• Login
    • Join
  • FOLLOW:
  • Subscribe Free
    • Magazine
    • eNewsletter
    Checkout
    • Magazine
    • News
    • Manufacturing
    • Packaging
    • Development
    • Compliance
    • Top 20
    • Directory
    • Microsites
    • Events
    • More
  • Magazine
  • News
  • Manufacturing
  • Packaging
  • Development
  • Compliance
  • Top 20
  • Directory
  • Microsites
  • Events
  • Current / Back Issue
    Features
    Editorial
    Columns
    Digital Edition
    eNewsletter Archive
    Our Team
    Editorial Guidelines
    Subscribe Now
    Advertise Now
    Top Features
    Biotechnology’s Role in Improving Stroke Outcomes

    CEO Spotlight: Marc Kikuchi

    Newsmakers: Darren Shirley

    Are You Prepared for the 2023 DSCSA Deadline?

    Rethinking the Changing Role of the CRO
    Breaking News
    Online Exclusives
    Industry News
    Collaborations & Alliances
    Promotions & Moves
    Trials & Filings
    Financial Reports
    Bio News & Views
    Custom Sourcing News
    Packaging & Tracking
    CRO News
    Live From Shows
    Top News
    Novavax Submits EUA for Protein-based COVID-19 Vax Booster

    BeiGene, Ontada Enter Strategic Oncology Alliance

    AskBio Appoints Clinical Ops Executives

    SpectrumX Partners With UK Contract Manufacturer

    GL Chemtec Partners with Edgewater Capital to Accelerate Growth
    APIs
    Aseptic Processing
    Cleaning Validation
    Clinical Trial Materials
    Cytotoxics and High Potency Manufacturing
    Equipment
    Excipients
    Extractables and Leachables
    Facilities
    Fill/Finish
    Lyophilization
    Parenterals
    Process Development
    Process Validation
    Risk Management
    Scale-up/ Technology Transfer
    Solid Dosage/ Creams/ Ointments

    SpectrumX Partners With UK Contract Manufacturer

    Just – Evotec Biologics and Alpine Immune Sciences Expand Partnership

    Almac Invests $65M to Expand North American HQ

    Captor Therapeutics Selects CDMO for Clinical Trial Materials

    Catalent to Acquire Metrics Contract Services for $475M
    Capsules
    Cold Chain Management
    Injectables
    Logistics
    Serialization
    Solid Dosage / Semi-solids
    Supply Chain
    Vials

    UPS to Acquire Healthcare Logistics Provider Bomi Group

    Marken to Acquire Medical Courier Business of Cedra Express

    5 Key Features of Agile Pharmaceutical Packaging Supply Chains That Drive Results

    Novavax Expands Manufacturing Agreement with SK bioscience

    Lonza Continues to Lead the Market with Innovative Hard Empty Capsules
    Analytical Services
    Bioanalytical Services
    Bioassay Developement
    Biologics, Proteins, Vaccines
    Biosimilars
    Chemistry
    Clinical Trials
    Drug Delivery
    Drug Development
    Drug Discovery
    Formulation Development
    Information Technology
    Laboratory Testing
    Methods Development
    Microbiology
    Preclinical Outsourcing
    R&D
    Toxicology

    Novavax Submits EUA for Protein-based COVID-19 Vax Booster

    GL Chemtec Partners with Edgewater Capital to Accelerate Growth

    West Pharmaceutical Makes Strategic Investment in Latch Medical

    “3 Key Trends” with James Park

    Captor Therapeutics Selects CDMO for Clinical Trial Materials
    Filtration & Purification
    GMPs/GCPs
    Inspections
    QA/QC
    Regulatory Affairs
    Validation

    Chime Biologics Receives Commercial Manufacturing License

    Automation Is Key to Meeting Demands in Pharmacovigilance

    UBC Acquires Examoto

    Responding to Consumer Complaints While Working with CMOs

    WuXi Vaccines Receives GMP Certificate from HPRA
    Companies
    Categories
    Corporate Capabilities
    Add New Company
    Contract Service Directory Companies
    IDT Biologika

