The CDMO industry has come a long way from its beginnings, when it was simply a niche service offering manufacturing capabilities that the majority of pharmaceutical companies did not have. Decades later, its growth year over year is faster than the pharmaceutical industry’s as a whole. According to a report by Ernst & Young, the CDMO industry’s annual growth rate is 6 to 7 percent, while the growth of the pharmaceutical sector as a whole is 5 to 6 percent. Outsourcing to CDMO partners is an effective strategy as pharmaceutical, biotechnology and virtual companies can access resources beyond their in-house capability to design, develop and manufacture medicines. It can also help offset potential risks of fixed costs. Lonza Pharma & Biotech has witnessed this shift firsthand. As the CDMO industry growth increases, so does the company’s capabilities, which are constantly expanding for projects with pharmaceutical companies who need their expertise and skillset. Contract Pharma spoke with Dr. Christian Dowdeswell, head of the dosage form and delivery systems business unit at Lonza Pharma & Biotech about the past, current and future trends within the exploding CDMO industry.  

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Contract Pharma: In the past decade, how has the CDMO sector evolved?

Christian Dowdeswell: Largely, the sector is evolving and adapting to the changing needs of the customer. Over the last 10 years, early clinical pipelines have been driven by smaller companies that historically might have come from larger pharmaceutical companies. One trend we are seeing is that smaller companies are actually growing with their products and taking them to market, in contrast to the original model, in which perhaps they’d sell early. So that has been something for CDMOs to adapt to. These customers have different needs and perhaps more limited resources in terms of personnel. And they may also have specific gaps in their expertise. For example, they might have an innovative means to treat an unmet need but lack the technical expertise to overcome a compound’s inherent solubility issues.

As a long-term CDMO, at Lonza we have adapted our offering. We’ve made a very conscious effort to look at these smaller companies and determine how we can really give them the support they need from getting through the early development phases all the way through to commercialization. So, I think that is one of the key trends facing CDMOs today—responding to that huge change in customer base and needs.

CP: What is the general attitude towards outsourcing? It is going to continue to be a trend in the future?

CD: Yes, absolutely. One dramatic trend over the last few years has been growth in the numbers of candidates there are in clinical phases.

However, small companies increasingly have little motivation to put their own facilities on the ground; their primary objective is getting their drug to clinic. They have competed with other companies for investor cash, and they don’t want to have that cash tied up in assets; they want to have it working for them and solving problems until they get the drug to market. So, I fully expect to see the trend of outsourcing continue in the future.

I think one of the other areas driving that trend is the way compounds in small molecules are developing. There are a lot more challenges around the nature of the products themselves. The small molecule APIs tend to have low solubility, increasingly have high potency, and the need for accelerated timelines to get their drug to market is commonplace. And companies are looking for people who have the expertise that can help them do so. It is one thing to have assets on the ground, but it’s a very different thing to have the right people operating them. At Lonza, our depth of expertise and broad toolkit mean we are well positioned to help people solve problems along the drug development pathway, from preclinical to launch.

CP: What is the importance of selecting a CDMO partner that is experienced and reliable?

CD: Time is something you can’t change, so when you are looking for a CDMO the number one thing you need is the guarantee that there will be no questions around quality or concerns that they’ll still be there in a year’s time. You need to have a stable and reliable CDMO. You also need to make sure that their reputation for executing and delivering what they say they will is very good.

I think that some of these are factors that people may take for granted, when you’re in a business like ours. We refuse to compromise on quality. And I think Lonza adds value to our customers because of our reliability. If Lonza is your supplier—when it comes to due diligence and when it comes to selling your assets—it’s a recognized name, no questions asked, we will deliver.

CP: What do you think the CDMO market outlook is for the next 10 years?

CD: I think, increasingly, people are looking for value from their partners. Not just for someone to execute their plan, but to add value throughout the process. They face challenges, how do you resolve some of the problems they face? How do you get the molecule into the clinic, into the patient? How do you do it on an accelerated timeline? Timelines have come down from a standard of seven years to, for example, one that we participated in that was approved from first in human in less than 30 months, and then dosed to a patient within six hours of approval. So, accelerated timelines to get a drug to patient, especially in immuno-oncology where it is critical, have become the norm, and how CDMOs adapt to that acceleration is a critical factor in our success and future.

CP: Since acquiring Capsugel, what type of growth have you seen, and what opportunities has it provided?

CD: Capsugel has now been fully integrated into Lonza. The capsule business itself was integrated into either consumer health and nutrition or the new capsule delivery solutions business unit and the drug product services business became the dosage forms and delivery systems business unit, part of Lonza Pharma & Biotech.

Specific to dosage forms and delivery systems, which I lead, we have acquired five sites through Capsugel that offer services including micronization, spray drying, soft gels, liquid-fill hard caps, complex tablets and modified extended release. We also added a sixth site in southern Switzerland specifically to give us dual-continent micronization capability. We look at how we can resolve our customers’ key problems. We have the right tools to address bioavailability challenges, optimize drug delivery, and offer specialized dosage forms that meet our customers’ target product profiles and commercial objectives. We work very closely with our sister business unit, which is the API development and manufacturing business, which means we offer an end to end solution from chemical intermediates through to final drug product.

I think most of the growth to date has been from finding synergies where we’re able to offer our customers a seamless solution. For example, we produce the API, and then we support the design and development of the dosage form and manufacture clinical trial material, which we then package and distribute. We’re working with our customers to accelerate timelines, reduce complexity and just make it easier for the scientists to talk to each other as part of a single partner organization.

CP: The Tampa, FL facility recently announced expanded encapsulation capabilities. Can you elaborate on that?

CD: We added encapsulation equipment to expand our capability for powder filled capsules at commercial scale. That was largely put in with a specific project in mind, but it has broad applications for multiple customers. Many of the projects in our portfolio have started with API-in-capsule (micro-dosing) studies and are growing to launch, and we have customers looking for us to go through to commercialization with them. Those investments create a very extensive capability for us to be able to launch other products in the future. We are adding more capabilities in terms of high potency, due to be finished by May of this year. High potency is a big driver within the oncology industry. More and more products are highly potent, which makes containment an integral part of our business, something in which we’ve invested at all of our sites to make sure we’re able to respond to that in the right way. Lonza probably has the largest range of high potency capabilities in the CDMO industry, and a very long track record.

CP: Can you provide an example of an expansion project for a specific customer?

CD: Our business model helps companies get through to the commercialization phase. One of our projects already in the public domain is with a company called Clovis. We supported them by putting in place a manufacturing plant to give them extreme flexibility in ramping up quickly as demands for the product change. But it also means that facility is exclusively dedicated to them. So whenever we have customers that have specific technology requirements that are needed for their project, we’ll find a way to work with them to put that capability in place. Quite often, that means extending capabilities we have at the development scale into a commercialization scale, which is a model we have been able to repeat several times over already.