The Biologics Price Competition and  Innovation Act of 2009 (BPCI Act) was signed into law in the US on Mar. 23,  2010. The BPCI Act created a new pathway for FDA to approve biological products  shown to be “biosimilar” to an innovator biological product (called a  “reference product” in the BPC Act). The article provides an overview of this new  regulatory pathway and also compares it to its European counterpart. The  overview focuses on issues and questions raised by the BPCI Act, particularly  those that FDA will have to resolve in implementing the BPCI Act. This key  issues focus on three main areas: the definition of a biosimilar product, the  timeframe for when a manufacturer can seek approval of such a product, and  additional requirements for marketing a biosimilar. 


 To be a “biosimilar” product, a  product first needs to be a “biological product.” The BPCI Act defines a “biological product” to be, among other things, “a virus, therapeutic serum,  …  protein (except any chemically synthesized polypeptide) or analogous product.….” Of great interest here is what constitutes a “protein” as well as what  constitutes an “analogous product.” By “except[ing]” any chemically synthesized  polypeptide from the definition of a “protein,” Congress probably only intends for the BPCI Act to  contrast recombinant expression (e.g.,

 a biological system, such as cell culture) and chemical synthesis (e.g., 

 a machine). In other words,  regardless of whether there is a distinction between a protein and polypeptide,  the BPCI Act means to cover recombinantly expressed proteins or polypeptides (instead  of chemically synthesized ones). FDA itself, however, suggests that a polypeptide  is distinguishable from a protein and that the BPCI Act only covers proteins; it  is seeking public comment on  “develop[ing] a regulatory definition … of [a] protein (as distinguished from a peptide or a polypeptide)” (1). 

In other words, according to FDA,  at least some polypeptides are not “proteins” as the term is used in the BPCI  Act. Thus, under FDA’s interpretation, these non-protein polypeptides are not  supposed to be covered by the BPCI Act. Such interpretation begs the question of what statute, if any, would cover these non-protein polypeptides. We  suggest that, presumably, the Food, Drug and Cosmetic Act (FD&C Act) would cover these non-protein peptides (if marketed for human or animal consumption)  because of the FD&C Act’s expansive definition of a “drug” as “articles  intended for use in the diagnosis, cure, mitigation, treatment, or prevention  of disease in man or other animals … and … articles (other than food) intended  to affect the structure or any function of the body of man or other animals”  (2). 
 
 For a “biological product” to be  “biosimilar,” the BPCI Act requires that the biological product be “highly  similar to the reference product, notwithstanding minor differences in clinically inactive components”(3). It also requires that there be “no clinically meaningful  differences between the biological product and the reference product in terms  of the safety, purity, and potency of the product”(4). Of interest here is that  the BPCI Act seems to place great emphasis on clinical similarity rather than  biological or structural similarity. Under this definition of “biosimilar,” it  is conceivable that a protein with a primary sequence somewhat different from  that of the reference product may nonetheless qualify as “highly similar” due  to its clinical similarity with the reference product. Recognizing that the BPCI  Act implicitly allows some structure differences, FDA is seeking public comment  on what range of structure differences between a proposed biosimilar product  and the reference product is consistent with the BPCI Act’s “highly similar”  standard (1).

Regarding how to demonstrate the  high similarity, the BPCI Act does not provide much detail other than generally  pointing to data from “analytical studies,” “animal studies,” and “clinical  studies.” FDA, therefore, is seeking public comment on what scientific and  technical factors it should consider in determining whether the biological  product is highly similar to the reference product. 

In addition to the “biosimilar”  standard, the BPCI Act also provides a parallel, optional “interchangeability”  pathway under which an applicant can prove that the biosimilar product is  “interchangeable” with the reference product. A biological product meets the  “interchangeable” standard if it “may be substituted for the reference product  [by a pharmacist] without the intervention of the healthcare provider who  prescribed the reference product.” We suspect that, compared with the  “biosimilar” provision, the “interchangeable” provision may not be used much by  applicants.  Despite being parallel to  biosimilarity, interchangeability encompasses biosimilarity, but often  constitutes a higher standard and, therefore, may require a much greater  showing to FDA.  If one can meet the  higher “interchangeability” standard, however, the BPCI Act affords the first  interchangeable biosimilar product a period of market exclusivity that expires  on the earlier of the following: 
 • One year after first commercial  marketing of the interchangeable product
 • 18 months after the resolution of  patent litigation 
 • 42 months after initial approval  of the interchangeable product if patent-infringement litigation is ongoing or 
 • 18 months after approval of the  first interchangeable biosimilar if that applicant has not been sued.


Crucial questions are how to  determine whether a follow-on product is “biosimilar” to the reference product  and the degree of clinical trials needed to prove “biosimilarity.” Regarding how  similar is “biosimilar,” the BPCI Act did not provide much detail other than  mandating that there has to be “no clinically meaningful differences between  the [follow-on] … product and the reference product in terms of the safety,  purity, and potency”(5).To implement the BPCI Act, FDA faces the question of  what to require from the follow-on sponsors to prove that there are “no  clinically meaningful differences” (1). To gather opinions from various  stakeholders, FDA recently held a public hearing seeking suggestions on this  issue along with other implementation issues (6).

Different stakeholders disagree to  a great extent on how much clinical testing FDA should require to approve the  follow-on product. At one end of the spectrum, the reference-product sponsors (i.e.,“innovators”)  urge FDA to require extensive clinical trials on all indications sought by the  follow-on sponsors because “clinically meaningful differences” are often hard  to predict from analytical data alone without well-designed clinical trials. At  the other end of the spectrum, the follow-on sponsors urge FDA to use  discretion in deciding whether clinical trials are necessary. In other words,  the follow-on sponsors would like FDA to tailor the requirements according to the  complexity of the product. According to the follow-on sponsors, at least in  some cases, FDA should not require any clinical trial at all. 

Not surprisingly, FDA is evaluating  where there is a middle ground. As recognized by FDA, requiring too many clinical trials (e.g., by universally requiring separate trials for each  indication or by always requiring clinically validated surrogate endpoints (a surrogate  endpoint is a measure of effect of a certain treatment  that may correlate with a real clinical  endpoint but doesn't necessarily have a guaranteed relationship) may essentially close the door for follow-on products and thereby frustrate the  very purpose of the BPCI Act, which is to provide an abbreviated approval pathway to encourage follow-on products to improve affordability of  the often expensive biological drugs for consumers. Highlighting the problem of requiring too  many clinical trials to prove “biosimilarity”, some follow-on sponsors (e.g.,  Teva and Sandoz) have decided that, at least initially, they will bypass the  BPCI Act to rely on the full-length, regular approval pathway (i.e., which the  innovator relies on) to seek approval for their follow-on products. On the  other hand, however, requiring too few clinical trials may prevent FDA from  fully identifying the differences between the follow-on product and reference  product, thereby raising safety and efficacy concerns. Because of the problems resulting from requiring either too many or too few clinical trials, several  middle-ground approaches were proposed during the hearing as outlined below.

