Pharma Outsourcing Market Expands

Pharmaceutical and biopharmaceutical companies will continue to use outsourcing services, especially drug manufacturing, due to cost concerns and mergers and acquisitions, according to a market survey of drug manufacturers by ISR Reports. The survey showed that the top five activities that drug companies outsource are drug product manufacturing, packaging and labeling, distribution, small-molecule manufacturing, and holding and storage, according to Kate Hammeke of ISR Reports (1).

The ISR survey suggests that the majority of companies are outsourcing their small-molecule manufacturing. ISR’s 2016 small-molecule outsourcing survey also showed that other popular outsourced activities include packaging and labeling, distribution, and holding and storage. Respondents to ISR’s survey indicated resources, an increased product demand, cost, and mergers and acquisitions as some of the reasons small-molecule companies outsource these activities.

For large-molecule companies, distribution was the number one outsourced activity indicated by ISR’s survey, with packaging and labeling coming second. Cost was the number one reason large-molecule companies indicated as the reason for outsourcing.

Service providers are expanding their services and capabilities to keep up with the high demand. The following are some examples of the growth the outsourcing industry is experiencing.  

Company developments, expansions, and acquisitions
The first few months of 2016 has seen an array of investments, expansions, and acquisitions in the pharmaceutical outsourcing market. Outsourcing companies appear to be looking to the early-phase development and clinical trial markets to increase their portfolios.

MPI Research, an early-stage drug development contract research organization (CRO) based in Michigan, is investing more than $5 million in a facility renovation to begin in 2016. The company plans to renovate more than 55,000 square feet of facility space.

Ed Amat, executive vice-president of global sales and marketing, said in a press release that the expansion reflects the increasing demand for investigational and preclinical pharmaceutical and medical device studies (2). In the upcoming year, MPI hopes to increase the company’s workforce by approximately 10%.

LabConnect, a Seattle-based provider of laboratory services to biopharmaceutical, medical device, and contract research firms, has built a new 5000-sq-ft biorepository in Johnson City, TN, that includes space for ambient, refrigerated, cold (-20 °C), and ultra-low temperature (-70 to -80 °C) storage as well as liquid nitrogen vapor phase storage (-190 °C) (3).

The facility includes storage capacity for more than eight million samples, validated and mapped backup freezers and generators, redundant HVAC systems, building and biorepository security systems, and a temperature monitoring system for freezers and refrigerators with a 21 Code of Federal Regulations Part 11 compliant audit trail. LabConnect also tracks sample locations and consolidates data within a centralized database.

Catalent Pharma Solutions announced on Feb. 2, 2016 (4) an investment of $4.6 million to expand its Singapore clinical supply facility by building GMP space for secondary packaging. The investment doubles the ambient storage space and quadruples cold-storage capacity, the company reports. The site provides clinical supply services including project and supply-chain management, comparator sourcing, clinical label printing, secondary packaging, clinical storage, import/export management, importer of record service, and returns and destruction management services. It has served as a regional hub for studies in Australia, Singapore, Korea, Hong Kong, and other countries in Southeast Asia.

Onyx Scientific, a UK-based CRO and small-scale API manufacturer, has announced an investment in an additional site located adjacent to its existing facility in North-East England to increase its laboratory facilities, GMP suites, and storage of GMP materials (5). In addition, the company has recruited several more chemists to support clients’ pre-clinical, development, and early-stage API manufacturing projects. In 2015, the company grew its GMP space following an increase in demand for its small-scale API manufacturing services.

Vetter announced on Jan. 28, 2016 that the company’s Schuetzenstrasse multi-functional building in Ravensburg, Germany, has been completed on schedule and departments critical to its operation have started to move in (6). The $32 million (€29 million) investment is part of a $331 million (€300 million) total investment strategy announced by the company in September 2015 for further development to its manufacturing sites.

The continued demand by large and small customers for enhanced drug development services, as well as the need for ever-more future-oriented sophisticated IT systems to protect their data, created the need for the new facility, the company reported in a press statement.

