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    Features

    Covid 19: Impact on Bioprocessing and Outsourcing

    Outsourcing of biologics is increasing due to Covid-19, but what will change in the long-run?

    Covid 19: Impact on Bioprocessing and Outsourcing
    Covid 19: Impact on Bioprocessing and Outsourcing
    Ronald A. Rader & Eric S. Langer, BioPlan Associates05.05.20
    Over the past 15 years, outsourcing of biologics has continued to increase steadily at a rate of around 4% annually. This is already accelerating, at least in the near-term, as the current Covid-19 crisis changes the dynamics of bioprocessing. According to BioPlan Associates’ “17th Annual Report and Survey of Biopharmaceutical Manufacturing,”1 65% of biotherapeutic facilities use contract and development manufacturing organizations’ (CDMO) services for at least some of their bioprocessing. And according to our recently prepared White Paper on the strategic changes in bioprocessing,2 the industry expects this to increase rapidly, at least in the near-term, as driven by the pandemic.

    Figure 1 shows the trend toward greater outsourcing for both mammalian and microbial platforms since 2006. As vaccine production increases, this will likely require additional capacity from microbial CMOs as well.



    Figure 1: % Organizations Manufacturing 100% In-house

    In our recent White Paper, “Accelerating Trends: Long-term Impact of Novel Coronavirus-19 on Biomanufacturing and Bioprocess Supply Chain,” we interviewed strategic decision-makers at biopharmaceutical facilities, as well as their suppliers. We found a number of near-term responses to the pandemic are being undertaken. But the future-casting by the biopharma industry presented some significant, long-term transformational changes that are likely to occur. Many of these will also impact outsourcing strategy.

    Near-term impacts
    The bioprocessing sector in the near-term is experiencing operational and personnel-related problems, but often these relate to increased activity. Essentially all bioprocessing-related industrial activities are continuing largely unaffected in terms of operations and output. While there are many changes in onsite staff management, broader business plans are not affected in the near-term.

    As expected, many companies, including developers and suppliers of hardware and services, are increasing their pandemic-related R&D and manufacturing. Suppliers are anticipating and planning for increased business as companies and governments start to rapidly develop, test and deploy pandemic-related vaccines, therapeutics and diagnostics. There has also been demand for increased short-term stocking-up on supplies.

    Healthcare segments generally tend to be less sensitive to economic stress. And we are finding that some suppliers, including healthcare divisions of larger companies report that groups serving other industries are experiencing significant loss of sales and related cut-backs.

    The general expectation is that there will be relatively minimal adverse near-term economic impact from the pandemic and its aftermath on the bioprocessing sector. Most companies are continuing with their long-term capital-intensive expansions and mergers/acquisitions.

    Biopharmaceutical-related equipment suppliers, CDMOs, CROs and developer companies are considered “essential,” and have continued operations with only minimal initial disruptions, most associated with staff management. Many are now planning on how to ramp-up their activities.

    There are examples of selfless work, but this is not sustainable. For example, at Braskem’s petrochemical plant in Marcus Hook, Delaware County, PA, 42 workers volunteered to quarantine themselves for 28 straight days. They did not leave their “live-in” factory, working 12-hour shifts day and night, producing tens of millions of pounds of the polypropylene for face masks and surgical gowns for the pandemic. Is this sustainable?

    Most non-critical jobs, such as sales, technical and regulatory and other support operations are being done virtually from home. Companies that are decreasing or delaying expenditures tend to be those with more diversified non-bioprocessing-related businesses, and smaller companies. In the longer term, the industry driver, biopharmaceutical sales, will remain largely unaffected, with patients still needing these therapies.

    Bioprocess Staffing: Bioprocessing companies report they have already adapted well to staff disruptions and challenges. Non-essential staff working from home are reported to be doing well. Inside facilities, many companies have adjusted work shifts and limited movement of staff within facilities, to keep groups isolated from infection. But this reduces the interaction among staff that has long been considered important in this industry. Staff management adaptations today will potentially have long-term effects, but many of these ‘wartime’ changes will likely be abandoned after the crisis is over, and vaccines become available.