Allow follow-on sponsors to extrapolate  clinical-trial data from one indication to another, thereby removing the burden  on follow-on sponsors to run clinical trials for all indications

 On this point, the follow-on sponsors  urge FDA to allow extrapolation at least when two indications are based on the  same mechanism of action. The innovators warn, however, that at least for  complex biologics, such as monoclonal antibodies, a clinical trial is needed  for each indication.

 Only require pharmacokinetics (PK) and pharmacodynamics (PD) studies for premarketing approval of follow-on products and allow  immunogenicity testing to be conducted in postmarketing studies

 On this point, the follow-on sponsors essentially ask FDA to rely on PK/PD studies to determine biosimilarity while waiting for postmarketing immunogenicity and other data to determine  interchangeability. The innovators, on the other hand, caution that it is  often hard to predict clinical outcomes from analytical studies, such as PK/PD  studies. For example, Amgen noted that half of the biosimilars developed in  Europe have had unexpected clinical outcomes (7).

. Allow follow-on sponsors to use  data from non-US licensed products

 On  this point, the follow-on sponsors urge FDA to allow them to rely on non-US  licensed products to avoid duplicative clinical trials. The innovators argue,  however, that the nontransitive property of “biosimilarity” means that, even  if a follow-on product is biosimilar to the non-US licensed product and the  non-US licensed product is biosimilar to the US reference product, it does not  necessarily follow that the follow-on product is biosimilar to the US reference  product.

 Allow follow-on sponsors  to buy access to the innovators’ clinical-trial data to use in their  applications for biosimilar approval. This idea originally came from a bill  sponsored by Senator Bernard Sanders (I-VT). Although the bill is unlikely to  become law, it likely will influence FDA in devising a mechanism by which the  follow-on sponsors, by sharing some R&D cost with the innovators, avoid the  cost of running extensive clinical trials. The bill proposes that the fee  either be negotiated by the parties along five criteria or be set through  arbitration (8). The five criteria are as follows: 
 • The actual out-of-pocket costs of  the applicable clinical investigations
 • The risks of the investigations,  as reflected in the probabilities that similar investigations result in  successful applications for marketing
 • Any federal grants, tax credits,  or other subsidies that reduce the net cost of the investigations 
• the  expected share of the global market for the product involved, by the party  seeking to rely upon the investigations for marketing approval
 • The amount of the time the holder  or holders of the relevant applications or licenses has benefited from  exclusive rights, and the cumulative revenue earned on the products that relied  upon the regulatory test data at issue (8).


 In addition to deciding how much  data is required to prove “biosimilarity”, FDA must also decide how much  drifting can be tolerated. 

 refers to a phenomenon unique to biological drugs. Unlike small-molecule drugs,  biological drugs have a complex structure that is highly dependent on a specific  manufacturing process. Although exact copies of a small-molecule drug can be  made at different manufacturing plants or even by different manufacturing  process, making exact copies of biological drugs is almost impossible. Each  manufacturing process update (e.g., implementing new technologies) can lead to  slight changes; this is the phenomenon known as drifting.

Because manufacturing process  update (i.e., drifting) can lead to improved efficiency and better consumer  affordability, arguments have been made that FDA should not restrict drifting.  But because drifting can also lead to unexpected changes in patient response  and thereby cause safety (or even efficacy) concerns, some rules have to be  set by FDA regarding how drifting is measured and how much drifting is allowed. 

Because drifting is common to both  the reference products and the follow-on products, follow-on sponsors argue  that the rules set by FDA regarding drifting should apply in parallel to both  the reference product and the follow-on product. In other words, follow-on  products should not be treated any differently from the reference product. The  innovators, on the other hand, are concerned that both the reference product  and the follow-on biosimilar could change over time. The innovators imply that  FDA should allow more room for the reference product to drift while restricting  the extent that a follow-on product can drift. 

In addition to the rules on how  much drifting can be tolerated, FDA must also decide how a follow-on product is  referenced against a reference product as the reference product drifts. In  other words, should the follow-on product be referenced against the drifted  reference product or the original reference product at the time of FDA  approval? If the latter is chosen, the follow-on product may end up based on a  reference product that no longer exist (i.e., because it is no longer made by  the innovator). On the other hand, requiring that the follow-on product be  referenced against the drifted reference product would put extra burden on the  follow-on sponsors to “drift” along with the innovator. 


 A crucial question is when a manufacturer can apply for the approval of a biosimilar product. Significantly, the  BPCI Act grants a 12-year exclusivity period to an innovator reference product.  It provides that a biosimilar application “may not be made effective by the  [FDA] until the date that is 12 years after the date on which the reference product  was first licensed” (9). Thus, presumably, a manufacturer can submit a  biosimilar application before the 12-year anniversary date (i.e., “critical  date”), but FDA cannot approve the application before the critical date. Thus,  an innovator gets 12 years of exclusive marketing rights for its approved  biologic before any biosimilar manufacturer can obtain approval from FDA. The  12-year exclusivity may be extended for six more months for pediatric innovator  product (1). It is unclear, however, whether FDA will start reviewing the  application before the critical date and then promptly approve the application  on the critical date or it will only start reviewing after the critical date.  If FDA only starts reviewing after the critical date, an innovator gets further  exclusivity period in addition to the 12 years while a biosimilar manufacturer  waits for FDA approval.

There are some exceptions to the  12-year exclusivity rule, however. The exclusivity does not apply to: 
 • “A supplement for a biological  product that is the reference product or ” 
 • “A subsequent application filed  by “the same … manufacturer or a licensor” of the reference product or a  “predecessor in interest, or other related entity” for (I) a change … that  results in a new indication, route of administration, dosing schedule, dosage  form, delivery system, delivery device, or strength; or (II) a modification to  the structure of the biological product that does not result in a change in  safety, purity, or potency.” 

The BPCI Act does not define what  “other related entity” fit within the exception. Recognizing today’s complex  corporate and business relationships, FDA is seeking public comment on what  types of related business entities may be deemed ineligible for a second  12-year exclusivity period (1).

Furthermore, in saying that the  exception covers “a modification to the structure … that does not result in a  change in safety, purity …,” the BPCI Act implies that a modification resulting  in a change in safety, purity, or potency would qualify for a second 12-year  exclusivity period. FDA is seeking public comment on what factors it should  consider in determining whether a modification results in a change in safety,  purity, or potency such that a second 12-year exclusivity period is warranted  (1).
 

