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1 Table of Contents Presented by HighTech Business Decisions 3150 Almaden Expressway, Suite 222, San Jose, CA Tel: (408) Fax: (408) May 2017

2 TABLE OF CONTENTS Chapter 1: EXECUTIVE SUMMARY 1.1 Introduction Market Overview Introduction Industry Drivers Market Size Summary of Customer Needs Products Outsourcing Budgets Change in CMO Pricing CMO Response to Capacity Shortfall Industry Trends and Observations Summary of Contractors Capabilities Annual Revenue Ranges Technology Capabilities Capacity Expectations for the Future of the Industry 1-19 Chapter 2: METHODOLOGY, DEFINITIONS, AND ACRONYMS 2.1 Research Objectives Research Methodology Definition of Biopharmaceutical Manufacturing Box-and-Whiskers Plot Definition Acronyms 2-4 Chapter 3: BIOPHARMACEUTICAL CONTRACT MANUFACTURING: MARKET OVERVIEW 3.1 Introduction Suppliers: The Contract Biomanufacturers Types of Contract Biomanufacturing Companies Major Players: Contract Biomanufacturing Companies Organizational Changes in the Industry Technologies and Services Contract Biomanufacturers Capacities Contractor Revenues 3-12

3 TABLE OF CONTENTS (continued) Chapter 3: 3.3 The Customers: Pharmaceutical and Biotechnology Companies Respondents Biopharmaceuticals by Phase Outsourced Biomanufacturing Examples of Contractors Used by Client Companies Customers Future Outsourcing Expectations In-House Capacity Expansion Outsource Requirements Industry Drivers Supply and Demand Market Size Estimates of Market Size Based on Contractor Revenues Market Size by Technology and Service Categories Market Growth Forecasts Trends in the Biopharmaceutical Contract Mfg. Market Industry Opportunities and Challenges Overall Industry Trends 3-34 Chapter 4: PHARMACEUTICAL AND BIOTECHNOLOGY COMPANIES: CLIENT ANALYSIS 4.1 Introduction Study Participants Respondents Titles and Experience Locations and Sites Respondents Biopharmaceutical Products on the Market Respondents Preclinical Products Respondents Clinical and Commercial Products Respondents Outsourced Products Biomanufacturing Needs Current and Forecasted Tank Size Requirements Number of Outsourced Batches Current and Forecasted Outsourced Demand Future Production Technology Requirements New Molecules Entering Clinical Pipeline Biomanufacturing Strategies Outsource versus In-House Decision Deviation from Outsourcing Strategy When Decision is Made to Expand Internal Capacity Estimate of Future Outsourcing Requirements 4-49

4 TABLE OF CONTENTS (continued) Chapter 4: 4.4 Outsourcing Biomanufacturing Outsourcing vs. In-House Manufacturing Spending Current and Anticipated Needs for Outsourced Services Change in CMO Pricing External Funding CMO Response to Capacity Shortfall China Market Strategy Use of China CMO for Export Purposes New Services Sought in a Contractor Companion Diagnostics Manufacturing Technologies Current Expression Levels Projects Requiring Continuous Manufacturing Molecules Requiring Continuous Manufacturing Range of Bioreactor Scale Biggest Challenges to Innovative Biomanufacturing New Technologies for Complex Molecules Contractor Selection Essential Characteristics Sought in a Contractor Commercial-Phase CMO Differentiation Change in Commercial-Phase CMO Differentiation Clinical-Phase CMO Differentiation Consideration of CMO New in the Industry Importance for Services to be Co-Located Services Difficult to Find Contractor Relationships Favorite Contractors Top CMOs for Operational Excellence, Price and Overall Reputation Number of CMOs Utilized Outsource Spending Outsourcing Budgets Outsourcing Budgets by Technology Outsourcing Budgets by Service Future Trends and Expectations Microbial Fermentation Trends Challenges for Biomanufacturing Long-Term Industry and Market Trends Future of Biopharmaceutical Contract Manufacturing 4-202

