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Contract manufacture: the order books remain full

There have been worse times for contract biopharmaceutical manufacturers. Studies, surveys and market analyses all come to the same conclusion: the market for therapeutic proteins is continuing to grow in double figures. Current estimates of the total market value are in the range of 60 to 70 billion US dollars, and the market is estimated to grow by 13 per cent p.a. up until 2010. Biopharmaceutical contract manufacturers have established themselves on the market and market observers estimate that the number of biopharmaceutical medicines will grow from 100 (2005) to approx. 150 (2010). A glance into the development pipeline shows that approx. 500 proteins and 150 peptides are in different stages of development with monoclonal antibodies, insulin, interferon beta, G-VSF and coagulation factors being among those drugs with the highest sales. The biosimilar market is regarded as an important future market worth billions of dollars.

Market observers generally agree that production capacity will have to be expanded. Contract manufacturing organisations (CMO) will also benefit from this growth. In 2005, the market volume achieved by CMO accounted for almost 1.5 billion US dollars (Ransohoff, 166); Frost & Sullivan estimate that the market will grow to 9.2 billion US dollars in 2010 (Karmack, 505).

Excellent perspectives for the contract manufacturing business

Rolf Werner, who is in charge of biopharmaceutical production at Boehringer Ingelheim, quoted figures for companies that develop products and says he expects a growing trend towards outsourcing up to 2011. According to these figures, the outsourcing of mammalian cell cultures will rise from 45 to 60 percent, that of microbial fermentation from 38 to 60 per cent. The outsourcing figures for yeast and plant cells are expected to rise even more, from 15 to 40 or 35 per cent, respectively.

In the meantime, the biotech industry has reached a degree of maturation that makes cost reductions necessary. Experts estimate that the outsourcing of different areas will lead to a reduction in manufacturing costs. In view of the high cost pressure, some people believe that product development companies will end up sharing factories following the model of established industries. Experts are also debating whether India, China or South Korea will become centres of production (see Finnegan/Pinto).

In pioneering years: in-house production

In order to better understand the biopharmaceutical contract manufacturing business, one must look at its short, but dynamic, history. The growth phase dates from the beginning of the 1980s to the middle of the 1990s. In the middle of the 1970s, the commercialisation of modern biopharmaceuticals started with the development of recombinant insulin – two products were authorised for sale in 1982. A complex production process and high requirements for the approval of such biopharmaceuticals led to construction costs for a production plant reaching 4,000 US dollars per litre of installed bioreactor capacity. At first, biopharmaceuticals were also produced by the companies that developed them, meaning that valid (protected) manufacturing standards still date back to the pioneering companies Genentech, Eli Lilly and Amgen.
A lab worker in white clothing is controlling a fermentation plant.
The importance of biopharma drugs increases. © Boehringer Ingelheim
© Boehringer Ingelheim

Careful regulatory authorities

When the production of biopharmaceuticals started in the 1980s, there were only a few CMOs. One reason for this was the caution exercised by the regulatory authorities that defined biopharmaceutical products by their production process and by their factories. This meant that the companies first invested in industrial production plants before submitting their products to clinical testing. US regulations as good as excluded the outsourcing of biopharmaceutical production.

High-risk business

Regulations as strict as this proved to be fatal for companies. On average, it takes 30 to 48 months from the time of the decision to build a production site before production starts. Thus, a lot of money flows into a production site for products that are still in Phase II of clinical development. If a product fails in the late clinical phase, this might mean the disappearance of an entire company, such as was the case with Synergen, which was acquired by Amgen during the development of its Antril sepsis drug.

Although fully-integrated biotech companies such as Amgen or Genentech invested large amounts of money and knowledge in production and process and analytics development and there was no great demand for CMOs, some companies, such as Boehringer Ingelheim, Celltech Biologics and Bio-Intermediair, nevertheless pushed the expansion of CMO capacities at the end of the 1980s and beginning of the 1990s. These CMO pioneers were all acquired by other companies or left the market with the only exception of Boehringer Ingelheim, which is still family-run.

FDA paves the way for CMOs

At the end of the 1990s, a growing number of biopharmaceutical companies resorted to using CMOs. This mainly concerned companies with products in the early stage of development and high capital costs. This growing availability of CMOs made outsourcing a practical option, also for companies that had larger amounts of capital at their disposition. Another reason for this was the change in regulatory conditions. The Modernization Act of the American FDA entitled product developers to keep control of their products, even in the case where they were manufactured by other companies. This change in the authorisation practice enabled companies to improve the process with well-defined products, increase production scale and even use different factories without having to carry out additional clinical trials.

Emerging capacity concerns

At the end of the 1990s, monoclonal antibodies and Fc fusion proteins to be administered in high doses were approved. Suddenly there was a fear that the manufacturing capacity for the numerous monoclonal antibodies in the pipeline was insufficient. In 2000 and 2001, many products reached the clinical phase, but the manufacturing capacity for clinical substances was too low. In addition, the JPMorgan report further increased the panic, as it predicted a four-fold rise in the production requirements for mammalian cell technologies up until 2005.