Other requirements for marketing approval


 In addition to approval, what else  needs to be done in order to market the product? In addition to seeking FDA  approval by supplying data from “analytical,” “animal,” and “clinical” studies  to demonstrate biosimilarity, the filing of a biosimilar application also may  trigger a complex patent-dispute procedure between the biosimilar applicant and  the reference-product innovator. The patent-dispute procedure is modeled in  some aspects after the patent dispute procedure in the Hatch–Waxman Act of  1984, but has notable differences. For  example, one major difference is the lack of an 

 listing of  patents in the biosimilar context. Another difference is that while under the  Hatch–Waxman Act, FDA must stay its approval for 30 months or until relevant  patent litigation concludes, under the BPCI Act, no 30-month stay exists. In  other words, FDA can approve a biosimilar product before relevant patent  litigation concludes. Therefore, upon FDA approval, a biosimilar applicant  under the BPCI Act can market a biosimilar product at the risk of ultimately  paying patent-infringement damages if it ends up losing the litigation.

US regulatory biosimilar pathway versus European counterpart


 Like the US, the  European Union also recognizes the “complexity of  biological/biotechnology-derived products.” Therefore, the European Medicines  Agency (EMA), the equivalent of FDA, implemented a biosimilar-specific  regulatory pathway separated from the generic-drug regulatory scheme. There are  two main existing differences and a third potential difference between the US  and the European biosimilar regulatory pathways: duration of exclusivity,  biosimilarity standard, and pharmacovigilance requirements. 

While the US provides a 12-year exclusivity  for an innovator- biological product and five-year exclusivity for an innovator-chemical  drug, the EU provides a 10-year exclusivity for both biological products and  chemical drugs. 

. As previously discussed, the US universally  defines biosimilarity as “highly similar … notwithstanding minor differences in  clinically inactive components; and … there are no clinically meaningful  differences … in terms of the safety, purity, and potency.” The EMA, however, has  said that “the differences between the similar biological … product and the  reference (innovator) … product…will have to be justified [by the biosimilar  applicant] by appropriate studies on a case-by-case basis.”  Ultimately, however, FDA may likewise make  its assessments on a case-by-case basis.  

A third potential difference between the US and the EU is the  pharmacovigilance requirements on biosimilar products. 

 is the science  of detecting, assessing, and preventing long- and short-term adverse side  effects of medicine. In addition to monitoring a drug’s adverse side effects  during clinical trials to obtain FDA approval, a drug manufacturer is often  required to monitor the drug’s adverse side effects after it markets the drug  to the consumer. While FDA is still  seeking comment and has not published any rules regarding such requirements,  EMA has decided to require biosimilar products to undergo the same  postmarketing monitoring procedures as the innovator reference product. In  this regard, the EMA requires that the “clinical safety of similar biological  medicinal products must be monitored closely on an ongoing basis during the  postapproval phase including continued benefit-risk assessment” (10). 


 Implementation of the BPCI Act is just  beginning. There are complex scientific and intellectual property issues that  companies will face before we see biosimilar products being approved by FDA.  While challenges certainly exist, the public and the biologic and  pharmaceutical industry look forward to potential cost savings and growth  opportunities in this area.  

 is cochair of the life-science industry team and head  of the FDA practice group, tel. 202.672.5430, drosen@foley.com and 

 is an associate in the chemical biotechnology and pharmaceutical intellectual  property practice, tel. 202.295.4774, llian@foley.com, both at the law firm of Foley & Lardner.


 1. FDA, “Approval  Pathway for Biosimilar and Interchangeable Biological Products; Public Hearing;  Request for Comments,” 

 (192), 61497–61501 (Oct. 5, 2010). 
 2. Food, Drug and  Cosmetic Act, Sec. 201(g)(1).
 3. US Code, Title 42, 

Licensing of Biological Products and Clinical  Laboratories

Licensing of Biological Products  and Clinical Laboratories

Licensing of Biological Products and  Clinical Laboratories

Approval  Pathway for Biosimilar and Interchangeable Biological Products Public Meeting,

 Public Hearing, Silver Spring, MD, Nov. 2–3, 2010. www.fda.gov/Drugs/NewsEvents/ucm221688.htm,  accessed Feb. 25, 2011. 
 7.  “Amgen to Provide Testimony at FDA Hearing on  Biosimilars,” Kerentech, Nov.2, 2010. www.kerentech.com/?p=5107, accessed  Feb.25, 2011.
 8. S. 3921.IS, 

, 111th  Congress (2009–2010), Washington DC, http://thomas.loc.gov/cgi-bin/query/z?c111:S.3921:,  accessed Feb.25, 2011.
 9. US Code, Title 42, 

Licensing  of Biological Products and Clinical Laboratories

Guideline on Similar Biological Medicinal  Products Containing Biotechnology-Derived Proteins as Active Substance:  Non-Clinical and Clinical Issues

, EMA Committee For Medicinal Products for  Human Use (Feb.22, 2006).

Articles

Biologics

The authors outline the key decision points FDA must consider in putting forth a US regulatory pathway for biosimilars.

The US Biosimilar Regulatory Scheme and Comparison with the European Experience: Where Do Where Go From Here?

SELECT (Sustainability, Eco-Labeling and Environmental  Certification Tracking) Eco-Label Manager

, a database created to  strategically manage eco-labels, environmental claims, directories and ratings  systems by allowing the user to search, analyze, and compare these programs in  a structured and consistent format. The tool is designed to help users to  understand and manage classifications issued by the federal government, large  retailers, trade associations, and third-patry organizations relating to  environmental classifcations. Currently, the tool includes 100 programs for  review, primarily associated with North America, but is continuing to add  programs from all regions globally. Examples include Built GreenCanada, a  residential construction checklist and energy-rating system; US Green Building Council LEED programs; and the Green Guides, a set of guidelines established by the US Federal Trade Commission to help manufacturers make clear and substantiated marketing  claims.  

 St.  Charles Operations  in Louisiana announced a three-year sponsorship of the Audubon  Nature Institute's Whooping Crane Recovery Program, which plans to restore the  endangered whooping crane to its native Louisiana environment. Based on  Audubon's Mississippi Sandhill Crane breeding program, the program will rely on  natural breeding and assisted reproductive technologies to restore the native  species to the Gulf region. The program will establish a nonmigratory  flock at White Lake in Vermillion Parish, marking the first time the species  has lived in Louisiana since the 1930s. Additionally, Audubon Nature Institute  will sustain a captive population of 135 birds. The program will include animal care and husbandry, collaboration with international agencies, and laboratory  research.