5 TABLE OF CONTENTS (continued) Chapter 5: BIOPHARMACEUTICAL CONTRACT MANUFACTURERS 5.1 Introduction Study Participants Types of Suppliers Locations Regulatory Inspections and Status Acquisitions and Organizational Changes Revenues Technologies and Capacities Offered Number of cgmp Phase III and Commercial Products Production Technologies Business Mix by Service Category Contract Manufacturers Current Capacities Contract Manufacturers Expansion Plans Manufacturing Technologies Expression Yields and Batch Success Rates Number of Batches Run per Tank Investment in Technology Over Past Five Years Investment Plans: Next Five Years Expression Technologies for Non-Standard Format 5-42 Antibodies Production Scale Single-Use Capacity Mix Importance of Drug Substance and Drug Product 5-49 Capability Biosimilar Projects Biosimilar Strategy Marketing Request-for-Proposals Received Request-for-Proposals Requiring Single-Use vs Stainless Steel Bioreactors Request-for-Proposals Outside Standard Platform Request-for-Proposals Leading to Contract Revenue Spent on Research and Development Metrics Used to Benchmark Business Performance How to Measure Customer Satisfaction 5-71

6 TABLE OF CONTENTS (continued) Chapter 5: 5.5 Customer Relationship Clients Served Bookings Offerings to Clients to Help Manage Schedule or Capacity Differentiation from Other CMOs Contractor vs. Client Relationship Changes Characteristics of the Customer Base Portion of Business by World Regions Industry and Future Trends Observation of Change in Demand for Outsourcing 5-95 Services Expectation of Industry Growth Price Changes for Biopharmaceutical Production Regulatory Challenges Changes and Trends for the Future of the Biopharmaceutical Contract Manufacturing Industry Appendix A: Write-Ups of Interviews with 41 Pharmaceutical and Biotechnology Company BioManufacturing Directors Worldwide, Unnamed and Edited for Confidentiality Appendix B: Directory of Biopharmaceutical Contract Manufacturers Appendix C: Interview Guide for Pharmaceutical and Biotechnology Company Respondents Appendix D: Interview Guide for Biopharmaceutical Contract Manufacturers

7 LIST OF TABLES Chapter Observed CMO Response to Capacity Shortfall Willingness to Accept Implemented CMO Changes User Opinions on Future of the Industry Future Trends Noted by CMO Respondents 1-19 Chapter Market Research Steps List of Acronyms 2-4 Chapter CMOs Preferred by Respondents Examples of Changes or Events in the CMO Industry: Past Two Years Industry Revenue Mix by Technology Categories Biopharmaceutical Contract Manufacturing Industry Capacity Estimates Examples of New Capacity for Biopharmaceutical Contract Manufacturing Examples of Contract Biomanufacturers and their Client Companies Examples of Pharmaceutical/Biotechnology Companies Building Capacity Outsourced Volumes by Technology Estimates of Needs for Outsourced Volumes for the Worldwide Industry Outsourced Manufacturing Capacity vs. Needs: Mammalian Cell Culture Outsourced Manufacturing Capacity vs. Needs: Microbial Fermentation Worldwide 2016 Market Size for Contract Biomanufacturing: Revenues Market Size by Technology Category: US$ Market Size by Service Category: US$ Worldwide 2017 Market Size for Contract Biomanufacturing Major Biopharmaceutical Contract Manufacturing Industry Trends 3-35 Chapter Respondent Pharmaceutical and Biotechnology Companies Respondents Titles by Segment Respondent Locations Respondents Bulk Biopharmaceutical Manufacturing Sites Respondents Fill-and-Finish Biopharmaceutical Manufacturing Sites Respondents Preclinical Products Respondents Preclinical Products Requiring Outsourcing Number of Products Produced Using Mammalian Cell Culture Number of Products Produced Using Microbial Fermentation Types of Respondents Products by Production Technology Outsourced Products by Phase by Year Number of Products Outsourced by Tank Size Needs in 2017: 4-18 Mammalian Cell Culture Number of Products Outsourced by Tank Size Needs in 2017: 4-19 Microbial Fermentation