    Aphena Pharma Solutions

    Quotient Sciences

    CMC Pharmaceuticals

    Societal CDMO
    Companies
    News Releases
    Posters
    Brochures
    Services
    Videos
    Case Study
    White Papers
    Jobs
    Contract Service Directory Companies
    IDT Biologika

    Aphena Pharma Solutions

    Quotient Sciences

    CMC Pharmaceuticals

    Societal CDMO
    Webinars
    Live From Shows
    • Magazine
      • Current / Back Issue
      • Features
      • Editorial
      • Columns
      • Editorial Guidelines
      • Subscribe Now
      • Advertise Now
      • Enewsletter Archive
      • Digital Edition
    • Directory
      • Companies
      • Categories
      • Corporate Capabilities
      • Add Your Company
    • Manufacturing
      • APIs
      • Aseptic Processing
      • Cleaning Validation
      • Clinical Trial Materials
      • Cytotoxics and High Potency Manufacturing
      • Equipment
      • Excipients
      • Extractables and Leachables
      • Facilities
      • Fill/Finish
      • Lyophilization
      • Parenterals
      • Process Development
      • Process Validation
      • Risk Management
      • Scale-up/ Technology Transfer
      • Solid Dosage/ Creams/ Ointments
      • cGMP Manufacture
    • Packaging
      • Capsules
      • Cold Chain Management
      • Injectables
      • Logistics
      • Serialization
      • Solid Dosage / Semi-solids
      • Supply Chain
      • Vials
    • Development
      • Analytical Services
      • Bioanalytical Services
      • Bioassay Developement
      • Biologics, Proteins, Vaccines
      • Biosimilars
      • Chemistry
      • Clinical Trials
      • Drug Delivery
      • Drug Development
      • Drug Discovery
      • Formulation Development
      • Information Technology
      • Laboratory Testing
      • Methods Development
      • Microbiology
      • Preclinical Outsourcing
      • R&D
      • Toxicology
    • Compliance
      • Filtration & Purification
      • GMPs/GCPs
      • Inspections
      • QA/QC
      • Regulatory Affairs
      • Validation
    • Top 25 Pharma & BioPharma
    • Contract Pharma Direct
    • Breaking News
    • Online Exclusives
    • Slideshows
    • Experts Opinions
    • Surveys
      • Outsourcing Survey
      • Salary Survey
    • Glossary
    • Videos
    • White Papers
    • Podcasts
    • Infographics
    • Supplier Microsite
      • Companies
      • News Releases
      • Posters
      • Brochures
      • Services
      • Videos
      • Case Study
      • White Papers
    • Contract Pharma Conference
      • Contract Pharma Conference
      • Speakers
      • Exhibitors
      • Conference Sessions
    • eBook
    • Webinars
    • Events
      • Industry Events
      • Live from Show Events
      • Webinars
    • Classifieds / Job Bank
      • Classifieds
      • Job Bank
    • About Us
      • About Us
      • Contact Us
      • Advertise With Us
      • Privacy Policy
      • Terms of Use
    Columns

    Biopharmaceuticals Outsourcing Slows

    Manufacturers are shifting focus

    Biopharmaceuticals Outsourcing Slows
    Fig 1: Average Biomanufacturers' Budget Change, 2009-2018 (Selected Data)
    Biopharmaceuticals Outsourcing Slows
    Fig 2: Single Most Important Biomanufacturing Trend, 2014-2018 (Selected Data)
    Biopharmaceuticals Outsourcing Slows
    Fig 3: % Organizations Manufacturing 100% In-house (No Outsourcing), 2006-2018
    Biopharmaceuticals Outsourcing Slows
    Fig 4: Five-year Projections: % Biomanufacturers Planning to Outsource at Least Some Production within 5 Years, through 2023 (Projections made in 2007-2018)
    Biopharmaceuticals Outsourcing Slows
    Fig 5: Country Selections as Destination for International Outsourcing of Biomanufacturing (All Respondents)
    Related CONTENT
    • Coriolis Pharma
    • Vetio Animal Health
    • Haste Makes Waste
    • Pharma Future
    • Why Otsuka Outsourced Regulatory Affairs
    Eric S. Langer, BioPlan Associates09.11.18
    Why, during this period of relatively robust global economic growth, are budgets for bioprocess outsourcing beginning to decline? The biopharmaceutical manufacturing segment has shown steady, 12-14% growth over decades in the U.S. and the EU, and even more rapid growth in some emerging regions. However, this steady growth has not applied to the outsourcing side of biologics manufacturing. During economic downturns, for example, biologics outsourcing has tended to contract, as innovators seek to reduce their economic exposure.

