Outsourcing services have rapidly become an attractive option for development and manufacturing activities within the pharmaceutical industry, driven by various factors including the growth of small molecules, prioritizing precision medicine and orphan drugs, increasing API complexities, and the need to reduce costs. The rate of new drug approvals are rising with the US Food and Drug Administration (FDA) approving 48 NMEs in 2019, requiring pharmaceutical companies to differentiate their products and increase their speed to market – collaborating with a contract development and manufacturing organization (CDMOs) can provide the cost-savings and expertise needed to accelerate a successful product launch.
With the pharmaceutical industry rapidly evolving and today’s clinical pipeline changing industry needs, CDMOs must remain agile to adapt their methods and capabilities on how to plan for and execute drug development and manufacturing. The market is highly competitive and remains fragmented, despite efforts to consolidate capabilities, capacities, and geographies, making differentiation critical to CDMO success.
Motivations to outsource and partner with CDMOs:
De-risking R&D efforts and reducing development and manufacturing costs while accelerating time to market of life-changing medical innovations is a common goal of pharmaceutical and biotech companies. Outsourcing allows companies to leverage facilities and expertise specific to their needs and avoid the high costs of in-house development and manufacturing. These cost- and time-saving benefits provide flexibility to devote more time and dollars to other critical activities needed for a successful product launch.
The development of new molecular entities (NMEs) continue to increase in complexity and diversity, creating a need for highly specific capabilities and expertise that may be economically unreasonable to generate in-house. With the orphan drug market forecasted to grow at double the rate of the non-orphan drug market, pharmaceutical and biotechnology companies are turning to CDMOs for niche capabilities and understanding of the regulatory and clinical landscape to shorten the timeline from R&D to patient access, and ultimately maximize the return on investment.
CDMOs have proven to be high-impact partners in the pharmaceutical industry demonstrated by a history of success in product quality, reliability, regulatory compliance, safety, and value. Many CDMOs are consolidating capabilities, capacities, and geographies to offer comprehensive and flexible services as well as reduce production delays. Some CDMOs are further differentiating themselves by adopting a “one-stop” shop business model offering end-to-end supply chain support from research and development through commercialization, which fosters long-term partnerships. This is an attractive model to sponsors because it reduces efforts towards logistics, inventory management, vendor sourcing, and technology transfer that can now be redirected to their core competencies and, ultimately, reduce time to market.
Integrated CDMOs with resource flexibility appeal to sponsor companies with diverse pipelines and niche technologies. Agile CDMOs with the ability to quickly and reliably address clients’ changing requirements – from new equipment needs to innovative formulations – further supports long-standing partnerships that streamline development and manufacturing.
Risk mitigation is a common goal of pharmaceutical and biotechnology companies. It takes several years and, according to a recent study published in JAMA, approximately $1.3 billion on average to develop a new drug. CDMOs stressing their commitment to a strong partnership may offer innovative risk-share business models lowering upfront costs with success depending on milestone events, which not only builds trust with sponsor companies, but also allows sponsors to pour resources into other drugs in development. In addition to new business models, CDMOs are becoming more common co-investors with sponsors to fulfill high capital requirements, further demonstrating the transition from relationships being purely transactional to strategic partnerships.
HIghest areas of opportunity for CDMOs:
According to Contract Pharma, key areas of market growth include complex formulations, high potency drugs, and biologics – with particularly high growth in antibody drug conjugates. Additionally, offering innovative business models or positioning as a one-stop shop are areas of high opportunities.
With new classes of drugs and targeted therapeutics on the rise, complex formulations is an area of expertise sponsors will continue to need. Solid dose compounds account for ~50% of the market followed by injectables (33%) and semi-solid/liquid compounds (17%). Injectables will likely be a major driver of this opportunity with the sterile injectables market expected to reach $657 B by 2024 according to contract pharma, but other key areas of opportunity include new drug delivery systems prioritizing patient compliance and reducing manufacturing complexity and oral solids be improving drug delivery, bioavailability, and efficacy.
CDMOs and pharmaceutical companies will continue to invest in manufacturing high potency active pharmaceutical ingredients (HPAPI). HPAPIs are highly specific and efficient in action at low daily therapeutic doses and can be used in formulations for highly potent drugs. Sixty percent of all high potency drugs are developed for cancer due to their ability to target specific disease cells. Facilities developing and manufacturing highly potent drugs will need to implement operations ensuring protection of employees and the environment from exposure.CDMOs entering this market will likely be required to make huge investments in newer technologies to adapt to the continual evolution of industry standards, technologies, and regulations.
With the therapeutic pipeline moving beyond traditional small molecules and conventional biologics to new approaches such as Antibody Drug Conjugates (ADCs), nucleic acids, and peptides, manufacturing processes are increasing in complexity requiring wide-ranging expertise and capabilities in chemistry and biology. Key capabilities include cell culture and synthetic chemistry, which must be highly controlled to ensure proper conjugation and stability; fill-finish, such as lyophilization; and analytical chemistry to fully characterize the ADC of interest and ensure quality control. According to ADC Directory, at least 70% of ADC manufacturing is outsourced, and is expected to increase due to small biotech companies requiring comprehensive expertise in development and production.
Examples of Top-Notch CDMOs
Below are a few champions of the 2020 CMO Leadership Awards, which are based on impartial market research using feedback from sponsor companies that outsource development and manufacturing services.
Samsung Biologics
Website: https://samsungbiologics.com/
Samsung Biologics is a one-stop CDMO offering contract development and manufacturing as well as analytical testing services. The company has been recognized for excellent quality, capability, and reliability and has demonstrated its dedication to technology innovation and client satisfaction by investing in new manufacturing technologies and recently launching a virtual client-facing platform.
WuXi STA, STA Pharmaceutical a WuXi AppTec Company
Website: https://www.wuxibiologics.com/
A global CDMO offering end-to-end solutions to discover, develop and manufacture biologics. As of June 30, 2020, WuXi had a total of 286 integrated projects ranging from pre-clinical development to commercial manufacturing. This company has wide-ranging biologics capabilities and expertise, including ADCs, and offers open-access technology platforms.
AbbVie
Website: https://www.abbviecontractmfg.com/
AbbVie is a CMO with eight locations throughout Europe, USA, and Puerto Rico and expansive capabilities including biologics, antibody drug conjugates, fill/finish, highly potent drugs, pre-filled syringes and more. They are a one-stop shop CMO delivering successful long term partnerships and excellent services.
Pantheon
Website: https://patheon.com/
Thermo Fisher Scientific’s Pantheon develops and manufactures small molecules and large molecules, including biologics. In addition to these services, it offers expertise in developing oral solid dosage technologies, steriles, and softgels. Because it is backed by a life sciences giant, it has extensive resources and expertise that enables new market penetration, technological innovation, and geographic reach.
Conclusion
Pharmaceutical and biotechnology companies are motivated to outsource development and manufacturing services to save costs, minimize risk, and accelerate time to market. With therapeutics evolving and becoming more complex, CDMOs are being selected as strategic partners for end-to-end services from discovery through commercialization and expertise. Although CDMOs are consolidating capabilities, the market remains fragmented with several opportunities to position these companies for future success and to meet the needs of their customers. Innovative companies offering the one-stop shop business model are at an early advantage as they can offer wide-spread capabilities, flexibility, and comprehensive expertise.