, whose mission is to assure help for the  world's most vulnerable people, has selected the humanitarian-relief organizations 

 to join its alliance of internationally focused charities. Global Impact has  raised more than $1.3 billion for relief and development programs since it was  founded in 1956. Global Impact raises funds for international relief and  development charities. Each Global Impact member is evaluated before being  invited to join. Partners In Health works in 12 countries around the world to  provide quality healthcare to people and communities devastated by joint  burdens of poverty and disease. Partners In Health is focused on three goals:  to care for patients, to alleviate the root causes of disease in patients' communities, and to share lessons learned around the world. Millennium  Promise is a nonprofit organization that supports achieving the UN  Millennium Development Goals to halve extreme poverty by 2015. Millennium  Promise oversees the Millennium Villages project, which supports integrated  social and business development services for more than 500,000 people in rural  communities across 10 countries in sub-Saharan Africa.

 (GSK)  has received the 2010 Environmental Stewardship Award from the  industrial-services company 

in  recognition of GSK's ongoing efforts to reduce its climate-change impact and  energy and water use. The Environmental Stewardship Award recognizes  exceptional performance in achieving sustainability objectives and financial  goals. In 2006, GSK set targets to reduce its water consumption by 2% per year  by 2010. By 2009, water consumption had been decreased 15%. In addition, in 2007 GSK launched a climate  change program for its operations, setting targets to reduce energy use by 45%  per unit of sales by 2015, using 2006 figures as a benchmark. The annual  environmental return on investment that GSK has achieved from using  Nalco's sustainable solutions includes: more than 325,000 cubic meters (85.8  million gallons) of water savings; 4.1 million kWh of energy savings; and 2000 metric tons of carbon-dioxide reduction.  The award selection committee included Nalco representatives and input from the 

 (P&G)  will seek LEED certification for all new sites. P&G's Taicang plant in China, which broke ground in February 2011, is the first P&G manufacturing site to  pursue LEED certification, with several additional new P&G sites currently  working toward the same distinction globally. Established by the US Green  Building Council, LEED is a program for the design, construction, and  operation of high-performance green buildings. All new P&G sites,  including those in the US, which are currently in design phase or early  construction, are working toward achieving LEED certification. In countries  where equivalent programs are available, P&G is also committing to meet all  local certification standards.

 also was recognized by the  humanitarin-relief organization 

 in  Rwanda for delivering clean water. The program recently marked its three billionth  liter of clean drinking water in the developing world. Recently, World Vision  and P&G brought PUR packets to remote villages in southern Rwanda. In the  village of Mirama, Claudine and Simon Ngendahimana, a family of subsistence  farmers, were among those who received the PUR packets that marked the three  billionth liter milestone. World Vision has partnered with P&G around the  world, including in Zimbabwe, Afghanistan, Cambodia, Kenya, and Haiti. Most  recently, in response to the 2010 Pakistan flood, P&G provided 1.1 million  PUR packets that World Vision distributed in the most severely affected flood  regions. World Vision estimates that more than 2.7 billion people live without  access to safe water. World Vision works s to meet water and  sanitation needs in developing communities. The humanitarian organization  responds to urgent water needs through P&G PUR packets and also digs wells  and boreholes to sustain communities long term. 

, a cross-functional coalition of representatives from industry, academia, government and nongovernmental organizations (NGOs), will be held March 22 and 23 at Drexel University in Philadelphia. SustaiNext is a two-year initiative  supported by the Sustainability Collaborative that was launched in December  2010 at Rutgers University. The goal of SustaiNext is to stimulate regional  partnering to help organizations, companies, and individuals to integrate  sustainability principles while realizing economic growth. Participants in the Sustainability Collaborative network include representatives  from business, which include companies, such as representatives from Johnson & Johnson, Merck & Co., Eli Lilly,  Amgen, Wal-Mart, Kimberly Clark, Microsoft, DuPont, PepsiCo., 7th Generation,  Lockheed Martin, Saatchi & Saatchi, and Terra Cycle. Participants in  the Sustainability Collaborative network from academia include representatives from Drexel, Yale, Philadelphia  University, Catholic University of America, Bard College, Penn State,  University of Florida, Rutgers University, University of Maryland and Ohio  State University. Participants in the Sustainability Collaborative  network from NGOs include representatives from the  Environmental Defense Fund, National Science Foundation, Environmental Working  Group, Beyond Benign, Second Nature,  AASHE, and the Ecology Society of  America.
Information about Sustainability  Collaborative and the SustaiNext Summit on March 22–23 can be found 

In early February 2011, John  Ruggie, Special Representative of the United  Nations Secretary-General for Business and Human Tights, concluded the  consultation period on the draft guiding principles for the Implementation of  the 

UN Protect, Respect and Remedy  Framework

. The guiding principles provide practical advice to governments,  companies, and other stakeholders on how better to protect individuals and  communities from the adverse human-rights impacts of business activities. Ruggie  will finalize his recommendations and submit them to the Human Rights Council  for consideration at its June 2011 session.The special representative received  feedback on the draft guiding principles from Nov. 22, 2010, to Jan. 31, 2011. Submissions  came from governments, individual companies, business associations, civil  society, investors, academics, international organizations, law firms, and  interested individuals. In January, Ruggie also received feedback from  governments in an informal session with the Human Rights Council in Geneva.

The special representative's  mandate was created in 2005 to move beyond what had been a divisive doctrinal  debate over the human-rights responsibilities of companies, according to a UN  press release. Ruggie's goal was to build shared understanding and  consensus among stakeholders by holding consultations around the world and by  conducting extensive research. Out of that process came the Protect,  Respect and Remedy; Framework, which was unanimously welcomed by the Human  Rights Council in 2008. The council  asked Ruggie to continue working in  the same manner to operationalize the framework. The guiding principles were  developed in response to that request.

 The Green Chamber of San Diego  County became a national organization, 

, to provide education, advocacy, and visibility for businesses  to grow through environmentally and socially responsible practices. Plans are  underway for US Green Chamber programs in education, advocacy, and member  networking. A membership directory, calendar of national events, and  distance-based learning through webinars are among the tools the organization  would like to make available to its members. Information about the US Green  Chamber may be found 

CSR and Sustainability Forum

A roundup of developments in corporate social responsibility and sustainability from the bio/pharmaceutical industry, its suppliers, and other public and private organizations.

Private–public partnerships are important vehicles in global-health initiatives. These partnerships can combine financial, educational, and knowledge-based resources from governmental, public, and private entities in the developed world with local governments and organizations in the developing world to address specific health concerns. Treatment and prevention of HIV/AIDS in Africa represent  areas of ongoing concern in global public-health efforts. Bristol-Myers Squibb announced a recent project in Tanzania as part of its focus of combating HIV/AIDS in Africa. 