    According to our 15th Annual Report and Survey of Biopharmaceutical Manufacturing,1 we see a number of key trends affecting outsourcing that will likely continue into the future. 

    Outsourcing is approaching an equilibrium
    Many companies are increasingly preferring to do their own commercial manufacturing, particularly for products expected to attain large markets. This orientation toward in-house manufacturing is occurring because of the advances the industry has made in bioprocessing over recent years. These include: Improved efficiencies, ability to invest in smaller facilities that use more flexible processes and lower capital cost single-use technologies; and titers (productivity) have improved, which has reduced facility sizes, while process steps have been incrementally improved or eliminated. All this makes bioprocessing a more rational core business function for certain drug innovators.

    Outsourcing is becoming more strategic
    Companies, including Big Pharma that in the past had eliminated in-house capabilities and moved to outsourcing, are often now taking a more rational and sophisticated approach. Companies are weighing their out- vs. in-sourcing options, with a longer-term perspective. While some companies are geared to keep capital costs low, including through outsourcing, others see strategic value in creating company value by developing and increasing their in-house manufacturing competence.

    Shrinking pipelines for outsourcing
    Companies are now concentrating their resources to fewer products in the pipeline, and proportionally devoting more development efforts. As a result, current in-house capacity may be sufficient for some companies’ pipelines. 

    Budgets for outsourcing on the decline
    In our study, over the past 10 years, we have asked how budgets would change for 12 key areas in bioprocessing. This year, the area with the least projected budget growth was outsourced biopharmaceutical manufacturing, with an average budget increase of only 1.5%, and this relative decrease has been going on since 2014. 

    On the other hand, budgets for areas such as new capital equipment continue to show significant growth this year at 8.2%—and we note that this is year-on-year growth as well. Much of this involves construction of new facilities and addition of capacity. As the industry matures, some of this spending is the result of increasing latent demand, e.g., as equipment and facilities wear out or age, combined with many companies expanding their manufacturing capacity, more products being manufactured, more new facilities (e.g., for biosimilars manufacture), etc. Additionally, budget increases for improved productivity this year include investing in process lines already in existence, and new technologies for downstream and upstream manufacturing, which received high budget increases—7.0 and 7.1%, respectively.

    It is very significant that no budget decreases were reported, clearly confirming an overall increase in bioprocessing budgets among developer companies this year.

    Single most important trend
    In the study, we also ask about the most important biomanufacturing trend or operational area where the industry must focus efforts. Last year, 5.5% of the industry saw outsourcing as the most critical trend, yet, this year only 1.4% felt the same. In comparison, 16% felt that improving manufacturing productivity and efficiency were the top area. Single-use systems were third on the list.

    Incentives for strategic outsourcing
    CMOs can provide a strategic advantage, particularly if the task requires specialized expertise, equipment, and infrastructure. For small clients, outsourcing biologics may be the only way to get their products into preclinical and clinical testing, and get them to market. In some areas, adoption of the use of single-use bioprocessing systems has expanded CMOs’ flexibility and capabilities to provide advantages and options. Single-use systems also enable easier technology copying of bioprocessing between the client and CMO. Therefore, product manufacturers more likely view contract manufacturing and outsourced services as an asset to drive strategic decisions than as a way simply to save money or get rid of lower-priority in-house projects. Other incentives that support technical outsourcing include:
    • Need for access to enabling technology (e.g. expression systems, downstream processing); 
    • Lack of internal expertise (available staff with specialized expertise); 
    • Need to control budgets and funding;
    • Need to avoid investing in facilities and staff;
    • Increased capacity needs;
    • Response to competitive pressures;
    • Urgency: time-to-market; and
    • Avoid technology licensing fees and royalties, e.g., for expression systems.
    On the other hand, outsourcing of R&D and other functions may allow budget cuts, but too much outsourcing can weaken companies, potentially leaving the company with few real assets, or inadequate bioprocessing facilities, pipelines, or staff with hands-on expertise.