    Supply Chains: Supply chains have proven reasonably robust and bioprocessing related supplies manufacturing and services have continued largely unaffected worldwide. In certain situations, manufacturing is being ramped-up in response to increased demand. At present, neither equipment nor biologics manufacturers report any significant supply chain issues, as their suppliers continue essential operations. Access to information has become more critical. Deliveries of supplies of goods and services to biopharmaceutical developer, services and supplies companies have largely continued unaffected. Upstream suppliers have continued deliveries, although some minor disruptions are expected in coming months, mostly involving commodity products, such as solvents and reagents. The sector’s specialized logistics companies report having adapted, including continuing deliveries to and from China and other countries during shut-downs.

    Services: Service providers, CDMOs and CROs, are seeing an increase in inquiries and orders, mostly pandemic vaccine- or therapeutics-related. Many suppliers of both equipment and services have begun increasing their activities in response to this increase, and to projected demand. There has been limited short-term stocking-up on supplies. Overall, developer R&D and pipelines are expected to change little, other than adding more pandemic- and infectious disease-related R&D. The ‘inertia’ built into bio/pharma pipeline projects makes it difficult to pivot on projects quickly, so current pipelines are not expected to change in the near-term. 

    Disaster Planning: Essentially all companies are working aggressively to upgrade their contingency and disaster planning. This now will include scenarios where numbers of critical staff are not working for periods of time. Worst case scenarios are no longer confined to fires, earthquakes, floods, blackouts, IT hacking, etc. This concern will extend into the next year, as many decision-makers are worried about staffing challenges this winter, with the annual influenza epidemic overlapping the Covid-19 pandemic.

    The near-term conclusions are that business for this sector is continuing despite the curtailing of marketing and sales efforts. Sales reps are not making visits, conference exhibitions have been cancelled. Overall, industry suppliers of goods and services are experiencing or expect increases in sales. Some companies will see a downturn in revenue in the later quarters of FY2020. But most suppliers are seeing, and expecting increased revenue, with an increasing number of pandemic and other infectious disease orders and projects beginning to come in.

    Outsourcing to CDMOs/CROs not in a position to support the pandemic may face challenges as prospective clients pull back from discussions, and pre-contracting facilities’ audits are not getting done. This may presage mid-term challenges for the sales pipeline of some service suppliers. But with bioprocessing CDMOs overall having as much as a year’s backlog of projects, CDMOs are insulated from many of the short-term revenue disruptions. Bioprocessing equipment suppliers report a similar response, with some slowing of orders but newer pandemic-related inquiries and orders coming in.

    The “New Normal” & What Will Change Long-term?
    While more difficult for our interviewees to predict, based on how the industry is responding to the Covid-19 pandemic, we believe that ‘Post-Covid,’ there will be a number of fundamental changes resulting from the pandemic. Many of these, such as the increase in the number of global facilities, were trending prior to the crisis due to regional growth, the need for redundant production, and requirements for smaller, dedicated facilities. But the added pressures will move up the timelines and magnitude of change. The novel Covid-19 appears to be a catalyst for acceleration of existing and emerging trends in the industry.

    More Facilities: Even at this early point in the crisis, we see that there will easily be $15-20 billion or more invested in new pandemic-related vaccines and therapeutics by governments and philanthropies, e.g., the Gate’s and Wellcome Foundations. Likely half or more of this funding will go to new manufacturing facilities.

    More Bioprocessing: All interviewees agreed that bioprocessing and related supplies and support activities will increase. This will include major significant rapid increases in pandemic-related R&D and manufacturing by companies and governments. Not unexpected, the bioprocessing sector will grow as a result of this crisis. Much of this will be in the form of preparedness for future challenges.

    More Pandemic-related R&D and Manufacturing: Many companies and governments will be pursuing pandemic- and infectious diseases-related R&D and manufacturing, including $billions already being planned as new investments in pandemic vaccines development and facilities in coming years. This may result in shortages including for single-use systems (SUS) supplies and experienced staff.

