Inadequate manufacturing capacity is a top challenge for 28% of life sciences chief financial officers (CFOs), tied with selecting a qualified contracting manufacturing organization (CMO) or contract development and manufacturing organization (CDMO), according to the just-released, 2023 BDO Life Science CFO Outlook Survey.
Almost weekly, biopharma organizations announce intentions to build manufacturing facilities, fueled by the needs of new technologies and the cheap cash of recent years. But, as Lance Minor, life sciences national co-leader at BDO, points out, “There is a gap of three to five years between the realization that additional capacity is needed and the time that facility is in production.” Today’s capacity shortage may well become tomorrow’s surplus.
The current manufacturing capacity constraint is, partially, a manufacturing imbalance caused by the maturation of novel new technologies like CAR-T, gene therapy, and certain mRNA therapeutics. Therefore, “When you see a new facility being built now for gene therapy, it may mean a monoclonal facility is sitting idle,” Minor says.
CDMOs, cognizant of the opportunity, are snapping them up for their own growing markets. For biopharma companies, divesting themselves of excess manufacturing capacity is a way to quickly obtain an influx of cash they can use to finance their pipelines and generate more clinical data.
Potential better options
There may be some better options, however. One is to outsource their facilities, generating steady income until they need capacity themselves.
Alternatively, Minor suggests partnering with similar companies to keep the facility staffed and operational. This trains your staff so they are used to running it at a consistent level, learn new things and, therefore, will operate the facility better when running your own product later, he explains. “We’ve seen that plants running at fuller capacities have fewer quality issues and better output, staff members are happier, and turnover is lower.”
For companies turning to CMO/CDMOs to meet their manufacturing needs, CFOs in the survey said finding the right one is challenging, especially for developers of truly innovative technologies. That’s because, Minor says, “there aren’t that many people who actually are good at doing that kind of development yet, so there’s a real search for talent.” In fact, access to technical expertise and resources was a top concern for 29% of respondents in the BDO survey.
The rush of cash into biopharma has slowed, and companies are assessing their paths forward more carefully. As capacity grows in some areas, it remains constrained in areas such as CAR T, gene therapy, and newer modalities, so, as Minor says, “There’s still a lot of improvement needed.”
