Outlook for 2009
While the biopharmaceutical contract manufacturing market is experiencing robust revenue growth this year, most CMOs are cautiously optimistic about next year’s growth. On average, the CMOs expect the biopharmaceutical contract manufacturing market to expand 12% in 2009, a growth rate slightly lower than this year’s expected growth rate of 15%.
The outlook for next year is a balance of long-term growth trends for the industry and short-term issues that may have a negative impact on demand. Most CMOs are optimistic about the future for biopharmaceutical contract manufacturing. They cite positive trends such as continued growth in the number of biologic products at all clinical phases, the increased reliance on contract manufacturing by pharmaceutical and biotechnology companies, higher yielding cell lines, and greater use of disposables technologies.
Factors dampening this positive market outlook include lower funding of biotechnology companies as a result of the current market turmoil, the weaker dollar, and lower regulatory approval rates. In addition, some CMOs are concerned about competitive price pressures from CMOs in low-cost geographic areas.
“On the positive side, there appears to be increased interest by many of the big pharmaceutical companies in expanding their biologics pipelines, and the general pipeline is strong,” according to Stephen Taylor, director, Avecia Biologics. “On the negative side, the ongoing issues of funding for small to medium biotechs is a growing concern that affects business in Europe, North America, and Asia. We have continued to see growth of contract manufacturing as a core strategy for both large and small biotech companies.”
Simon Saxby, CEO at Cobra Biomanufacturing, echoed the cautious optimism theme for next year. “For Cobra, 2009 looks positive with commercial supply starting at our Oxford site, and three other clients looking at Phase III and commercial manufacture. Timing is everything and is dependent upon the success of our clients’ products in their respective clinical trials.
“In addition, the current preclinical work should mean a steady stream of business moving through to the higher value manufacturing end. We have already seen clients cutting back on preclinical projects to focus their resources on more advanced projects. Given the turmoil in the financial markets for the last six months, however, biotechs may look like less of a high-risk investment.”
Overall, the CMOs’ long-term growth expectations remain positive. “Our expectations are that the contract manufacturing segment in biopharmaceuticals will continue to grow in 2009 and beyond,” stated Karen King, president, DSM Biologics. “Biopharmaceuticals, particularly mAbs, are among the largest growth segments in the pharmaceutical industry. This is the driver behind our planned capacity expansions that will enable us to better meet our growing customer base and their needs.”
In summary, most CMOs see overall positive long-term trends for biopharmaceutical contract manufacturing. “The CMO market continues to grow; the main market drivers are the increasing number of biopharmaceuticals in development, and the pharmaceutical and biotechnology companies increasing reliance on outsourcing to improve efficiency and reduce costs, stated Rene Brecht, vp process science and manufacturing at ProBioGen.
“The use of CMOs provides pharmaceutical and biotechnology companies with significant advantages regarding productivity, cost-effectiveness, and safety profile. These requirements also led to the development of our AGE1® cell lines.” With pharmaceutical and biotechnology companies’ increasing reliance on outside contractors, the CMOs’ clients are demanding higher quality services, tailored solutions, and new technologies such as proprietary cell lines for the manufacture of vaccines and recombinant proteins.