In February 2011, Bristol-Myers Squibb, through the Bristol-Myers Squibb Foundation, and Baylor College of Medicine, Texas Children’s Hospital, opened the Baylor College of Medicine-Texas Children’s Hospital —Bristol-Myers Squibb Children’s Clinical Center of Excellence at the Bugando Medical Center, a 900-bed, tertiary referral hospital, in Tanzania. The family-centered pediatric HIV/AIDS care and treatment center seeks to tackle the problem of HIV/AIDS in that country. Approximately 1.4 million Tanzanians are infected with HIV/AIDS, including 13% of women aged 30–34 and more than 8% of newborns, according to information from Bristol-Myers Squibb. By 2013, the center is expected to care for at least 5000 children and their families affected by HIV. Additionally, the center will provide infrastructure for training current and future HIV/AIDS care providers. The center was established through a public–private partnership between the Baylor College of Medicine International Pediatrics AIDS Initiative (BIPAI) at Texas Children's Hospital, the Bristol-Myers Squibb Foundation, the United States Agency for International Development, and the government of Tanzania.

In collaboration with the government of Tanzania, the center will partner with the Bugando Medical College, Bugando Medical Center’s medical school, to expand its programs in pediatric global health and support curriculum development, mentoring, and pediatric residency rotations. "This Pediatric Center of Excellence represents an investment in sustainable development and another critical step in fulfilling the vision of the US and Tanzanian Partnership Framework for a coordinated HIV/AIDS response: providing health services today while building enduring health systems for tomorrow," said US Ambassador to Tanzania Alfonso Lenhardt in commenting on the new facility.

The Mwanza center will join BIPAI's existing network of Children's Clinical Centers of Excellence throughout eastern and Sub-Saharan Africa. "Ultimately, this will establish a network of pediatric HIV/AIDS care and treatment canvassing all three countries bordering Lake Victoria, a region with the highest HIV prevalence in east Africa," said Michael Mizwa, BIPAI chief operating officer and senior vice-president.

“The Bristol-Myers Squibb Foundation and Baylor College of Medicine share a common goal of improving the care and treatment of communities affected by HIV/AIDS in Africa, working together with local governments,” says John Damonti, president of the Bristol-Myers Squibb Foundation and vice-president of corporate philanthropy. “This new center builds on our longstanding strategy of forging public–private partnerships to effect lasting change at the community level for the benefit of HIV-infected and affected children and their families,” he said.

The Tanzanian Children’s Clinical Center of Excellence will join the existing network of children’s HIV/AIDS centers established by Bristol-Myers Squibb and Baylor College of Medicine, which are staffed in part by a funded corps of pediatricians from North America and which include a network of pediatric HIV/AIDS facilities. Existing centers of excellence operate in Botswana, Lesotho, Swaziland, and Uganda, including about 20 satellite clinics in Africa for treating HIV-positive children and their families. The final center, in Kisumu, Kenya, is scheduled to open in 2012. Bristol-Myers Squibb Foundation’s Secure the Future program is a $160-million initiative established in 1999 to help confront HIV/AIDS in Africa. The Secure the Future program has funded more than 240 projects in 20 African countries, integrating clinic-based medical care with community-based health education and supportive care, according to the company. 

Bristol-Myers Squibb opens a new pediatric HIV/AIDS clinic in Tanzania.

Bristol-Myers Squibb Moves Forward with HIV/AIDS Project in Africa

The market for pharmaceutical development continues to  evolve rapidly. One important change is the increasing prominence of drug  development for public sector, nonprofit, and developing-world markets. Not long  ago, pharmaceutical industry involvement with these sectors was limited to  certain government-sponsored vaccination programs, and donations of drugs and  vaccines to the developing world were done on essentially a charitable basis. For  the most part, these interactions did not significantly impact the business  model of commercial pharmaceutical companies, which was supported by developed  country (i.e., Western  Europe, US, and Japan)  focused sales of blockbuster drugs to high-margin commercial healthcare markets.

During the past decade, global attention to biodefense and  pandemic preparedness has given rise to major government-development programs,  such as Project Bioshield and the Biomedical Advanced Research and Development  Authority (BARDA) in the US. At the same time, nonprofit organizations, such as  the Bill and Melinda Gates Foundation, have become important sponsors of  drug-development programs, adding to an increased focus on affordable  treatments for widespread diseases of the developing world, including neglected  tropical diseases (NTDs), such as malaria and tuberculosis. The pursuit of  drugs for rare or orphan disease indications also has taken on a higher  profile.  

These markets are distinct in some ways, but they are similar in that they all challenge the profit margin that supported the development programs of major pharmaceutical companies in the past. The pervasive challenge of lower profitability potential is due to low sales prices or small volumes. Other challenges include complex payer arrangements and attendant “lumpy” revenue streams as well as poor long-term sales visibility with substantial political or policy risks. The unique circumstances faced by customers and end users often impose additional constraints, such as the need for a long shelf life, tolerance to poor refrigeration, or the ability to administer the product safely with a low level of medical oversight. In addition, technology transfer and intellectual property (IP) issues can be unusually challenging. These challenges are outlined in Table I.

 Comparison between traditional commercial and government, nonprofit, and developing-world markets.

High–medium (government)
 Low (developing world)

Low (government)
 Medium–high (developing world)
 Very high (traditional medicines    for developing world)

Interestingly, these drug-development challenges are  analogous in many ways to those faced by the biopharmaceutical industry as the  era of the blockbuster commercial drug comes to an end. Therefore, the  innovative approaches being explored in these difficult markets point the way  toward potential solutions for sustainable mainstream drug development in the  21st century. Some of the most important approaches include novel  research and development (R&D) models; partnering arrangements and merger  and acquisition strategies; new approaches to cofunding and  public–private partnerships; and IP and regulatory  strategies. The opportunity, however, is to build large-volume markets by  providing traditional high-margin medicines, such as diabetes, cardiovascular,  and lifestyle drugs, to the vast developing-country markets alongside NTDs,  biodefense drugs, and vaccines.   
 
 


The first step to profitably serving these markets involves  innovating further up the drug- development value chain. Simple donation or  distribution of the finished drug does not meet most requirements, and measures  focused on procurement, such as  pooled  purchasing, also are generally insufficient. The drug-development process  itself is, therefore, a key focus of innovation.  