8 LIST OF TABLES (continued) Chapter Tank Size Distribution for Outsourced Products: Mammalian Cell Culture Tank Size Distribution for Outsourced Products: Microbial Fermentation Outsource Batches per Project: Mammalian Cell Culture Outsource Batches per Project: Microbial Fermentation Outsource Demand by Phase: Mammalian Cell Culture Outsource Demand by Phase: Microbial Fermentation Expected Changes in Technologies Used Molecule Class Mix Entering Clinical Pipeline Drivers for Companies Who Outsource 100% GMP Manufacturing Drivers for Companies Who Outsource Some GMP Manufacturing Deviation from Outsourcing Strategy Decision Points to Add Internal Capacity Considerations for Estimating Future Outsourcing Requirements Future Outsourcing Trends Spending Mix by Production Source and Technology Services Currently Outsourced Services To Be Outsourced No Plans to Outsource Services Change in Outsourced Service by Number of Products Reasons for Pricing Change for CMO Biopharmaceutical Services External Funding Observations Observed CMO Response to Capacity Shortfall Willingness to Accept Implemented CMO Changes China Market Strategy and Drivers Considerations for Use of Chinese CMO for Export Purposes New CMO Services Sought Companion Diagnostics by Segment Expression Levels Reported by Respondents in Grams per Liter Expression Levels Reported for Mammalian mab Products Summary of Comments Related to the Use of Continuous Manufacturing Required Bioreactor Scales in Liters Innovative Biomanufacturing: Challenges and Actions Development of Manufacturing Technologies for Complex Molecules Essential Characteristics for Choosing a CMO Weighted Characteristics by Respondent Segment Main Differentiators Among Commercial-Phase CMOs Observations Regarding Contract Manufacturing Industry Changes Main Differentiators Among Clinical-Phase CMOs Criteria for Using a New CMO without Manufacturing History Reasons for Importance Rating of Service Co-Location Services Difficult to Find Contract Manufacturers Preferred by Respondents Top CMOs for Operational Excellence, Price and Overall Reputation Reasons for Change in Number of CMOs Utilized 4-176

9 LIST OF TABLES (continued) Chapter Expenditures on Outsourcing of Biopharmaceutical Production Spending Mix by Technology: 2017 and Weighted Averages: Outsourcing Budget by Services in Weighted Averages: Outsourcing Budget by Services in Microbial Fermentation Trends Capacity Constraints and Challenges Near-Term Challenges for the Biopharmaceutical Manufacturing Industry Future Trends in Biopharmaceutical Manufacturing Future Expectations of the Biopharmaceutical Manufacturing Industry Chapter Respondents from Companies Offering Contract Biomanufacturing Services Types of Biopharmaceutical Contract Manufacturing Organizations Contract Biomanufacturers: Headquarter Locations Examples of Company Changes in Contract Biomanufacturing Organization Changes Over Last Two Years Contract Biomanufacturers Revenue in 2016 (US$) Phase III and Commercial cgmp Products Manufactured Business Mix by Production Technology and Year Business Mix by Production Technology and Respondent Segment: Business Mix by Service and Production Category and Year Business Mix by Service and Production Category by Respondent Segment Mammalian Cell Culture Capacity at 17 Respondents Facilities in Microbial Fermentation Capacity at 14 Respondents Facilities in New Capacity Expected: 2017 to Contractor Yields and Success Rates Number of Batches Run per Tank Investment in Technology Over Past Five Years Investment in New Technology Expected Bioreactor Scale in Demand Percentage of Single-Use Technologies at Respondent Sites Advantage of Drug Substance and Drug Product Capability Biosimilar Strategies Number of RFPs Received per Month Percent of RFPs Split by Stage of Project Percent of RFPs Split by Bioreactor Type RFPs Received Not Within Standard Platform RFP Success Rate Areas of Investment Benchmarking Metrics How Customer Satisfaction is Measured 5-72

