The enormous impact the pandemic had on the biopharma industry is unmistakable, as evidenced by the unprecedented investments that took place in the cell and gene therapy (CGT) space.

In January 2022, the Milken Institute published a report, “Cell and Gene Therapies: Looking Ahead to 2022,”¹ describing the growth of the CGT industry in 2021. In the U.S., 7 new therapies were approved for commercialization, a similar number were approved in Europe, and greater than 1,000 therapies were in development, with 75 expected to be approved in the U.S. by 2030.

How accurate are these predictions?

According to the Q4 2022 Quarterly Data Report² by The American Society of Gene & Cell Therapy, 2 new gene therapies were approved in the U.S. in late 2022, bringing the worldwide total to 24. Currently, more than 2,000 clinical trials are ongoing globally. With approximately 10% of them in Phase III, it is likely that 75 therapies will be approved much sooner than 2030.

The CGT industry has expanded rapidly, beginning a trend for innovator companies to outsource analytics, development, and/or the sophisticated manufacturing necessary in this nascent field. As the first quarter of 2023 concludes, it is more accurate to describe this “trend” as the new industry standard. In addition to an increased number of companies outsourcing their CGT development and manufacturing needs, many are shifting their service provider partnerships to much earlier in their developmental workflows. In a 2022 survey, 62% of respondents planned to outsource their viral vector manufacturing, whereas in 2023, that percentage has risen to 88%.

In addition to the rapid growth of the industry, the current macroeconomic environment is also driving CGT companies to consider moving work to external service providers. Scrutiny of their cash positions and burn rates is steering companies towards outsourcing to maintain a positive financial position.

Why is outsourcing necessary?

The potential to revolutionize disease treatments makes CGT one of the fastest-growing segments of healthcare and is attracting massive investments from both the public and private sectors.

A key challenge facing this industry is the high cost of developing and manufacturing these therapies, as they require specialized manufacturing facilities and expert personnel. These costs are often prohibitive for small and mid-sized companies, so they are turning to contract development and manufacturing organizations (CDMOs) as a solution. By employing this approach, companies have access to specialized facilities and expert personnel they wouldn’t otherwise have access to without a significant outlay of cash. By working with external partners that have already validated methods and platform processes, material and consumable costs can be trimmed and project budgets better controlled.

Building facilities to manufacture at scale with highly trained experts is an enormous drain on resources. Fully equipped buildings range in price from $1,000 to $2,000 per square foot and can take between 18 months and five years to complete.  Sourcing, onboarding, training, and retaining the skilled talent required for the multiple complex processes is exceptionally difficult, as is procuring some of the equipment and consumables needed.

Large biopharma has the resources to play in this advanced therapies arena, however, smaller biotechs and academia, where the majority of biotherapeutic development is taking place, do not have such deep pockets. With limited capital and the need to carefully manage their current funding, it is to a smaller firm’s financial advantage to outsource development and/or externalize manufacturing.

In addition to the financial benefit, outsourcing allows companies to stay focused on their core competencies. Drug development is a complex process requiring extensive expertise. Outsourcing portions of the workflow allows companies to free up resources to remain concentrated on those activities at which they are most proficient.

Most importantly, though, outsourcing typically results in a higher quality product. CDMOs have the expertise and experience necessary to manufacture CGTs at the highest standards and in consistent compliance with regulations.

What functions should be outsourced?

All pieces in the CGT workflow can now be outsourced and include:

Manufacturing
CGT manufacturing is a highly specialized process requiring extensive training and sophisticated instrumentation. Most companies choose to outsource as they lack the expertise and/or the financial resources to support the platforms.

Quality control
Quality control is an essential component of therapeutic development to ensure patient safety. Contract research organizations (CROs) have optimized and validated their platforms to maintain the highest standards with consistent and reproducible results.

Regulatory compliance
The CGT industry is highly regulated with strict compliance requirements for new product commercialization. These requirements, in addition to the constantly evolving regulatory landscape, make outsourcing regulatory support an efficient, cost-effective, and less risky solution as the outsourcing partners have departments focused on staying current with regulations.