New R&D models aim to dramatically reduce the cost of  the traditional vertically integrated drug-development process by broadly  leveraging investments and capabilities across multiple partners.  Product development partnerships (PPD) are alliances of development partners,  often brokered and contracted by a central development organization, which may  contribute only funding. The Bill and Melinda Gates Foundation is one of the  PDP model’s most visible champions, and it leverages the model for most of  their own development programs. As an aggressive outsourced R&D model, it  goes beyond the “virtual pharmaceutical company” concept by delegating many  coordination and program-management functions to outside partners. This  scenario allows the Gates Foundation to develop many classes of drugs in  parallel without intramural R&D capabilities of its own and enables  recruitment of low-cost partners, such as universities. However, successful  implementation requires careful standardization of end-to-end processes across  PDPs to ensure products are developed and transitioned effectively.

As an example, in 2001, the international nonprofit  organization PATH and the World Health Organization (WHO) used seed funding  from the Gates Foundation to establish a network of development partners,  including the Serum Institute of India Ltd. and international nonprofits, to  develop a meningococcal meningitis vaccine for sub-Saharan Africa. With this low-cost network of partners,  the Meningitis Vaccine Project was able to develop and license a vaccine in  only four to five years, at one-tenth the cost of a traditional vaccine-development program. The Drugs for Neglected Diseases Initiative (DNDi) is  taking a similar approach to development of treatments for trypanosomiasis,  Chagas disease, and other illnesses.

The use of consortia, especially for precompetitive  exploratory development, is a trend being adopted from other industries, such  as oil and gas, faced with high risks and daunting development costs.  Consortium-based leveraging of existing information for new purposes is a key  element of the R&D model of the Institute for OneWorld Health (iOWH).  Licensing data and teaming with other organizations has allowed iOWH to screen  pre-existing candidate libraries for efficacy against diarrheal diseases,  visceral leishmaniasis, and other indications endemic in poor countries.  GlaxoSmithKline (GSK) recently teamed with several bioinformatics and drug-discovery  institutes to share scientific data on 13,500 candidate molecules that could  lead to new malaria treatments. The advantages of this model for commercial  drug development are already being recognized in the form of initiatives, such  as the Pistoia Alliance, a consortium started by GSK, AstraZeneca, Pfizer, and  Novartis, and now involving several dozen organizations to develop standards to  facilitate the widespread sharing of precompetitive scientific data across the  pharmaceutical industry.

Some entities are even experimenting with a completely  open-source approach to drug development for low-profit markets, modeled on the  open-source development of free software such as Linux. In this ultra low-cost  approach, discrete development activities are parceled out among volunteers,  often working in academic or nonprofit laboratories. The Open Source Drug  Discovery (OSDD) consortium, funded by India’s Council for Scientific and  Industrial Research, is championing this approach with an initial focus on treatments  for tuberculosis.

These innovative R&D models can radically reduce  development costs and provide a magnified return on a limited available  investment. Because they depart from the traditional vertically integrated  development model, these models present significant management challenges,  particularly in ensuring consistent program coordination, and alignment with  effective end-to-end frameworks with well-administered, stage-gate  criteria.     


 For major pharmaceutical firms looking for cost reductions  and market access while remaining closer to traditional R&D models,  commercial joint ventures with emerging drug developers in the developing world  are an attractive option. Many of these partnerships evolved from earlier  relationships limited to in-country distribution or licensed manufacturing and  now encompass R&D as the developing-world firms continue to expand their  capabilities. Some are contract research–like deals, focused on the major  pharmaceutical company’s existing pipeline of Western-focused drugs with no  sharing of IP. A spate of deals in the past two to three years focuses on true  codevelopment of products for the developing world, highlighting the rising  status of the emerging partners in IP and product development (see Table II)

Table II. Examples of recent codevelopment joint ventures with developing-world firms.

Merck, Orchid Research    Laboratories (India)

Novavax, Cadila    Pharmaceuticals (India)

The same advantages accrue to acquisitions of developing  market firms. For example, sanofi-aventis acquired the Indian firm Shantha  Biotechnics in 2009 for $784 million. Shantha has developed and marketed  several recombinant vaccines and protein products. Similarly, in 2009, Novartis  acquired the Chinese vaccine developer Zhejiang Tianyuan Bio-Pharmaceutical  Ltd. for $125 million.


A major element common to biodefense drugs, orphan drugs,  and products for diseases of the developing world is the expanding role of  public–private partnerships. For instance, vaccines and therapeutics for  defense against biological, chemical, and radiological weapons are niche products  with challenging regulatory pathways. Therefore, government investment is  required to secure private pharmaceutical firm engagement in developing  products for this market. In the US, BARDA and its counterpart in the  Department of Defense, the Chemical and Biological Medical Systems program,  have expanded the role of the government well beyond that of its traditional  support of early-stage scientific research by investing approximately $1.5  billion during the past decade in direct support for advanced biopharmaceutical  R&D at private companies, in addition to more than $5 billion appropriated  for manufacturing and procurement through Project Bioshield. Recently, emphasis  is evolving from highly focused investments supporting individual drug candidates  toward dual-use platform technologies with both defense and commercial  applications. Major nonprofit public health sponsors, such as the Gates  Foundation, function similarly to governments in the role they play, pursuing  operating models reminiscent of public–private partnerships. Like government  sponsors, they offer the benefits of nondilutive capital and do not claim  patent rights.

Another new concept is the Advance Market Commitment (AMC),  an up-front contract to purchase a specific quantity of developmental drug  product at an agreed price, if certain criteria are satisfied. This greatly reduces risk for drug developers in these markets by ensuring sales revenue if a drug is successfully developed

The US government is expanding its biodefense focus on  partnering with firms in other regions, in the recognition that exotic diseases  endemic to the developing world can become health-security threats for the US.  By establishing relationships with biopharmaceutical firms in the developing  world, the US can obtain better access to new treatments against these  threats. Public support is equally important to the development of treatments  for rare or neglected diseases. In addition to long-running tax incentives  under the Orphan Drug Act, the US government is testing additional incentives.  One leading innovation, Priority Review Vouchers, offers a company that  develops such a drug-accelerated FDA review for a different commercial drug  candidate in its pipeline, thereby enabling a 4–12 month faster time to market  and potentially providing attractive financial benefits. 


 Whatever R&D model and business strategy is chosen,  firms developing products for these markets will need to contend with  challenging issues regarding regulatory pathways and IP. In the case of drug  products intended for the developing world, developers must choose which  regulatory regime to follow from choices that include FDA, European Medicines  Agency, WHO, and other country-specific national regulatory authorites. For instance, costs are high to obtain FDA approval for a  new drug, making alternative licensure attractive to achieve a low development  cost. However, this choice may preclude marketing the drug in the US. Because  of these tradeoffs, the choice of regulatory regime should closely align with  the business plan and market strategy for each product.  

