CROs and CMOs adapt their business models and capabilities to meet sponsor companies' need to reduce costs and accelerate development time.
In an effort to accelerate drug development and reduce costs, contract research organizations (CROs), contract manufacturing organizations (CMOs), and bio/pharmaceutical companies are implementing new approaches to improve clinical development and production of clinical-trial materials (CTM). These strategies include new partnership models between CROs and sponsor companies, alliances among CMOs, and adding new capabilities in contract services, including biopharmaceutical services.
Patricia Van Arnum
The changing requirements in drug development are leading CROs and sponsor companies to form more collaborative and strategic partnerships. "Since 2005, the biopharmaceutical industry has seen a steady increase in strategic outsourcing relationships between pharmaceutical companies and CROs," says John Watson, corporate vice-president and president of strategic partnering and integrated drug development at the CRO Covance (Princeton, NJ). "The CRO industry, which primarily started in the mid-to-late '80s and early '90s, has also evolved considerably over the last several years from a very nascent industry—used primarily as spillover capacity—to become strategic partners in drug development. Sponsors have been looking to new strategic/partner-based models of outsourcing such as multiphase integrated development, dedicated capacity agreements, and asset transfers, to help them advance their pipelines and take the time and cost out of drug development," he says.
Covance's 10-year, $1.6-billion drug-development services pact with Eli Lilly (Indianapolis, IN), which was signed in October 2008, shows the trend toward greater strategic partnerships. Under the deal, Covance acquired Lilly's Greenfield, Indiana, preclinical research facility for $50 million, and Covance received a broad range of drug-development services work over the next 10 years for a minimum contract value of $1.6 billion. Covance also assumed responsibility for all of Lilly's toxicology testing and discovery-support activities at Greenfield.
PHOTO: RAINER DITTRICH, GETTY IMAGES
"This alliance has truly been a win-win-win for Lilly and Covance, the employees at both companies, and our communities," says Watson. Since the agreement, more than 95% of the original 264 employees hired from Lilly are still with Covance. The company has added more than 70 new employees to the Greenfield facility and plans to expand staffing with an additional 300 employees as the company is awarded work by other biopharmaceutical companies, says Watson. Since the agreement, Covance also added three new service lines in its biomarkers, nutritional-chemistry, and biotechnology businesses in Greenfield. Lilly and Covance also expanded their existing partnership in March 2010 through a three-year biotechnology services agreement under which Lilly transferred bioproduct analytical testing to Covance's Greenfield facility.
In executing the partnership, the companies share common goals. "Lilly and Covance identified a path to achieving Lilly's goal of '1000 Days to Patient' by reducing drug-development cycle times," says Watson. "1000 Days to Patient" begins when Lilly researchers identify a lead molecule to begin clinical testing and ends when Phase II efficacy studies begin in patients.
Building critical mass
CROs are also broadening their capabilities in the drug-development continuum. In late April 2010, the CRO Charles River Laboratories (Wilmington, MA) agreed to acquire the CRO WuXi AppTec (Shanghai) for $1.6 billion. "The combination of Charles River's expertise in in vivo biology and WuXi's expertise in chemistry creates a partner capable of supporting early-stage drug-development efforts from molecule creation to first-in-human testing and through Phase I clinical development," says Nancy Gillett, corporate executive vice-president and president of Charles River Global Preclinical Services.
Charles River had 2009 sales of $1.2 billion, of which approximately 55% were in research models and services, and 45% in preclinical services. WuXi had 2009 sales of approximately $270 million, of which 93% were in laboratory services and 7% in manufacturing services. The combined company will have sales of $1.5 billion, with 44% of its revenue in research models and services, 41% in preclinical services, and 15% in discovery services. With the acquisition, the size of Charles River will increase from its current size of approximately 8000 employees to 12,200. Inclusive of the 4200 employees from WuXi are 2900 scientists with advanced degrees, including 2000 chemists.
CSR and sustainability forum
Charles River gains several facilities in the acquisition: a 1-million-ft2 research and development (R&D) discovery facility in Shanghai; a 253,000-ft2 discovery-chemistry facility in Tianjin, China; and a 314,000-ft2 good laboratory practice (GLP) preclinical toxicology facility in Suzhou, Jiangsu, China.
Gillett points out that Charles River also nets active pharmaceutical ingredient (API) manufacturing capacity on a CTM- and commercial scale, formulation-development capabilities, and secondary manufacturing capabilities, which will provide Charles River with its first capabilities in those areas. The company will acquire a 300,000-ft2 good manufacturing practice chemical API manufacturing facility in Jinshan, China, and a 75,000-ft2 biopharmaceutical services facility in Philadelphia, which includes biologic drug-substance manufacturing.
Charles River's acquisition of WuXi AppTec, which is expected to close later this year, is reflective of larger changes occurring in the CRO market. "Pharma is looking at how to do R&D differently and looking to outsource more as a means to reduce costs and improve development times," says Gillett. "The large pharmaceutical companies are reevaluating what they are willing to outsource. Certain functions that they may have historically kept in house, they are now outsourcing or evaluating opportunities to outsource," she says. Such functions include toxicology and safety assessments, development of high-throughput assays, and pharmacological models.