    In adverse economic conditions, activities that were previously considered essential to retain in-house can become options for outsourcing. But the additional strategic benefits, beyond just cost savings, that outsourcing can bring to product developers can often swing outsourcing decisions. Companies’ outsourcing inevitably leads to less in-house capabilities. In some cases, CMOs and consultants are hired for finding and fixing problems that classically would or should have been resolved by in-house staff. This can create a lack of consistency in bioprocessing and regulatory documentation can lead to delays in product development, approvals, and manufacturing.

    Outsourcing market penetration
    Outsourcing, on the other hand, is becoming common among a majority of facilities. And the number of companies doing all their manufacturing in-house is declining (see Figure 3). This is likely to be the trend in the near future. In 2018, among respondents producing in mammalian cell culture, 30% indicated they performed all their production in-house—no outsourced production. This is a decrease from 44.2% in 2017. Similarly, 43.1% of respondents indicated they performed all their production of Microbial Fermentation in-house compared to 67.6% in 2017.

    Future outsourcing: the good news
    Although budgets are tending down, overall results suggest a continuing trend towards more facilities outsourcing at least some of mammalian cell culture. In this year’s study, 72.3% of users projected some outsourcing will be done at their facility within five years (by 2023). We also note that for microbial fermentation systems, the percentage anticipating some level of outsourcing has increased significantly to 58.4%. Respondents using Yeast systems have reported a level of anticipated outsourcing similar to 2016 (42.9%).

    Other outsourced activities
    In addition to the larger market for outsourced bioprocessing, there are also very significant, but in some cases, relatively lower value services, such as analytical testing, sterility, fill-finish, and other often routine testing and tasks. In 2018, we surveyed 26 different areas of outsourcing. We continued to find that the primary outsourced activities include:
    • “Analytical testing (other bioassays),” with 77.8% of biopharmaceutical companies outsourcing at least some of the activities. Outsourcing is now a common and core activity within most companies, although the tasks outsourced vary.
    • “Testing: toxicity testing,” (72.6%) moved to the #2 position on our list in 2017 (80.9%, up from #3 in 2016) and remains there in 2018, and “Fill/Finish Operations,” (66.7%) dropped to back to 2016 levels at the #4 position.
    At the other end of the scale, there appears to still be relatively lower outsourcing activity for “Downstream Process Development,” which has now moved up from the bottom of the list to #23. “Upstream Process Development,” still ranks as 22 this year. Note: process development tasks are apparently considered by many to be core corporate capabilities not suitable for outsourcing and areas where CMOs are perceived as lacking needed expertise, although most CMOs have considerable relevant expertise. But the data suggest this view may be changing, with an increase in this outsourcing reported.

    International outsourcing (off-shoring) of biomanufacturing
    We asked respondents to consider their five-year time horizon (lead-up to 2023), and to evaluate their facility’s current plans for future international capacity expansion (not domestic). We identified more than 22 countries as potential outsourcing destinations.

    Among all respondents, the U.S. ranked highest again as a potential ‘offshore’ outsourcing destination, with 30.1% vs. 26.3% in 2013 of respondents indicating that there was a “Likelihood” or “Strong likelihood” that they would outsource production to facilities there. Following the U.S. was Germany at 25.2% of respondents, followed by China with 21.4% in 2018 (vs 16.2% in 2017); and India with 18.4%.

    China and India remain the most popular developing country outsourcing destinations, but patent and IP issues also come into play in these and many other developing countries. With looser or simply no relevant laws and even less enforcement and precedents, IP concerns are significant. In fact, this year when we asked respondents to identify their critical issues when considering outsourcing to a CMO, we saw a significant decrease in the proportion that said it was ‘very important’ for CMOs to have regulatory compliance expertise—38.4% in 2018, down from 46.3% in 2017. Clearly all CMOs need appropriate regulatory compliance experience. But this may simply be an area where CMO competence is increasingly presumed to be universal.

    Conclusions
    Today, most every area of R&D and manufacturing is at least considered a candidate for outsourcing, and the impact of this is being felt on a global basis. While global economics has a clear effect on short-term budget allocation for outsourcing, overall, the industry plans to continue its long-term view involving more outsourcing, including a mix of outsourced and in-house production options. 

