.

Paul Josephs, Lifecore Biomedical’s president and chief executive officer, shares insight on the company’s history and industry trends driving strong tailwinds for U.S.-based CDMOs — from reshoring, tariffs, and a manufacturing capacity crunch driven by GLP-1s.

Contract Pharma: How has Lifecore Biomedical evolved since its founding 60 years ago, and how did that lead the company into the sterile fill/finish space?

Paul Josephs: Lifecore was originally founded by a physician developing technology for breast cancer detection. From there, the company’s focus evolved to molecular diagnostic tools for regional clinics and hospitals. In the early 1980s, utilizing the company’s scientific resources, we undertook the design of a bacterial fermentation process to generate hyaluronic acid (HA). At the time, HA was primarily extracted from rooster combs, a source that was problematic for a variety of reasons. 

By the late 1980s, we had begun supplying pharmaceutical-grade hyaluronic acid to customers who used it as an API/excipient in their drug formulations. We were approached by one of these customers who needed U.S.-based fill/finish services, and we stepped up to help. We worked closely with that customer to develop the required knowledge, bring in equipment, and build a Quality Management System (QMS) to support their product. For the next four decades, we continuously grew our process development and sterile fill/finish capabilities, support services, and QMS to become a true end-to-end injectables CDMO for drugs, biologics, medical devices, and combination products.    

Contract Pharma: Sterile fill/finish services and technology have evolved significantly over the past several decades. What are some of the most impactful advances that have been made and what role has Lifecore played in these?  

Paul Josephs: Technology has certainly moved forward at a dramatic and consistent pace in the fill/finish space, and the key advances experienced within Lifecore provide a snapshot of what has taken place across the industry.  For example, in the 1980s, our first filler involved time-over-pressure filling technology which was slow and could only handle small batches. That machinery worked at about 10% of the speed of today’s fillers, making it appropriate only for small-batch work which took days and was less precise. 

In the late 1990s, Lifecore undertook sterile filtration of highly viscous formulations (in excess of 100,000 cP) using high-pressure sterile filtration (HPSF) technology. HPSF can have clear advantages such as higher throughput, higher flux, and reproducibility in terms of concentration, as well as lower material holdup which can be beneficial when handling costly formulations.

In 2005, we were early U.S. adopters of a filler design with vacuum filling/vacuum stopping technology for bubble-free filling, an area of continued strength for Lifecore. Within the last 15 years, we also customized one of our fillers to add heating elements throughout, including heated filler needles, to handle an extremely viscous formulation that is almost solid at room temperature. Heating is necessary to get the product to flow during the formulation and filling process. It is noteworthy that the filling manufacturer told us that the modification could not be made, yet our in-house engineering team found a way to do it, and the process is still used on one of our current commercial products. 

With the more recent addition of an isolator filler, we have continued to strengthen our global compliance position and expanded our capacity to fill vials, syringes, and cartridges on the same machine. The high-speed technology of this single line also doubled our filling capacity.

Taken together, these advances demonstrate just how dynamic the sterile fill/finish space is, with ongoing innovations continuing to enhance the service offerings and overall results that can be delivered to customers.      

Contract Pharma: What are the key industry trends driving growth for U.S.-based CDMOs? 

Paul Josephs: The number one driver is the regionalization or growing momentum for U.S. manufacturing. This really started during Covid and the need for essential medicines to be produced domestically and continued due to associated supply chain disruptions. Now with incentives or disincentives – depending on your point of view – the current administration has made it clear that there is a preference for U.S. manufacturing for products that are sold here. 

For injectables CDMOs, the unprecedented growth in GLP-1 therapies combined with the fact that roughly 50% of the drug pipeline is represented by injectables has created significant and growing demand for injectable capacity. This has also led to shifts in demand from traditional vials to more convenient delivery systems like pens and other types of autoinjectors.

Finally, regulatory scrutiny is rightfully intensifying in our industry as you see an increase in 483s and warning letters. From my perspective, clients today are viewing a CDMOs quality track record and history as pivotal differentiators when making partnership decisions, more so than at any time during my career. 

Contract Pharma: What are some key challenges clients face in today’s sterile fill-finish market and how can they be addressed? 

Paul Josephs: As I mentioned, I believe the increased regulatory scrutiny is an ongoing challenge for CDMOs. There must be a steadfast commitment to maintaining a Quality Management System that is continually improving and adapting to the changing landscape. 

Also, as sterile fill-finish transitions into more complex injectables, both from a formulation and delivery standpoint, we need to ensure that we are developing, retaining, and recruiting high-quality technical talent.  In addition to the key issue of compensation, we need to ensure that we provide career development opportunities along with a great culture where team members feel valued and appreciated. 

A final challenge is balancing the competitive cost pressures from our customers combined with the increase in quality requirements and high CapEx intensity in sterile manufacturing. To address this successfully, CDMOs need to cultivate a culture of continuous improvement and drive for operational excellence.

Paul Josephs brings more than 30 years of pharmaceutical industry experience to Lifecore, including more than 25 years of CDMO experience. From 2021 until April 2024, Mr. Josephs served as President & Chief Executive Officer and a member of the Board of Directors at Woodstock Sterile Solutions, a specialized, full-service CDMO. Prior to joining Woodstock, Mr. Josephs served as Head of CDMO – Global Business Development at Viatris (formerly known as Mylan) since 2016 when it acquired DPT Laboratories. Mr. Josephs’ work with DPT Laboratories began in 1997, where he held numerous progressive roles in sales and business development, culminating with a position of Senior Vice President, Sales, Marketing & Corporate Development.