Partnerships among CMOs
CMOs also are forming new models to respond to demand for more integrated outsourcing. For example, Avantium Pharma (Amsterdam), a specialist in solid-state chemistry, Cambridge Major Laboratories (Germantown, WI), a contract API manufacturer, Xcelience (Tampa, FL), a contract provider of formulation development and finished-product manufacturing, and Beckloff Associates, a scientific and regulatory consulting firm and subsidiary of Cardinal Health (Dublin, OH), formed a partnership this year that marries the respective capabilities of each company to offer a new service model in pharmaceutical development. Under the model, named the Chemistry Playbook, each company is independent and is responsible for its own activities and project management, but a prospective sponsor company, if it wishes, can use the complementary service offerings of all or some of the partners.
"The partnership is all about suppliers talking to each other," explains Brian Scanlan, chief business officer at Cambridge Major Laboratories. "Chemistry Playbook is in direct response to a market need for coordination between functional areas in outsourcing. It's not a traditional one-stop-shop model. Instead, we are leveraging the expertise of four specialists in pharmaceutical outsourcing as a means to accelerate a company's development program by aligning project management and business development groups to ensure optimal information flow. The partnership is designed to work with external or in-house chemistry, controls, and manufacturing (CMC) management," says Scanlan.
James Kanter, director of business development at Xcelience, explains that there may be functional-group-deliverable bias in a one-stop-shop model similar to that which may be found in a vertically integrated model. Under a classic vertically integrated model, discrete companies specialize in particular functional areas, and the sponsor company is the point of contact between contract-service providers and must coordinate activities between discrete functional areas of expertise. "Often, each company has a distinct deliverable and may not be aware of the overall project timeline, thereby suffering from a deliverable bias," says Kanter. "The focus is on the discrete deliverable such as the API and the formulation. Project management tends to be 'silo-centric,' and the interactions between other contract-service providers is usually minimal and sometimes can be acrimonious," says Kanter.
Derek Hennecke, CEO and president of Xcelience, says that the partnership model offered by Avantium, Xcelience, Beckloff, and Cambridge Major Laboratories seeks to minimize deliverable bias by emphasizing project ownership that entails full responsibility for integrated project management and timelines while preserving the advantage of the functional-area expertise offered by each company. "The partnership acts as a one-stop shop but with streamlined timelines as agreed by a sponsor company and project manager of each of the partner companies," says Hennecke. "The amount of individual project-manager presence is determined by the phase of the project. A Gantt chart, which is used to show the project's schedule, deliverables, and project timeline are shared among all functional areas to prevent 'silotization,'" he says. "Constant communication flow between technical and regulatory areas of expertise establishes real-time feedback loops across the entire development program," adds Michael Beckloff, president of Beckloff Associates. "This maximizes efficiency and prevents delays and cost overruns. A single point of client contact can be established based on a client's needs and interest," he says.
Intensification in biopharmaceutical development is another factor affecting the CTM sector, and contract-service providers are expanding in this area. Catalent (Somerset, NJ), a provider of advanced technologies and development, manufacturing, and packaging services, for example, opened a new temperature-controlled warehouse in Bolton, United Kingdom, to meet increased demand for clinical-supply services, including cold-chain storage and distribution, in October 2008.
Lyophilization Technology (Ivyland, PA), a contract provider of lyophilization services, recently invested in its CTM manufacturing capacity by expanding temperature-control capabilities for compounding and handling bulk solutions, incorporating vial-capping operations within an ISO 5 air-supply environment, and adding controlled-temperature storage for finished product, notes Edward Trappler, president of Lyophilization Technology. The company brought on a unit to process product from temperatures of 0–60 °C in August 2009, developed an in-line chiller for bulk solutions immediately after compounding in January 2010, and expanded capacity for controlled storage at –20 °C in October 2009.
Larger and more global clinical trials are another important consideration in CTM supply. "Automation in clinical-trial material supply is of increased importance as companies conduct larger trials, in part in response to FDA's interest to have data from larger studies," says Frank Lis, vice-president and general manager of clinical supply services at Catalent. "It is not uncommon to have 25–30 trial sites, distributed globally, with total patient enrollments of 5000 to 10,000 for late-stage clinical trials."
Lis offered several examples on how Catalent has improved manufacturing and packaging operations in CTM supply to meet demands of larger trials. In January 2010, Catalent announced the installation and qualification of a ZED in-line blister card sealer at its clinical-supply services facility in Philadelphia. The in-line blister-card sealer automatically places blister cards and blister strips, so the run time of carding jobs can be reduced. "To show the difference that automation can provide, we used to fill 500–1500 cards per eight-hour shift, and now can fill 5000–6000 cards per shift," says Lis.
Another example is the company's migration to a central server for designing, proofing, and validating labels for clinical packaging. The server environment allows these functions to be performed at a central location, rather than replicating them at each individual facility, and allows labels to be printed locally at each facility as required. "These types of improvements help to reduce timelines and costs in drug development, which are key in today's environment," says Lis.
Patricia Van Arnum is a senior editor at Pharmaceutical Technology, 485 Route One South, Bldg F, First Floor, Iselin, NJ 08830 tel. 732.346.3072, firstname.lastname@example.org.