The CMO business model is based on the need for additional flex capacity. That need continues, as this year 20.7% of respondents were experiencing severe or significant constraints at the commercial manufacturing level. In comparison, 17% of respondents were experiencing severe or significant constraints at “Later-stage clinical manufacturing.” Conversely, this year, only 8.2% of CMOs experienced “No capacity constraints”, while nearly a one-third, 32.4% of biotherapeutic developers, were able to say the same.
In 2007, 16.2% of respondents agreed that their organization is currently experiencing severe or significant constraints. This compares with 36.2% in 2006. When identifying respondents that experienced moderate or minor constraints, however, the total was 53.5% in 2007, 52.7% in 2006, and 54.6% in 2005. This suggests that, over time, more than half of the respondents consistently experience constraints; what changes is the perceived degree of constraint—generally moving from severe to moderate since 2005.
The decrease in the degree of constraint probably reflects better overall capacity management by the industry since overall product growth has continued to be constant. Better capacity management could come from better market and production forecasting; productivity enhancements; and improved access by product development companies to external sources of additional capacity such as CMOs’ or other biotherapeutic developers.
Last year, to control capacity constraints, CMOs appeared to be more concerned about manufacturing process performance and costs. This year, they appear to be more concerned about training, hiring, and the lack of financing for production expansion. In contrast, for biopharmaceutical manufacturers this year, issues of physical capacity of equipment as well as hiring were of more concern, compared to training and regulatory issues last year. Specifically, half of CMOs felt that “Optimizing systems to improve downstream purification performance” was the key.
Five-year projections put the percent of biomanufacturers outsourcing at least some of their mammalian production at over 60%. This bodes well for CMOs who are able to strike a relationship that works. Trend information is necessary for both CMOs and their clients to make informed strategic decisions. Because outsourcing and production strategies require long time horizons and substantial capital, facility, and human resource investments such trend data can be useful in establishing long-term relationships with suppliers.