IP issues regarding drug patents and generics play a central  role in the developing world. The issues were elevated by the WTO’s 2001 Doha  Declaration and the subsequent August 30 decision in 2003, which affirmed the  power of governments to issue compulsory licenses for generic versions of patented  drugs for urgent public health needs in the developing world. Brazil, Thailand,  and Canada have all invoked this power to date, either for domestic use or for  export to least-developed nations elsewhere that lack their own generic-drug  production capability. More widespread use has been forestalled by various  bilateral agreements from nations with leading pharmaceutical industries,  meaning that the IP landscape is complex and nonuniform.         

The  last step is to build truly sustainable public–private partnerships by creating  a regulatory infrastructure to nurture development of local capabilities. This  process allows for the flourishing of local R&D or manufacturers that have  a vested interest in getting their products out to the marketplace. A local, private  business has a long-term view in delivering the products and services needed  throughout the region, such as by hiring local skilled labor, which in turn  creates true sustainability.


 Pharmaceutical markets in the developing world, in  biodefense and public health, and for orphan diseases, offer special challenges  to firms. Business innovations are contributing greatly to progress. The  solutions in development point toward new business practices that can help  major drug companies navigate the increasing challenges in their own target  markets and build new ones globally. 

Chan Harjivan is a partner and heads the global public  health practice at the global management consulting PRTM, 

. George Dougherty is a manager in the global public practice at PRTM, 

This article is Part I of a three-part series on biopharmaceutical issues in public health, government, and developing-world markets. 

, which focused on manufacturing and access, appeared in the April 2011 issue of 

This article is Part I of a three-part series on biopharmaceutical issues in public health, government, and developing-world markets. Part 1 focuses on drug-development. Part II, which examines manufacturing, appeared in the April 2011 of Sourcing and Management. Part III, which analyzes distribution and administration,appeared in the May 2011 issue.

Drug Development for Government, Nonprofit, and Developing-World Markets

Several contract manufacturers and fine-chemical suppliers took the opportunity to announce capacity expansions and service expansions at Informex, the trade show of custom and batch manufacturers, held last month in Charlotte, North Carolina. Below is roundup of news from the show and following the show.

 reported on its new 240,000-square foot North American headquarters, built on 40 acres in Souderton, Pennsylvania, north of Philadelphia, which has full-service, integrated clinical packaging, drug supply-management, and technology solutions to the pharmaceutical and biotechnology industries. The facility complements existing facilities in the United Kingdom.

Almac also is expanding its biocatalysis business with a $4-million investment for discovering new biocatalytic platforms and for other research areas. These areas include hyperactivation of biocatalysts to reduce enzyme loadings, drivers for cofactor recycles, and resolving problems with equilibriums. Almac also added a dedicated late-stage customization suite to the company’s commercial facilities. The addition is designed to assist orphan drug and niche product launches in Europe.

received approval from the Italian Medicines Agency (AIFA) for its facility in Burlington, Massachusetts, to manufacture the commercial drug product octreotide for a customer in the European Union. This approval specifically applies to laboratories and manufacturing areas at the company's Burlington facility designed for the production of aseptic and lyophilized vials, affirming the facility's compliance with EU GMP standards. 

is investing in a new high-containment facility in Queenborough, United Kingdom. The facility is scheduled to be completed in May 2011. Aesica also is purchasing three manufacturing sites in Germany and Italy from the biopharmaceutical company UCB as announced in late 2010. Aesica is acquiring sites in Monheim and Zwickau, Germany, as well as UCB’s Pianezza, Italy site. The companies also formed a long-term supply agreement. 

 expanded its service portfolio and capacity for stability studies in compliance with latest guidelines from the International Conference on Harmonization. The company installed new stability chambers at its site in Hunzenshwil, Switzerland and now offers short-term, long-term, accelerated, intermediate, follow-up, and customized tests. 

 formed a biocatalysis collaboration with 

. Under the agreement, Codexis will supply biocatalysis screening products and services to DSP for use in selected undisclosed therapeutic products in its development pipeline. In January 2011, Codexis and 

, the custom-manufacturing organization of Royal DSM, formed an enzyme supply agreement. The agreement grants DSM rights to use Codexis’ custom biocatalysts and services and secures supply of Codexis enzymes for commercialization of pharmaceutical manufacturing routes developed by the InnoSyn route-scouting services of DSM. 

 is doubling the production capacity of its non-CGMP facilities in Dalian, China. The company expects the expansion to be completed in 2011 with further expansion by 2013. 

 recognized three companies, Zeon, Novomer, and DSM, for its second annual “Profiles in Sustainability” awards. Fifteen companies submitted projects for consideration by the judging panel, which consisted of representatives from the American Chemical Society’s Green Chemistry Institute, the Society of Chemical Manufacturers and Affiliates, Georgia Institute of Technology, and trade media. The entries were judged on the 12 principles of green chemistry, the commercial scale of the product and process, the uniqueness of the technology, and the magnitude of the product and process. Zeon won the product category for is submission of a high-performance ether solvent, cyclopentyl methyl ether. Novomer won the process category for catalyst technology for enabling the production of certain polymers with carbon dioxde from commodity petrochemical epoxides. DSM was recognized for its corporate commitment to sustainability as a business driver and in pharmaceutical research and development and manufacturing. 

 will be held Feb. 14 through Feb. 17, 2012 in New Orleans at the Morial Convention Center. 

 reported on the integration of the biocatalyst offerings from X-Zyme, which the company acquired in July 2010. Johnson Matthey has expanded the biocatalyst offerings into product and service offerings in its catalysis and chiral technologies business. The portfolio from X-Zyme includes enzymatic catalysts for scalable production of highly pure chiral amines and alcohols. The biocatalysts and related technology complement the chemocatalytic technology and related expertise of Johnson Matthey. 

, a supplier of manufacturing solutions to the life-science industry, and 

, a provider of chromatographic stationary phases for purification of active pharmaceutical ingredients (APIs), have expanded their global alliance to include the purification of taxanes, a class of anticancer compounds. The collaboration enables Novasep to develop, operate, or supply optimized large-scale chromatography processes for taxane-based APIs and intermediates. 

