Sidebar 3: An emerging model: manufacturing-capacity sharing arrangements
Achieving a good return on assets through manufacturing-capacity utilization is an ongoing challenge for biopharmaceutical/pharmaceutical
companies. Pharmaceutical companies need manufacturing capacity on hand to produce commercial products and also to launch
new products as they come through their drug-development pipelines. The inherent uncertainty of drug development, however,
makes it difficult to balance the need for timely access to manufacturing capacity with the interest of avoiding underutilizing
capacity and a resulting reduction on a return on assets. One strategy taken by some companies has been to enter manufacturing
capacity-sharing agreements, which allows one partner to monetize underutilized capacity and another partner to secure access
to manufacturing capacity.
In December 2012, Biogen Idec and Eisai formed such a strategic alliance to strengthen the manufacturing capabilities of both
companies' facilities in Research Triangle Park (RTP), North Carolina. Under the terms of the agreement, Biogen Idec will
lease a portion of the Eisai facility to manufacture oral solid dose products for both companies. Eisai will provide Biogen
Idec with vial-filling services for biologic therapies and packaging services for oral solid-dose products. The 10-year lease
agreement gives Biogen Idec the option to purchase the Eisai oral solid-dose facility.
Approximately 50 Eisai personnel are expected to become Biogen Idec employees in early 2013, building on the company's RTP
workforce, which exceeded 1000 in 2012. Eisai currently employs approximately 225 full-time employees at its RTP site. Biogen
Idec and Eisai have both operated manufacturing facilities in RTP since the mid-1990s.
Merck & Co. and MedImmune, the biologics arm of AstraZeneca, also have a capacity-sharing arrangement in biologics, an arrangement
the companies formed in September 2011. The relationship emerged to address underutilized capacity on behalf of MedImmune
and a need for Merck to secure biologics capacity for its biologics program.
In 2007, AstraZeneca completed the acquisition of MedImmune, which became the biologics arm of AstraZeneca, incorporating
the MedImmune assets, legacy AstraZeneca biologics assets, and Cambridge Antibody Technology, which AstraZeneca had acquired
in 2006. A key manufacturing asset for MedImmune, which is headquartered in Gaithersburg, Maryland, is the company's large-scale
monoclonal antibody (mAb) manufacturing facility in Frederick, Maryland. Prior to its acquisition by AstraZeneca in 2005,
MedImmune committed to support 500 kg of production per year through the addition of two 15,000-L bioreactors, which would
replace an original 2 x 2500 L plant. The additional capacity was intended to meet the mid-range product demand of MedImmune
In acquiring MedImmune in 2007, AstraZeneca further authorized an additional 500 kg of capacity to include a total of four
15,000-L bioreactor trains at the new Frederick facility. When the MedImmune product for which the initial capacity was intended
did not proceed through clinical development, MedImmune realized that existing products would not fill the site. The combination
of a pipeline-delivery gap and the subsequent improvement in titers or grams-per-liter yields required an alternative solution
to fill capacity (1). The companies formed a 15-year manufacturing capacity-sharing agreement in September 2011 with Merck
utilizing MedImmune's Frederick, Maryland facility for Merck bulk-product manufacturing. The companies also are exploring
the suitability of Merck's facilities in the production of microbial-based compounds in MedImmune's pipeline and other potential
manufacturing opportunities where business strategies intersect.
1. P. Van Arnum, "Outsourcing Resources supplement to Pharm. Technol. 36 (8), s28–s32 (2012).