    Emerging markets such as China and India have become increasingly favorably viewed alongside established markets as potential outsourcing destinations, particularly for research, which can be rather repetitive. And while developing country bioprocessing CMOs/CROs may not see dramatic growth in the short term, their long-term potential is clear. Companies with large domestic populations will need to produce biologics in very large quantities for their local markets. As companies in developing countries ramp-up serving their domestic markets, some of this experience, sooner or later, will result in emerging market CMOs making inroads into major biopharmaceutical markets. 

    Resources
    1. 15th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production, 2018, BioPlan Associates, Inc. April 2018. www.bioplanassociates.com


    Eric S. Langer
    BioPlan Associates

    Eric S. Langer is president and managing partner at BioPlan Associates, Inc., a biotechnology and life sciences marketing research and publishing firm established in Rockville, MD in 1989. He is editor of numerous studies, including “Biopharmaceutical Technology in China,” “Advances in Large-scale Biopharmaceutical Manufacturing”, and many other industry reports.  elanger@bioplanassociates.com  301-921-5979.  www.bioplanassociates.com
    Related Searches
    • biologics manufacturing
    • Testing
    • Preclinical
    • biopharmaceutical companies
    Suggested For You
    Coriolis Pharma Coriolis Pharma
    Vetio Animal Health Vetio Animal Health
    Haste Makes Waste Haste Makes Waste
    Pharma Future Pharma Future
    Why Otsuka Outsourced Regulatory Affairs Why Otsuka Outsourced Regulatory Affairs
    TraceLink Joins IMVO Serialization Pilot for Pharmacies and Clinics TraceLink Joins IMVO Serialization Pilot for Pharmacies and Clinics
    Schreiner MediPharm Introduces Multifunctional Covert-Hologram Seal Schreiner MediPharm Introduces Multifunctional Covert-Hologram Seal
    Wasdell Group Launch Serialization Service Wasdell Group Launch Serialization Service
    Biogenerics Progress Biogenerics Progress
    Serialization Readiness: A Contract Services Provider Perspective Serialization Readiness: A Contract Services Provider Perspective
    CRO Industry Update: Big Data Drives Drug Development Efforts CRO Industry Update: Big Data Drives Drug Development Efforts
    Biopharma Manufacturing Markets Biopharma Manufacturing Markets
    CMOs Growing Strong in APIs CMOs Growing Strong in APIs
    Thermo Fisher to Build Pharma Services Facility Thermo Fisher to Build Pharma Services Facility

    Related Buyers Guide Companies

    • Coriolis Pharma

      Coriolis Pharma

      ...
      Daniel Weinbuch, Dr. 07.01.21

    • Vetio Animal Health

      Vetio Animal Health

      ...
      John Kane, CEO 10.24.19

    • Biologics, Proteins, Vaccines | Biosimilars | Drug Development
      Haste Makes Waste

      Haste Makes Waste

      When to sprint and when to breathe in the race from lab to clinic.
      Christian Cattaruzza, MilliporeSigma 09.11.18


    • Pharma Future

      Pharma Future

      Where are we now? What’s next?
      Ben Locwin 09.11.18

    • Drug Development | Regulatory Affairs
      Why Otsuka Outsourced Regulatory Affairs

      Why Otsuka Outsourced Regulatory Affairs

      How outsourcing regulatory affairs gave Otsuka flexibility to move products through the development process faster.
      Kristin Brooks, Managing Editor 08.09.18

    Loading, Please Wait..
    Trending
    • Thermo Fisher Expands NY Cell Culture Media Manufacturing Site
    • Pfizer, Neurocrine Terminate Collaboration
    • Almac Invests $65M To Expand North American HQ
    • Catalent To Acquire Metrics Contract Services For $475M
    • Novavax Submits EUA For Protein-based COVID-19 Vax Booster
    Breaking News
    • Novavax Submits EUA for Protein-based COVID-19 Vax Booster
    • BeiGene, Ontada Enter Strategic Oncology Alliance
    • AskBio Appoints Clinical Ops Executives
    • GL Chemtec Partners with Edgewater Capital to Accelerate Growth
    • SpectrumX Partners With UK Contract Manufacturer
    View Breaking News >
    CURRENT ISSUE

    July/August 2022

    • Biotechnology’s Role in Improving Stroke Outcomes
    • CEO Spotlight: Marc Kikuchi
    • View More >

    Cookies help us to provide you with an excellent service. By using our website, you declare yourself in agreement with our use of cookies.
    You can obtain detailed information about the use of cookies on our website by clicking on "More information”.