, a contract research and manufacturing organization, announced a new focus on short-term full-time equivalent (FTE) for customers who require custom organic synthesis projects. The PharmaCore Flex-FTE allows customers more flexibility in reaching their project goals through methods other than the provided demonstrated technical package. PharmaCore will provide a quotation based on estimated time, analytical requirements, process development, and other components. If the project goes quickly and is completed before the allotted time frame, the customer pays only for actual time. If changes in analytical requirements prove to require additional time and resources, the customer is consulted and makes the decision on whether or not to proceed. The company also offers long-term FTE projects. 

 reported on the completion of its expansion of its Jerusalem, Israel facility, which was completed in 2010. The additional capacity expands SAFC's contract manufacturing capabilities in large-molecule recombinant proteins and small-molecule active pharmaceutical ingredients (APIs) through fermentation, including high-potent APIs and secondary metabolites. The fermentation expansion focuses on niche fermentation of APIs and bulk drugs, producing secondary metabolites, cytotoxins and large-molecule proteins.

 a provider of active pharmaceutical ingredients (API) and contract research and manufacturing (CRAM) services, will provide commercial manufacturing services for the API vilazodone hydrochloride for the pharmaceutical company Clinical Data’s Viibryd. Viibryd is a new drug entity recently approved by FDA for the treatment of adults with major depressive disorder. 

Contract Manufacturing

Contract manufacturers and fine-chemical suppliers announce capacity expansions and service enhancements of Informex.

A Roundup of Informex

Outsourcing has increasingly become  synonymous with cost-cutting, even more so as the economic crunch has forced biopharmaceutical companies to evaluate virtually every budget line item. Despite improvements in the economy and corporate profitability, the preliminary data from BioPlan Associates 

8th Annual Report and Survey of Biopharmaceutical Manufacturing 

indicate that companies are continuing to focus on how to reduce costs (1). The shift in outsourcing of crucial functions may affect manufacturers' competitiveness in the long run. 

For 2011, the BioPlan study finds that 1 in 10 biopharmaceutical companies has outsourced jobs in both process development and in biomanufacturing to reduce costs (see Figure 1). This outsourcing occurred at nearly twice the rate of research and development (R&D) job migration (i.e., outsourced by biomanufacturers at a rate of 7.2% and 4.6% to domestic and offshore vendors, respectively). All of these activities are considered core strengths for biologics companies, and when such jobs are outsourced, they tend to stay outsourced as institutional knowledge as infrastructure and experience migrate.  

Figure 1: Percentage of respondents deciding to outsource select biomanufacturing functions due to cost-reduction efforts (1).			

Outsourcing data from the BioPlan Associates' report are among the crucial manufacturing issues probed through the annual study of more than 300 global biomanufacturers and contract manufacturing organizations (CMOs). To put the data in context, this report provides a composite view and trend analysis from biomanufacturers in 35 countries. It covers capacity constraints, expansions, use of disposables, emerging trends and budgets, disposables, downstream purification, quality management and control, hiring issues, employment and training (1).  

Current industry service suppliers are recognizing this shift and have begun adding capabilities to their offerings. "A number of CMOs are adding fill–finish capabilities as well as assay and product-characterization services to their offerings, and several are providing additional flexibility by offering clinical production in disposable bioreactor systems," said Don Durham, president of Durham Consulting in a recent interview with BioPlan Associates. Durham believes this reflects a continuing trend, and service suppliers are responding by adding business capacity in these support services. 

For the 2011 study, BioPlan Associates also evaluated the top 23 types of biomanufacturing operations currently being outsourced (see Figure 2). The survey showed, not surprisingly, that respondents outsourced an estimated average of 35% of their fill–finish operations. This level is consistent with last year's results. Approximately 26% of toxicity testing is being outsourced in 2011. In addition, outsourcing of both upstream and downstream operations (10.0% and 10.4% respectively), were up about two percentage points in 2011 compared with 2010.  

Figure 2: Estimated average percentage of outsourced activities by biomanufacturing facility (1).			

Many service vendors insist that outsourcing can improve organizational efficiency for their clients and that service providers can often offer better quality and  more efficient services. And these services are not just for repetitive, low-value activities, or for testing, or fill–finish work. The 2011 study tends to confirm this claim in its measurement of trends in usage levels for the top 23 biopharmaceutical operations commonly outsourced. We asked respondents which activities they expected to outsource at "significantly higher levels" during the next 24 months. Surprisingly, the 2011 data show that upstream and downstream operations are going to be outsourced at a much higher rate than in previous years. The growth in other, less crucial operations were virtually flat. For example, the percentage of respondents indicating fill–finish activities would be outsourced at a higher rate, was 24.6% in 2011 compared with 24.8% in 2010.    

Figure 3: Respondents identifying biomanufacturing outsourcing activities likely to be done at significantly higher levels during the next 24 months (1).			

Areas such as product testing and other assays continue to grow at double-digit rates. For example, nearly 20% of respondents indicated they would be outsourcing significantly higher levels of their product-characterization testing over the next 24 months. Tim Lee, deputy director of bulk manufacturing at Sanofi-Pasteur, notes, "The outsourcing of analytical test methods used in product characterization is a big trend as in-house testing labs become fully loaded with their manufacturing tests to release product. Also, many outsourced labs have specific expertise that industry doesn't have internally." 

The economic recovery has been slow, and uncertainty continues to restrain hiring, which means the pressure to outsource and offshore operations has yet to abate. The BioPlan study also indicates that many contract manufacturing organizations and service providers have been experiencing much greater pressures from their clients to keep costs in line, reduce nonessential services, and otherwise trim budgets. This pressure, in turn, has forced service suppliers to run leaner operations and curtail some of the value-added services that might have otherwise been provided. While the industry will continue to see growth among emerging contract biopmanufacturing providers in India and other Asia-Pacific locations, providers in the US and Western Europe will see more modest improvements.  

The economic uncertainty also makes shorter-term contracts more popular, and clients are increasingly expecting work to be done on short-term cost-and performance milestones, rather than on long-term commitments and partnerships. The price cuts and shifts toward more transactional, short-term business is likely to damage long-term relationships and reduce the potential strategic value that outsourcing can bring to clients. As long as global economic uncertainty remains, outsourcing will continue to be used as a buffer for cost cutting, and hiring of costly operations staff may continue to be delayed. This change may, in the end, result in strategic shifts in how companies are valued if their core capabilities and institutional knowledge in manufacturing, process development, and R&D continue to be delegated to external providers.   

 is president of BioPlan Associates, tel. 301.921.5979, 

 1. BioPlan Associates, Preliminary data from the 

8th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production

, Publication for April 2011 (Rockville, MD), 

bioplanassociates.com/publications/bmcp.htm

Outsourcing

More crucial biomanufacturing operations are expected to be outsourced.

PTSM: Pharmaceutical Technology Sourcing and Management-03-02-2011

The US Biosimilar Regulatory Scheme and Comparison with the European Experience: Where Do Where Go From Here?

CSR and Sustainability Forum

Bristol-Myers Squibb Moves Forward with HIV/AIDS Project in Africa

Drug Development for Government, Nonprofit, and Developing-World Markets

A Roundup of Informex

Changes Underway for Biopharmaceutical Outsourcing