The 91,500-sq-ft, six-story building contains non-cGMP laboratories for development support, laboratory space for microbiological analysis, office workplaces for Vetter Development Service and IT, and a data processing center with enhanced security systems, including a safety cell that protects technology and data from external physical hazards in the event of an emergency.

Novasep is building a new synthesis laboratory and adding kilogram-scale production at its existing US facility in Boothwyn, PA (7). This extension will allow Novasep to offer both chemistry and purification services and to produce the initial kilogram-scale batches of synthetic molecules that are needed for biological testing and preclinical trials.

The investment is in response to increasing demand from US customers for closer proximity to Novasep’s contract manufacturing services for early-stage development and production scale-up. Novasep has provided purification development services to North American customers for more than 15 years at this location. The new laboratory, equipped with reactors up to 50 L in size, will start operation in May 2016. It will offer cryogenic capacities and standard chemistry, as well as preparative purification chromatography processes.

PBOA expands membership
The Pharma & Biopharma Outsourcing Association (PBOA), founded in 2014, has been advocating for the pharma outsourcing industry as the global market changes and expands. “We’re focused on working on the reauthorization of the Generic Drug User Fee Amendment (GDUFA), while keeping an eye on FDA’s Quality Metrics initiative, and helping make sure that CMO/CDMOs [contract manufacturing organizations/contract development and manufacturing organizations] are prepared for track-and-track/serialization regulations as they roll out in the US and the EU in the next few years,” says PBOA President Gil Roth.

In February 2016, PBOA expanded its membership (8). IDT Biologika and Ei SolutionWorks joined the PBOA as general members; 3M Drug Delivery Systems (DDS) joined as a sustaining member. Diego Romeu, manufacturing and supply chain director at 3M DDS, was also voted to a three-year term on the board of trustees, along with Rajan Puri, director of business development at Therapure, and Lee Karras, CEO of Halo Pharmaceutical.

“As we continue our mission to represent the CMO/CDMO industry before FDA, Congress and other stakeholders, it’s critical that we increase our membership and provide a true voice for our industry,” said Roth. “We’ve been successful in bringing the CMO/CDMO perspective to issues such as GDUFA, quality metrics, and serialization, and we’re delighted to bring in new member companies and add fresh points of view to our Board of Trustees.”

References
1. A. Shanley, “Surveys Examine Outsourcing Trend,” Pharmaceutical Technology, Supplement: Partnerships in Outsourcing, 40 (13), 32-33,.
2. PharmTech Editors, “MPI Research Invests in Upgrades and Department Expansions,” PharmTech.com, Feb. 11, 2016.
3. LabConnect, “LabConnect Builds New Biorepository, Expands Services, Offers Absolute Sample Protection,” Press Release, Feb. 3, 2016, accessed Feb. 16, 2016.
4. Catalent, “Catalent Invests $4.6M to Further Expand Asia-Pacific Clinical Trials Hub in Singapore,” Press Release, Feb. 2, 2016, accessed Feb. 16, 2016.
5. Onyx Scientific, “Facility Expansion at CRO Following Record Year,” Press Release, Jan. 29, 2016, accessed Feb. 16, 2016.
6. Vetter, “Vetter Announces Completion of Multi-Functional Building for Development Service and State-of-the-Art IT,” Press Release, Jan. 28, 2016, accessed Feb. 16, 2016.
7. Novasep, “Novasep Adds Synthesis and Kilo Lab Extensions at US Facility,” Press Release, accessed Feb. 16, 2016.
8. PBOA, “PBOA Welcomes New Members and Trustees,” Press Release, Feb. 10, 2016,  accessed Feb. 16, 2013.

Article DetailsPharmaceutical Technology
Vol. 40, No. 3
Pages: 68–70

Citation
When referring to this article, please cite as S. Haigney, "Pharma Outsourcing Market Expands," Pharmaceutical Technology 40 (3) 2016.