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Feature Articles : Oct 1, 2008 (Vol. 28, No. 17)

CMOs See Robust Growth

Contract Manufacturing Organizations Are Cautiously Optimistic about 2009
  • William Downey

The biopharmaceutical contract manufacturing market continues to expand in 2008, and most contractors expect more growth in 2009. Growth in capacity, services, and continued investment in new technologies were cited by most contractors interviewed for the “Biopharmaceutical Contract Manufacturing: Quality, Capacities, and Emerging Technologies” report.

Overall, 27 biopharmaceutical contract manufacturers reported aggressive plans to increase production capacity, expand service offerings, and adopt the use of disposable technologies to meet the ever-growing needs of their pharmaceutical and biotechnology clients. The respondents in this study noted the expanding market for biopharmaceuticals and the increasing use of outside contractors to produce their biopharmaceutical products as major reasons for market growth.

Most of the CMOs interviewed for this article indicate that their business is on target to meet their plans in 2008. At the beginning of the year, most CMOs were optimistic about their prospects; they had projected, on average, year-over-year revenue growth of 15%.

Two of the larger CMOs, Boehringer Ingelheim and Lonza, have published midyear results showing double-digit growth for the first half of this year. For Boehringer Ingelheim, sales revenues from its industrial customers, which include biopharmaceutical production services, grew 15% (in Euros) in the first half of 2008 compared to a year ago. Similarly, Lonza reported that sales revenues in the first half of 2008 grew 19% (in Swiss Francs), compared to year-ago levels, for its exclusive synthesis and biopharmaceutical division.

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.

Capacity Expansion

To meet the increased demand for biopharmaceutical contract manufacturing services, CMOs continue to invest in new facilities, added support services, and new technologies. CMOs are offering new cell line systems, investing in single-use systems, and expanding their service offerings including process development and supply chain management services.

“In the past two years, we have tripled our process-development capabilities and more than doubled our manufacturing capabilities,” stated Stephanie C. Finnegan, CEO at Goodwin Biotechnology. “We have added a new 500 L tank train and several disposable bioreactor systems,” Finnegan noted. “In addition, we doubled our protein-purification capabilities and built a process-development lab in India. In the short time since expansion, we are operating at full capacity in development and purification.”

In June, Rentschler Biotechnologie started running the first of two 2,500 L multiprocess production suites. “This modern, multipurpose bioreactor is designed such that batch, fed-batch, or perfusion cell culture processes can be run,” Dr. Weiland Wolf, member of the board, explained. “Protein purification is performed in two suites for pre- and post-virus inactivation, respectively.”

Also completing a major expansion is Sandoz. “In 2008 Sandoz will finish a new 13,000 L mammalian manufacturing line at Schaftenau, Austria, and we are making an adaptation in the microbial 40,000 L plant in Kundl in order to increase flexibility in operation which will be done in 2009,” said Friedrich Nachtmann,Ph.D., head biotech cooperations at Sandoz.

Also just completing construction of a new facility this year is the ASPEX division of Asahi Glass. The firm constructed a new 3,000 L GMP facility this year, according to Hiroko Tsukamoto, group leader, business development. Operations are scheduled to commence in September. Laureate Pharma is completing a $13 million enhancement to its facility, noted Mike Cavanaugh, vp sales and marketing. “We are including addition of a new pilot plant, dedicated buffer prep area, column packing area, and inoculum prep room. We have also leased additional office space and a warehouse to streamline our operations resulting in increased efficiency to our clients. We are in the process of acquiring flexible, single-use bioreactors to address the varying needs of our clients.”

Earlier this year, Laureate entered into a cGMP agreement with Alopexx Pharmaceuticals. Laureate will produce Alopexx’ mAb F598 antibody under cGMP conditions. Initially, the production of this antibody will be for clinical trials, and later for commercial production. Alopexx’s mAb F598 is expected to be used for the treatment and prevention of Staphylococcus aureus infections.

Downstream Processing

CMOs are not only expanding cell-culture and fermentation tank capacity, but they are also expanding their downstream processing capabilities and capacities. Many CMOs are also expanding their process-development expertise and offering new expression systems.

At Avecia, Dr. Taylor noted, “We have significantly extended our offering in a number of support services to offer a more complete service to meet our clients’ needs. These include stability and formulation development. We have also invested over $2 million in new state-of-the-art, development laboratory space to support our pAVEway ™ offering.”

Avecia’s pAVEway system is a protein production platform that offers clients high expression levels. In addition to improved expression systems, Avecia has made significant investments in downstream operations and supply-chain management systems.

“For our late-phase and commercial clients, we have invested multiple millions of dollars this year to add large-scale reversed phase chromatography, enhanced centrifugation capabilities, plus improved supply-chain management systems,” Dr. Taylor concluded.

In June, DSM Biologics reported that it had achieved record yields in producing IgG antibodies using PER.C6® technology. By employing the PER.C6 human cell line and XD™ technology, DSM achieved titers of 27 grams per liter. In addition, they are expanding capacity and investing in further process-optimization technologies, noted King.

“We have recently added two 250 L disposable bioreactors to our facility, and we will add 50 L cGMP capacity for our high-yielding XD technology by the end of this year. We plan to make further investments such as 250 L cGMP capacity for our XD technology and also 1,000 L cGMP fed-batch.”

Cobra Biomanufacturing continues to expand its Oxford facility for the commercial manufacture of GenVec’s TNFerage™ product, which is currently in various clinical trials for pancreatic, rectal cancer, melanoma, and head and neck cancer. “Cobra is currently investing approximately $2.5 million in upgrading our Oxford facility for commercial manufacture of TNFerade in 2009,” Saxby stated.

Cobra is also investing in disposable bioreactor and bioprocessing technologies at its Keele facility. In July, the firm extended its manufacturing agreement with ViroMed to include a long-term research, development, and technical consultancy agreement for all ViroMed’s products.

New Locations and Collaborations

This year, three CMOs have announced cross-border manufacturing collaborations and expansions. Early in the year, CMC Biologics purchased the Seattle-based operations of ICOS Biologics from Eli Lilly. In August, the firm inked a deal with Symphogen under which CMC will develop processes and manufacture polyclonal antibody product candidates for Symphogen.

In June 2008, Eden Biodesign announced formation of a U.S. subsidiary, Eden Biodesign. “This new operation will offer cell-line and strain-development services with supporting process and analytical development, and facilitate development of stable, highly productive production lines,” said Roger Lias, president at Eden Biodesign.

Eden Biodesign also recently announced a collaboration agreement with Human Genome Sciences that “provides HGS with access to our global marketing and business development reach and, in turn, provides our mammalian cell culture clients with the opportunity to access world-class cGMP production capacity at large scales up to 20,000 L working volume,” stated Dr. Lias.

Also in June, PacificGMP and Pacific Biopharma Group signed a definitive merger agreement and will develop a cGMP joint venture in Taizhou, China. The new joint venture, China Quantitative Biomedicine, will be one of the largest single-use biomanufacturing facilities in the U.S. or China, according to the firms.

The biopharmaceutical contract manufacturing market continues to experience year-over-year growth. Overall, the industry is on target to meet their growth plans in 2008, although most biopharmaceutical contract manufacturers expect slightly lower growth in 2009. Contract manufacturers continue to invest in new capacity, expand service offerings, and develop new technologies to meet their clients’ needs, including expanded capacity, capabilities, and services.