    More Supply Chain Oversight: The pandemic will result in more product, supplies and services companies exercising more control over their supply chains, including reaching further upstream to suppliers to suppliers. Having control of supply chains will be even more critical to maintain access to needed supplies. This will also be required to support product quality, regulatory documentation and patient safety. Companies will be pressing suppliers—and their suppliers, on up the supply chain—for more information. Because there are relatively few suppliers of bioprocessing goods and services, there may be a need to centrally compile and facilitate access to regulatory documentation and information, at least regarding commonly used equipment and reagents.

    Prioritization of Supplies and Services: Prioritization of outsourced projects and supplies orders will be part of the “new normal” after the pandemic subsides. Orders for pandemic-related supplies and outsourcing already are receiving priority, going to the head of the line. There will be losers and winners in terms of wait times for supplies and services.

    Single-use vs. Stainless Steel: There will be more Single-use systems (SUS) process lines and facilities. Most expect that pandemic-related new facilities will largely engage SUS due to its flexibility which will be needed, combined with SUS speed and much lower capital investment. Long-term, this flexibility will imprint on the responses to future pandemics and health crises. Due to the speed, cost and flexibility benefits of SUS, most pandemic-related new facilities and process lines are expected to be SUS-based, and many of them will likely be of modular construction. 

    More Modular Facilities: Many new pandemic-related vaccine and biotherapeutics facilities will likely be modular. Modular units, along with SUS, will facilitate rapid cloning of facilities worldwide. Modular facilities manufacturers are already experiencing high demand, and this is likely to continue. Again, this trend has been accelerating for at least 5 years; the crisis will precipitate rapid expansion. Stainless steel facilities will also be constructed, after products show long-term utility, or where there is government funding.

    Single-use Expansions: Because pandemic-related bioprocessing process lines and facilities are generally SUS-based, suppliers are concerned about future shortages. Already, there is a worldwide shortage of some of the key high-purity polymers, causing increasing lead times. Suppliers are concerned that the uptick in pandemic-related vaccines and therapeutics development and, particularly, related manufacturing will result in shortages of SUS supplies.  In the future, this is likely to result in greater investment in SUS supply chains and supply chain security.

    Most pandemic-related vaccines and therapeutics manufacturing efforts will be scale-up or -out at unprecedented world-class scales. Assuming two or three pandemic-related vaccines or biotherapeutics enter the market, each will likely require manufacture of 100s of millions, if not a billion or more, doses/year. This will require multiple facilities. Estimates may show that 4,000 SUS bioreactors/year with total capacity of 8 million L of culture media/year.

    China’s Response: The near-term responses in China have been similar to that in the U.S. and Europe. This includes most operations continuing largely unaffected; recognition of need to have better supply chain management. There have been no major supply changes, such as switching to domestic Chinese rather than Western bioprocessing suppliers. In fact, there are expectations of large government investments in pandemic-related vaccines and therapeutics. This has also increased expectations that US-China trade differences can be resolved quickly to support its domestic health policy. Government follow through on planned economic reforms to make it more market-driven is also being sought. The pandemic is likely to be a catalyst in the acceleration of these trends.

    More Regionalization/Decentralization: New facilities, including vaccines-related, will be located internationally, with emphasis on regional manufacturing and distribution of both supplies and biopharmaceuticals. This is now seen as essential to deal with any future pandemics. For example, suppliers expect to build more equipment capacity in the U.S. for the U.S. market, in China for the Chinese market, etc. Biopharmaceutical manufacturing itself will likely be more internationally disseminated to increase flexibility and manufacturing redundancy.

    Faster R&D and Speed-to-Market: The pandemic is showing that (bio)pharmaceutical R&D needs to be more streamlined. New ways of doing product testing, including clinical trials, and more rapid approval options from regulatory agencies are needed to speed-up product development. Needs include faster ways of identifying and designing candidate vaccines and therapeutics, their testing in clinical trials, and manufacturing. Suppliers recognize they will need to move their new products through R&D and beta testing faster.

    More Collaboration: Those in the industry recognize the need for more collaboration and communication among bioprocessing professionals and companies/facilities at all levels. This already includes pandemic-related developer companies banding together to perform vaccine or therapeutics development. And suppliers are initiating communications and sharing of information with fellow suppliers, including SUS suppliers within industry trade organizations, BPSA and BPOG. On a global level, the unprecedented R&D efforts for development of life-saving medicines will result in unexpected growth in scientific collaborations as the successes from the current crisis bear fruit.