Companies started to again invest more in own capacities in order to avoid what happened to Immunex, a company that was unable to produce sufficient amounts of Enbrel, one of the most commercially successful biotech drugs. Immunex was subsequently swallowed up by Amgen. The trend for outsourcing slowed, and temporarily went into reverse. The production bottleneck envisaged for 2001 - 2005 did not occur. The consequence was that more and more ‘product’ companies entered the CMO business in order to take advantage of surplus manufacturing capacities.

The century of monoclonal antibodies

A glance into the biopharmaceutical industry pipeline shows the dominance of monoclonal antibodies or Fc fusion proteins. Both groups are, without exception, within the top ranks of production volume of mammalian cell-based biopharmaceuticals (Rituxan, Enbrel, Remicade and Herceptin). Annual demands are not far off the ton scale.

The success of antibody-based biopharmaceuticals has accelerated the growth of the entire biopharmaceutical industry. Revenues of approximately 20 billion US dollars in 2000 reached a volume of almost 55 billion US dollars in 2005. The contract manufacturing business also benefited from this development. A look at expert journals shows that CMOs have in the meantime quickly established themselves as a profitable part of the biopharmaceutical industry. It is possible to outsource all steps in the development and production process. Further growth in the number of CMOs is regarded as certain.

Up to 20 per cent of production capacity in the hands of CMOs

At present, contract manufacturing organisations have between 15 and 20 per cent of the industry-wide microbial and mammalian bell-based production capacity. Due to the strong growth of monoclonal antibody products, the demand for mammalian cell-culture manufacturing technology has increased dramatically in the last decade – from approx. 0.8 million litres fermenter capacity (2003) to almost 2.4 million litres; it is estimated that the volume will grow to over 3 million litres up to 2010. Accordingly, the CMO production volume has increased from approx. 100,000 to 400,000 litres and will most likely have exceeded the 0.5 million margin by 2010.

Strategic products are produced in-house

The majority of biotech pharmaceuticals involving mammalian cells is produced by the product companies. Big multinational companies prefer to manufacture strategically important products in-house. In the case of small and medium-sized companies, in-house production is often not profitable because manufacturing facilities can only be operated economically when several products are produced simultaneously and fixed costs can thus be divided across several products. Small biotech companies usually require contract developers and manufacturers on a temporary basis only because their pipelines are not that full. According to Wieland Wolf of Rentschler Biotechnologie, small biotech companies particularly like to resort to the services of CMOs where they can book facilities at times that suit their requirements (hours or days).

High concentrations

The largest segment of the industrial mammalian cell manufacturing capacity is in the hands of just a few companies; among the product companies, Amgen, Genentech and Wyeth Biopharma are responsible for almost 60 per cent of production. By 2010, experts envisage a shift in favour of Genentech, and a considerable reduction in production for Amgen and Wyeth. The situation is similar for CMOs where a few companies also dominate the market: Boehringer Ingelheim, Lonza Biologics, and some way behind Celltrion and Baxter. According to the experts, the order will change in 2010: Lonza Biologics, Boehringer Ingelheim and then Celltrion. According to current figures, Boehringer Ingelheim and Celltrion have market shares of more than 75 per cent in this CMO segment.

The production volume of microbial fermentation is considerably below that of mammalian cells. In 2003, it amounted to almost 0.6 million litres (CMO proportion: almost 0.05 million litres), for 2008 almost one million litres (CMO proportion: almost 0.15 million litres) are expected. This market is also dominated by a few product companies, including Sandoz, Akzo and Avecia, which cover almost 40 per cent of the market; the remaining 60 per cent are divided among the CMOs, which is different from the situation in mammalian cell production technology.

Germany is still an important production site

In terms of biopharmaceutical production, Germany comes second after the USA (according to VfA report from 2007), which is mainly due to the big companies Sanofi Aventis, Pfizer, Roche and Boehringer Ingelheim. According to the market overview published by the magazine transcript (3/2008) and the biotechnologie.de database, there are about three dozen biopharmaceutical contract manufacturers. The majority of companies offer clinical material, only a few companies, including Wacker Biotech, E-nema, Girindus, Haupt-Pharma (fill and finish), Miltenyi Biotec or Phyton Biotech produce directly for the market.

Michael E Kamarck, Building biomanufacturing capacity – the chapter and verse, in: Nature Biotechnology, 25/5, May 2006, S. 503-505
Thomas C. Ransohoff, The Rise of Biopharmaceutical Contract Manufacturing, in: BioPharm International 10/2007, S. 165174
Jaynant Lakshmikanthan, Outsourcing: Biologics Manufacturing: The CMO Advantage, in: BioPharm International, 1.2.2007
Wieland Wolf, Rentscher Holding GmbH & Co. KG, oral communication;
German Association of Research-Based Pharmaceutical Companies (VfA)
Stephanie Finnegan; Karl Pinto: Offshoring: The Globalization of Outsourced Bioprocessing, in: BioProcess International 4(8), S. 56-62, September 2006
William Kerns: Outsourcing: What is the Path Forward? in BioPharm International, 2. April 2007
Susan Cameron: Successful Steps for Outsourcing the Manufacture of Clinical Trials Material, in BioPharm International 2. April 2007.
William Downey: Biopharmaceutical Contractor Selection, in: Contract Pharma, April 2007.
Boehringer Ingelheim, Biotech-Press Conference, Biberach, 9th April 2008.

wp - 23rd April 08
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