10 LIST OF TABLES (continued) Chapter Number of Clients in Offerings to Clients to Manage Schedule Factors CMOs Clients Use to Differentiate Them Observed Contractor and Client Relationship Changes Business Mix by Customer Base by Respondent Segment Simple and Weighted Business Mix by Customer Base Types of Customers Served and Number of Products Average Percentage of International Clients Business Mix by World Region by Respondent Segment Simple and Weighted Business Mix by World Region Observations for Demand Increase Over Last 12 Months Average Expectations of Growth: Next Twelve Months Average Expectations of Growth: Next Three Years Areas Impacted by Price Pressures Regulatory Challenges Industry Prospects and Trends Noted by Contractor Respondents 5-108

11 LIST OF FIGURES Chapter A Outsourcing Demand vs. Contract Biomanufacturers Capacity: Mammalian B Outsourcing Demand vs. Contract Biomanufacturers Capacity: Microbial C Worldwide Biopharmaceutical Contract Manufacturing Market Forecast A Respondents Biopharmaceutical Products by Phase and Technology B Respondents Preclinical Products C Respondents Expected Change in Biopharmaceutical Outsourcing Budgets D Price Change for CMO Biopharmaceutical Services A Contract Biomanufacturers Annual Revenue Ranges in B Technology Comparisons: Weighted Business Mix in C Worldwide Biopharmaceutical Contract Manufacturing Industry Capacity 1-18 Chapter A Explanation of Box-and-Whiskers Plot 2-4 Chapter A Worldwide Biopharmaceutical Contract Manufacturing Industry Capacity B Biopharmaceutical CMO Average Revenue in A Respondents Biopharmaceutical Products by Phase B Production Source Mix C Outsourced Products by Phase in D Outsourced Production Spending by Respondent Segment E Outsourced Products by Phase by Year F Trends Indicated by Number of Products Outsourced or to be Outsourced A Outsourcing Demand versus Contract Capacity: 2017 to 2022: Mammalian B Outsourcing Demand versus Contract Capacity: 2017 to 2022: Microbial A Worldwide Biopharmaceutical Contract Manufacturing Market Forecast 3-33 Chapter A Respondent Segment by Number of Biomanufacturing Sites B Summary of Respondents Bulk and Fill-and-Finish Biopharmaceutical 4-6 Manufacturing Sites 4.1-C Number of Biopharmaceutical Products on the Market D Respondents Preclinical Products E Respondents Preclinical Products Requiring Outsourcing F Change in Number of Preclinical Products Requiring Outsourcing G Respondents Biopharmaceutical Products by Phase and Technology H Respondents Biopharmaceutical Product Mix by Phase I Respondents Biopharmaceutical Products by Technology and Company 4-13 Type 4.1-J Respondents Biopharmaceutical Products Sourcing Mix K Outsourced Products by Phase in L Outsourced Products by Phase by Year 4-17