    Better Inventory Management: The need for better inventory management is becoming obvious. Before the crisis, delays in obtaining required equipment for biologics production were a challenge. Today, avoiding delays is a critical mission. Bioprocessing facilities are likely to inventory more needed supplies; pandemic and other vaccines and therapeutics will likely be stockpiled by governments and countries’ biodefense programs; and vendors will improve their inventory systems to minimize the impact of future challenges and crises. Stockpiling by governments will likely change as national security is impacted by the ability to respond to pandemics and other health threats.

    More Investment: The private and public sector will increase investments in pandemic- and other infectious diseases-related R&D and manufacturing. Already, BioPlan is tracking over $10 billion in projected new pandemic-related vaccines and therapeutics development efforts, with much or even most this likely to go towards bioprocessing. For example, Pfizer and BARDA, the U.S. biodefense agency, are “at risk,” even before trials start, investing ~$1 billion in vaccine development and manufacturing facility construction.

    More Staffing Difficulties: Chronic staffing challenges have plagued the industry for 15 years. These will now be exacerbated by the expected increase in bioprocessing for pandemic-related products. Hiring challenges and shortages of staff with expertise and experience (documented in BioPlan’s annual survey) will accelerate. Pandemic R&D and manufacturing will compete for limited staff with the cellular and gene therapies sectors, as new facilities come online. Expect bioprocessing expertise and even technicians to be increasingly in short supply, with recruiting more difficult and salaries increasing.

    More Automation: Related to the staffing difficulties, the preferences to decrease onsite staff, and process intensification, there will be increasing investments in automation; along with automation for process improvements and cost reductions. There will also be increased use of automated screening systems, process modeling, etc.—anything that reduces work by staff.

    Conclusions
    The changes in the bio/pharmaceutical industry are being accelerated and catalyzed by the current Covid-19 crisis. Although suppliers have proven themselves rather robust in their dealing with the pandemic, and business is continuing generally uninterrupted, there will be significant shifts. Long-term adjustments in how the bio/pharma industry handles future pandemics are even now being formed by the current crisis. These will result in strategies to moderate future supply shortages, development of collaborative relationships in R&D and among suppliers, and the implementation of more rapid, flexible, and modular production processes to speed products to the market. These changes will affect manufacturing long after the current crisis resolves. 

    References
    1. Langer, E.S., Report and Survey of Biopharmaceutical Manufacturing and Production, BioPlan Associates, 17th Annual, Rockville, MD April 2020, 450 pages, www.bioplanassociates.com/17th.
    2. Accelerating Trends: Long-term Impact of Novel Coronavirus-19 on Biomanufacturing and Bioprocess Supply Chain, White Paper, BioPlan Associates, Inc. Rockville, MD, May 2020,


    Ronald A. Rader is the Senior Director, Technical Research, BioPlan Associates. He has more than 35 years’ experience as a biotechnology and pharmaceutical, particularly biopharmaceutical, information specialist, analyst and publisher, and has been responsible for the Antiviral Agents Bulletin periodical; the Federal Bio-Technology Transfer Directory; BIOPHARMA: Biopharmaceutical Products in the U.S. and European Markets; and the Biosimilars/Biobetters Pipeline Directory. rrader@bioplanassociates.com, +1 301-921-5979, www.bioplanassociates.com

    Eric S. Langer is the 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, +1 301-921-5979, www.bioplanassociates.com


    Survey Methodology: The 2020 Seventeenth Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production yields a composite view and trend analysis from over 125 responsible individuals at biopharmaceutical manufacturers and contract manufacturing organizations (CMOs) in 24 countries. The methodology also included 120 direct suppliers of materials, services and equipment to this industry. This year’s study covers such issues as: the impact of Covid-19 on bioprocessing, new product needs, facility budget changes, current capacity, future capacity constraints, expansions, use of disposables, trends and budgets in disposables, trends in downstream purification, quality management and control, hiring issues, and employment. The quantitative trend analysis provides details and comparisons of production by biotherapeutic developers and CMOs. It also evaluates trends over time and assesses differences in the world’s major markets in the U.S. and Europe, as well as China and developing regions.
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