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Will CMOs Provide Sufficient Capacity for Growing Biologics Demand?
The overall pharmaceutical market is shifting its focus from small molecule drugs to biologic compounds. At the same time, the patents on several existing biotherapeutics are likely to expire over the next five years. These two factors are contributing to greater demand for contract manufacturing services in the biopharmaceutical sector at a time when a gap already exists between available and needed capacity, according to Aiswariya Chidambaram, senior research analyst for life-sciences with market research firm Frost & Sullivan.
“While companies are making investments to increase capacity, it is very difficult to predict exactly how much capacity will be needed in the future. Biopharmaceutical manufacturers need to closely monitor the situation and establish strategic relationships with the contract manufacturing organizations (CMOs) that meet their performance requirements and have the expertise and capacity they expect to require,” Chidambaram notes.
Key changes in the biopharma market
Be aware of challenges facing CMOs
Complying with complex regulatory requirements is another key challenge faced by CMOs and also a driver for their use by biopharmaceutical companies. There are a wide range of product types, and many times the regulatory requirements are different. In addition, CMOs are trying to grapple with the uncertainties in the regulatory framework for biosimilars. While the European Union has made significant progress, the United States falls slightly behind, and it is still unclear what the approval process will ultimately entail, according to Chidambaram.
Further down the road, biopharmaceutical CMOs, which are currently largely located in the EU and the US, will face new competition from CMOs in emerging markets, most notably India. “At this point, CMOs in these emerging markets have yet to develop the technical expertise for most biopharmaceutical processes, but they are making advances and are preparing to enter the biosimilars marketplace in the future,” Chidambaram explains.
Quality must remain top selection criteria
Alliances/consolidation to be expected
First, larger CMOs are acquiring smaller CMOs that have complementary technical expertise, target a new end user segment, and/or serve a specific geographic market. They are also in some cases acquiring manufacturing sites from biopharmaceutical firms as a way to rapidly increase capacity. Second, large biopharmaceutical companies are acquiring CMOs to ensure access to capacity, particularly in emerging markets, where it is difficult to gain entry for international companies. Third, because the biopharmaceutical industry is a high-technology sector, CMOs are forming alliances with technology providers in order to be able to provide the services required for the large number of new products that are coming to market that are based on newer technologies. Finally, venture capital firms have taken an interest in the biopharmaceutical manufacturers and CMOs, and are investing in/acquiring companies with products in late stage clinical trials with a likelihood of being commercialized. Such investment is helping to fund capacity expansions and addition of the latest technological capabilities for these CMOs.
Demand growing for integrated CMOs
CMOs that have invested in advanced upstream and downstream technologies and achieved reduced quality variability and increased productivity will be of particular interest to biopharmaceutical firms. Those that have implemented single-use manufacturing systems, which enable significant cost reductions, particularly in multi-product manufacturing settings, will also be in high demand. CMOs with advanced lyophilization capabilities and those that have implemented process analytical technology can expect greater interest from biopharmaceutical customers as well, according to Chidambaram. She adds that strong growth for injectable formulations over the next five years will drive further demand for CMOs that can provide support for the production of prefilled syringes. As importantly, Chidambaram says, is the growth of the mammalian contract manufacturing segment, which is expected to witness significant investments and capacity expansions of as much as 60% in the medium-to-long term, propelled by the high success and growth rates of complex, glycosylated monoclonal antibodies, and recombinant proteins.