CMO use to grow despite Big Biopharma's in-house spend, say experts

By Dan Stanton contact

- Last updated on GMT

Big Pharma: outsourcing or investing in-house?
Big Pharma: outsourcing or investing in-house?
Third-party manufacturers anxious about Big Biopharma investments and downbeat industry reports can relax as experts concur “it’s a time of growth for biopharmaceutical outsourcing.”

Amgen opened its $200m (€160m) biologics plant​ last week on the same complex in Singapore where AbbVie and Novartis are constructing their own biomanufacturing facilities​, and with Big Biopharma continuing to invest in its own capacities to support its biologics pipelines, there may be alarm bells ringing across the contract manufacturing industry.

At a recent industry conference​, Novartis’ head of global tech operations, Juan Andres, spoke of how the Swiss firm would continue to invest in its complex manufacturing technologies as “those things are going to be more problematic to outsource,” ​mirroring the views of Janssen and Eli Lilly, which have both told this publication they are more prone to invest in their own capabilities for biologics.

An industry report from PharmSource last month​ brought further gloom to CMOs, saying Big Pharma's current outsourcing level of 25-30% is unlikely to increase as companies would rather “make than buy”​ biologics. Despite this, the report said small biotechs and virtual biopharmas would continue to rely on third-parties, and Stacie Ropka, an IP litigation lawyer from Axinn, Veltrop & Harkrider was also upbeat about the CMO industry.

“Big Pharma has made investments in manufacturing to allow them to manufacture biologics in-house as have the larger generics, but there is still a place for CMOs, particularly during down-stream development where manufacturing processes are developed but then might be brought in-house for final scale-up,” ​she told Biopharma-Reporter.com.

Eric Langer, Managing Partner of industry analysis firm BioPlan Associates, added results from the ‘11th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production’ showed in-house facilities were increasingly outsourcing operations including toxicity testing, fill/finish operations and validation services.

Furthermore, outsourcing is likely to “take on a higher-value dimension that puts cost behind other considerations,”​ he added, encouraged by the advent of biosimilars, and “all in all, it’s a time of growth for biopharmaceutical outsourcing.”

Meanwhile, CMOs themselves are continuing to invest in biologics capabilities: Catalent quadrupled its biologics offering last year​, Patheon propelled itself into the biomanufacturing market in August​ with its acquisition of Gallus Biopharmaceuticals, while Lonza continues to invest​.

IP Protection and Biosimilars

Controlling the supply chain and minimising the risk of complex manufacturing have been cited by Big Biopharma as reasons for investing in-house. However, we asked Ropka whether companies were reluctant to outsource due to the security of their intellectual property.

“The agreements prevent third parties from using the process to manufacture other biologics,”​ she said, but “if a third party used the IP protected process to make a biosimilar, it would be easier to enforce because the biosimilar applicant must turn over the manufacturing process once there is application acceptance by FDA. Of course, current Sandoz litigation is testing this provision of the BPCIA [Biologics Price Competition and Innovation Act] right now.”

At the Biological Production Forum in Dublin, Ireland, earlier this year Ron Branning, VP Corporate QA at Gilead Sciences, spoke of IP concerns relating to the cancer drug Avastin (bevacizumab) in a previous role at Roche's Genentech.

By being caught off guard by the US FDA’s approval of Avastin in 2004, Genentech needed greater commercial capacity. “The problem was that by fitting out [Genentech’s] San Francisco plant, we had to move out three commercial products to CMOs,” ​he told delegates.

“So we taught Lonza, Novartis and Genetics Institute - now part of Pfizer - how to manufacture our 3 largest oncology products, so as it turns out we in essence gave away our IP by doing a technology transfer out of necessity.”

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