Five reasons biologics contract manufacturing will hit $87.6bn by 2027

By Ben Hargreaves contact

- Last updated on GMT

(Image: Getty/Xur82)
(Image: Getty/Xur82)

Related tags: CAR-T, Monoclonal antibodies, Novartis, Pfizer, Gsk, Roche, China

The contract market for bringing biologics through the pipeline to commercialisation is growing at a rapid clip, with a recent report suggesting a high CAGR in the sector.

Expansion in the outsourcing of development and manufacturing of biologics will see the market reach $87.6bn (€77.2bn) by 2027, according to a report by Research and Markets. To reach this figure, the market will develop a double-digit compound annual growth rate (CAGR).

Using the report, BioPharma-Reporter has identified five key factors driving the development of the market.

Cost and complexity of manufacture

A significant reason that companies operating as contract manufacturing organisations (CMOs) and contract development and manufacturing organisations (CDMOs) are experiencing a boom in business is due to the difficulty in producing commercial-scale biologics in-house.

This is increasingly the case as novel technologies are brought through the clinical stage, receive approval, but then need processes to be scaled up to meet patient demand.

One particular case is the manufacture of chimeric antigen receptor (CAR)-T therapy. When speaking to Derek Adams, bluebird bio’s chief technology and manufacturing officer, he told us that the understanding of the manufacturing process of this type of therapy is still in its infancy.

“Currently, our processes are very complicated. They’re expensive and are probably very inefficient, but they work. Knowing it will get better keeps us going,”​ he concluded.

As result of this difficulty, it makes sense for companies to direct a CMO to take on the responsibility of manufacturing complex therapies and allow them to find the efficiencies – allowing the developer company to focus on the commercialisation of the product.

Companies narrowing focus

A broader angle as to why the market is growing at such a rate is that companies are trying to refine down their activities to fewer, core areas of business. This can clearly be seen, at an organisation level, with the number of companies taking action on legacy consumer healthcare businesses.

This has seen Pfizer and GSK combine healthcare ventures​, which arrived half a year after Novartis divested its stake​ in the consumer healthcare industry.

Companies are now looking to focus on core activities of drug development, as Emma Walmsley, CEO of GSK, emphasised in a statement on its consumer healthcare joint venture: “The transaction presents a clear pathway forward for GSK to create a new global Pharmaceuticals/Vaccines company, with an R&D approach focused on science related to the immune system, use of genetics and advanced technologies.”

This means that even larger companies, such as Novartis, are seeking partners to advance manufacturing of complicated biologic treatments or to advance into different geographic regions​, such as with its deal with Cellular Biomedicine Group (CBMG) to manufacture its CAR-T therapy.

The emergence of China

Supported by the Chinese government, which is keen to invest in the sector, there is a growing number of biotechs, such as CBMG, and a developing educated workforce within the country.

As a result, larger pharma companies are using the opportunity to partner with Chinese companies to develop drug candidates and to access the local market at the same time. One recent example saw Eli Lilly and Innovent receive approval for the second domestically produced PD-1 drug​ in China.

These factors have led for some within the industry to call attention to the pace of development of the biologics industry in China. Christoph Heinemann, transformation leader at Sanofi, told attendees at a recent event that ‘speed and scale’ of transformation​ in China is something that the global industry needs to watch with interest. In particular, he noted that there are more patients involved in clinical trials in China for CAR-T therapies than there are currently in the US.

Higher profit

One of the major reasons there is a surge of interest related to investing in biologics is that the return is significantly higher than on traditional small molecule therapies. Research and Markets noted that for manufacturers, profits are 40% higher when compared with small molecule drugs.

There is also the commercial return for the pharma companies that bring biologics through to market. The same report noted that, in 2017, 70% of blockbuster drugs were biologics. In addition, many of the top-selling treatments were biologics, such as Humira (adalimumab), Herceptin (trastuzumab), and Rituxan (rituximab).

High number of candidates in pipeline

With higher profit comes greater interest from the industry in putting more biologics through the clinic, which provides a larger market for CDMOs and contract research organisations (CROs).

McKinsey revealed that the number of biotech patents applied for has been growing at a rate of 25% annually​ since 1995. In addition, there are more than 1,500 biologics currently going through clinical trials.

In particular, there is significant interest in the cell and gene therapy space – with a pipeline of nearly 300 therapies in this area alone​.

With this healthy pipeline, increasing numbers of CMOs are offering services to simplify the development and manufacturing​ of such treatments to capitalise on the continued growth of the market into the coming years.

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