Market research
Market research is critical for understanding  trends in the industry, the needs of patients and physicians, and developing marketing strategies. Outsourcing this function to a professional marketing research firm saves enormous time and expense for companies whose focus is developing new therapies.

Should any functions remain in-house?

Factors effecting which aspects of the CGT workflow should be done in-house versus externally are unique to each company and include:

• A company’s existing capabilities;
• The sustainability of maintaining in-house operations;
• The availability of in-house talent;
• The bandwidth of in-house resources; and
• Access to capital markets.

Flexibility is key

Flexibility is essential in a CDMO partner. As the CGT field continues to evolve, a flexible CDMO partner with the ability to rapidly pivot in response to modifications in the scope or scale of the program, to adapt the program to revisions in the “end-to-end” services needed or adjust the business model to better align with the client’s specific financial situation is an attractive option. An outsourcing partner must be able to offer customized solutions tailored specifically to the client’s unique needs, such that the final deliverable meets their precise specifications.

The ability to scale is essential when manufacturing CGT therapies. Scalable manufacturing capabilities, the capacity to scale-up based on required production volumes, is critically important. Having to tech transfer materials due to limited manufacturing volumes decreases the efficiency of the workflow, increases the turn-around time for the program, and exposes the material to contamination risks.

Flexibility in service offerings is another valuable characteristic of an external partner. End-to-end service offerings integrated together at one site, reduces the risk of errors in change of custody, chain of identity, shipping, tracking, temperature controls, transportation, etc., that would be required if materials had to be transferred from facility to facility.

And lastly, flexible business models are a strong indication that the potential CDMO partner is completely aligned with and committed to the success of the CGT organization. Instead of a “one-size-fits-all” approach, a CDMO willing to carve out financial and contractual terms designed for the individual needs of each client is one that is dedicated to the realization of the client’s mission to new life-saving therapies.

Potential future trends

There have always been geopolitical risks in relying on international supply chains; this was exacerbated by the recent pandemic, which highlighted the need for increased U.S.-based manufacturing. As a result, the past several years has witnessed a dramatic increase in domestic manufacturing to address the risk of dependency on an international supply chain. And as the CGT industry continues to expand, these efforts will become increasingly critical.

The way therapies are manufactured and distributed will evolve, as well. For example, the future may see a more globalized approach to outsourcing as companies look to tap into international expertise and resources.  An implication of this trend includes a more competitive market, as companies source the best manufacturing and distribution partners worldwide. Another benefit of this evolution would be to increase the availability of therapies to patients globally.

The industry will also see increased specialization in the CDMO market. The developing, manufacturing, and scaling-up of these therapies is an especially arduous process requiring deep expertise. As a result, companies looking to outsource CGT manufacturing will increasingly look for partners with specific specialization and experience in gene editing, viral vector development, process development and characterization, analytics, GMP manufacturing, and strong familiarity with regulatory and compliance guidance.

As the CGT industry matures, CDMO outsourcing is expected to increase dramatically, playing an even more critical role in advanced therapy production. In addition, the IP landscape and quality control standards will become clearer as regulations are better defined, resulting in an even higher degree of expertise and level of capabilities offered in the outsourcing service provider marketplace. 

References
1. https://milkeninstitute.org/report/cell-gene-therapies-2022
2. https://asgct.org/global/documents/asgct_citeline-q4-2022-report_final

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Heather White is a director of strategic partnerships at the Center for Breakthrough Medicines. In this role, she liaises with large pharma and biotech on a global scale to maintain a coordinated, holistic approach to business. Heather entered the cell and gene therapy space just shy of 1 year ago. Prior to CGT, she spent 9 years in the iPSC technology space. Here she worked with regenerative medicine companies, large pharma and biotech, and cell therapy companies to develop human cells to build organoids, for R&D purposes, and for developing cell therapies in the immunology space.