    • About Us
    • Privacy Policy
    • Terms And Conditions
    • Contact Us

    follow us

    Subscribe
    Nutraceuticals World

    Latest Breaking News From Nutraceuticals World

    Charlotte’s Web Sports Product Line to Undergo NSF Certification Process
    ADM and Benson Hill Partner to Scale High Protein Soy for U.S. Market
    Tazo Transitions to Regenerative Organic Agriculture
    Coatings World

    Latest Breaking News From Coatings World

    PPG Completes Universiada STEM Education Initiative in Wrocław, Poland
    What are you Reading this Week?
    SONGWON Industrial Group Reports Strong Q2 Financial Results
    Medical Product Outsourcing

    Latest Breaking News From Medical Product Outsourcing

    Spartech Promotes Three Staff Members
    Elisabeth Lackner Named Chief Scientific Officer at Element Materials Technology
    Natech Plastics Purchases Three New Injection Molding Machines
    Contract Pharma

    Latest Breaking News From Contract Pharma

    Novavax Submits EUA for Protein-based COVID-19 Vax Booster
    BeiGene, Ontada Enter Strategic Oncology Alliance
    AskBio Appoints Clinical Ops Executives
    Beauty Packaging

    Latest Breaking News From Beauty Packaging

    Maelys Rolls Out to Ulta Beauty
    The Body Shop Encourages Young People to Vote
    Weekly Recap: Howard Kaneff Dies, Keys Soulcare Adds SPF Skincare Offering & More
    Happi

    Latest Breaking News From Happi

    In-Cosmetics Asia Returns to Bangkok to Deliver Look at Market Trends and Ingredient Innovations
    Perfect Corp. AI Skin Analysis Beauty SaaS Brand Console Is HIPAA-Compliant
    Black-Owned Dinobi Detergent Uses Plant-Based Green Ingredients
    Ink World

    Latest Breaking News From Ink World

    Weekly Recap: Printing Ink Primer, Zeller+Gmelin Lead This Week’s News Stories
    Heidelberg Enjoys Successful Start to 2022-23 Fiscal Year
    Mimaki Announces New LATAM Website
    Label & Narrow Web

    Latest Breaking News From Label & Narrow Web

    Pro Label Inc. installs first Mark Andy DSiQ hybrid press
    Gallus launches Gallus One inkjet label press
    Esko, Constantia Flexibles announce acquisitions and more
    Nonwovens Industry

    Latest Breaking News From Nonwovens Industry

    Daio Paper Acquires Pet Care Products Manufacturer
    Honest Reports Increased Revenue
    Weekly Recap: Essity Switches to Recyclable Packs for Feminine Pads, FTC Sues PPE Maker on False Origin Claims & More
    Orthopedic Design & Technology

    Latest Breaking News From Orthopedic Design & Technology

    FundamentalVR Raises $20 Million in Series B Funding
    Bioventus Achieves Strong Growth in Q2 2022
    Bone Void Fillers Market Growing at 6%
    Printed Electronics Now

    Latest Breaking News From Printed Electronics Now

    Weekly Recap: ALTANA, Universal Display and Emerson Top This Week’s Stories
    eMagin Corporation Announces 2Q 2022 Results
    Zebra Technologies’ Emission Reduction Targets Validated by SBTi

    Copyright © 2022 Rodman Media. All rights reserved. Use of this constitutes acceptance of our privacy policy The material on this site may not be reproduced, distributed, transmitted, or otherwise used, except with the prior written permission of Rodman Media.

    AD BLOCKER DETECTED

    Our website is made possible by displaying online advertisements to our visitors.
    Please consider supporting us by disabling your ad blocker.


    FREE SUBSCRIPTION Already a subscriber? Login