12 LIST OF FIGURES (continued) Chapter M Tanks Sizes Required for Outsourced Mammalian Cell Culture Products N Tanks Sizes Required for Outsourced Microbial Fermentation Products A Tanks Size Mix for Outsourced Products: Mammalian Cell Culture B Tanks Size Mix for Outsourced Products: Microbial Fermentation C Outsource Batches per Project: Mammalian Cell Culture D Outsource Batches per Project: Microbial Fermentation E Summation of Outsourced Volumes Required by Respondents F Technology Usage Patterns Top 6 Mentions G Molecule Class Mix Entering Clinical Pipeline A Respondents Outsourcing Strategies B Deviation from Outsourcing Strategy C Decision Time Frame in Advance of Capacity Expansion A Outsourced Production Spending by Respondent Segment B Outsourced Spending Mix by Technology: C Expected Changes in Outsourced Spending D Price Change for CMO Biopharmaceutical Services E Distribution of Price Increase for CMO Biopharmaceutical Services F Observed Change in External Funding G China Market Strategy H China Market Strategy Local Manufacturing vs. Import Path I Use of Chinese CMO for Export Purposes J Developing Companion Diagnostics A Mammalian Cell Culture Titers B Microbial Fermentation Yields C Future Projects Requiring Continuous Manufacturing D Molecules Requiring Continuous Manufacturing E Mammalian Cell Culture Bioreactor Scale Commercial Phase F Mammalian Cell Culture Bioreactor Scale Clinical Phase G Microbial Fermentation Bioreactor Scale Commercial Phase H Microbial Fermentation Bioreactor Scale Clinical Phase I Major Areas that Present Challenges to Innovative Biomanufacturing J Availability of Technology for Development and Manufacture of Complex Molecules 4.6-A Top Criteria for Selecting a CMO B Top 5 Weighted Characteristics by Respondent Segment C Changes in Main Differentiators that Set Commercial-Phase CMOs Apart D Importance for CMO to Have All Services Co-Located E Importance for CMO to Have All Services Co-Located by Respondent Segment 4.7-A Change in Number of CMOs Utilized A Respondents Expected Change in Outsourcing Budgets: 2017 to B Weighted Averages: Outsourcing Budget by Services: 2017 and A Microbial Fermentation Trends B Challenges for Biomanufacturing C Opinion on Future Success of Biopharmaceutical Manufacturing 4-203

13 LIST OF FIGURES (continued) Chapter A Length of Time in CMO Business B Number of CMO Respondent Sites C Number of FDA or EMA Inspections D Inspections Associated with New or Approved BLA E Contract Biomanufacturers Annual Revenue Ranges in F Contract Biomanufacturers Expected Revenue Change: 2016 to A Average Number of Phase III and Commercial Products B Technology Comparisons: Business Mix by Respondent Segment: C Technology Comparisons: Weighted Business Mix: D Service Category Comparisons: Business Mix by Respondent Segment E Production Category Comparisons: Business Mix by Respondent Segment F Weighted Business Mix by Service and Production Category: G Mammalian Cell Culture Capacity Utilization Rates: 2017/ H Microbial Fermentation Capacity Utilization Rates: 2017/ I Additional Mammalian Cell Culture Capacity by Year J Additional Microbial Fermentation Capacity by Year K Summary of Current and Future Capacity at Surveyed Contractor Facilities A Expression Yields by Technology and Respondent Segment B Average Number of Batches Run per Tank C Expression Technology Implementation for Non-Standard Format 5-43 Antibodies 5.3-D Distribution of Scale for Mammalian Cell Culture: Clinical Phase E Distribution of Scale for Mammalian Cell Culture: Commercial Phase F Distribution of Scale for Microbial Fermentation: Clinical Phase G Distribution of Scale for Microbial Fermentation: Commercial Phase H Distribution of Single-Use Technologies by Respondent Type I Importance of Drug Substance and Drug Product Capability J Change in Importance of Drug Substance and Drug Product Capability K Percent of Business Related to Biosimilar Projects L Change in Percentage of Business for Biosimilar Projects M Biosimilar Strategy A Average Number of RFPs Received per Month B Percent of Respondents Whose RFPs Specify Requirements C RFP Success Rate D Percent of Revenue Invested in R&D E Change in R&D Investment from F Customer Loyalty Survey Implementation A Distribution of Number of Clients Served in B Percent of Respondents Fully Booked in C Production Technology Fully Booked in D Length of Time Manufacturing Plant Booked Out E Business Mix by Customer Base by Respondent Segment F Simple and Weighted Business Mix by Customer Base Comparison 5-90

14 LIST OF FIGURES (continued) Chapter G Business Mix by World Region by Customer Segment H Simple and Weighted Business Mix by World Region Comparison A Change in Demand for Outsourced Services Over Last 12 Months B Expectations of Industry Growth: Twelve Months and Three Years C Price Expectations in D Distribution of Expected Price Change 5-101