Biopharmaceutical products are

Transcription

1 The Rise of Biopharmaceutical Contract Manufacturing In contrast to the early years, the contract manufacturing industry has matured into an established, profitable, and important segment of the biopharmaceutical industry. Thomas C. Ransohoff Biopharmaceutical products are complex macromolecules that must be manufactured to meet high purity and quality standards. The manufacturing processes and analytical test methods used to produce and characterize these products are among the most technically challenging in any industry. As a result, manufacturing capacity and development capability are expensive to build and operate. To make matters more challenging, a decision to construct commercial production capacity to support the launch of a biopharmaceutical product must be made around the time a product is in Phase 2 clinical trials when it is extremely difficult to accurately predict manufacturing capacity requirements. 1 Even against a backdrop of increasing use of outsourcing in the pharmaceutical and other industries, regulatory and technical challenges have created additional obstacles for outsourcing the manufacture of biopharmaceuticals. Nevertheless, as the industry matures, there is a clear trend toward the increasing use of biopharmaceutical contract manufacturing and development organizations, leading to significant recent growth in this segment of the industry. This article reviews the growth and changes in the contract manufacturing segment of the biopharmaceutical industry during the past two decades, and discusses current industry trends and dynamics. Thomas C. Ransohoff is a senior consultant at BioProcess Technology Consultants, Inc., Acton, MA, , transohoff@bioprocessconsultants.com. Listen to a podcast interview with Thomas C. Ransohoff at biopharminternational.com/biopharmnow BioPharm International October

2 A HISTORICAL PERSPECTIVE The Early Years ( ) The commercialization of modern biopharmaceutical products began with the development of recombinant human insulin in the mid- 1970s by several companies as a replacement for animal-derived insulin products. The first recombinant therapeutic proteins to be approved for marketing by the FDA were Humulin and Novolin, commercialized by Eli Lilly and Novo, respectively, in Since then, more than 100 recombinant proteins and monoclonal antibodies have been commercialized in the United States and Europe for the treatment of a wide range of diseases. 2 The majority of approved biotechnology products are recombinant proteins or monoclonal antibodies, both of which are manufactured using large-scale cultures of genetically modified organisms, followed by extensive recovery and purification steps. The complexity of these processes and their regulatory requirements contribute to high construction costs for a stateof-the-art biopharmaceutical manufacturing facility. These costs have been estimated at more than Quick Recap The biopharmaceutical contract manufacturing industry has grown to an estimated $1.5 billion in The regulatory environment that strongly discouraged contract manufacturers earlier has now become far more supportive of outsourcing. CMOs hold approx % of industry-wide capacity, both for microbial fermentation and mammalian cell culture. $4,000 per liter of installed bioreactor capacity. 3,4 The earliest biopharmaceuticals were manufactured by the companies that developed them by necessity there was no other route to produce these compounds. Furthermore, much of the fundamental process technology was developed in parallel with the products, and therefore, in many cases the operational know-how existed only in the product development firms. As a result, many standards still in use today for biopharmaceutical manufacturing were established by the initial manufacturing processes at facilities developed by companies such as Genentech, Eli Lilly, and Amgen. Another important factor in the early years was the perceived importance of controlling manufacturing processes and analytical methods, and the capabilities to develop them. The widespread view was that these capabilities were core and critical competencies in the biopharmaceutical industry, and that controlling them was a fundamental business necessity. In fact, it is still somewhat difficult to argue against this point: biopharmaceutical manufacturing capabilities and capacity decisions have proven to be critically important in numerous instances. Improved capabilities in the outsourcing arena for biopharmaceutical manufacturing and development activities have reduced the criticality of control in this area, but many people still view biomanufacturing capabilities and capacity as strategic. Finally, during the 1980s and early 1990s, the regulatory framework within the FDA for biologic products, which most biopharmaceuticals were considered to be, further reduced the attractiveness of any strategy other than in-house Many manufacturing standards still in use today were established by companies such as Genentech, Eli Lilly, and Amgen. manufacturing. This regulatory framework had two fundamentally challenging aspects for manufacturers of biopharmaceutical products: 1. The initial regulatory approach for biopharmaceuticals was derived from biologics (e.g., traditional vaccines and blood- or plasmaderived products), in which the process defines the product. This philosophy made sense for traditional biologics because the products were so complex that analytical quality control tests were generally insufficient to fully define a product. This philosophy was also appropriate for early biopharmaceutical products at a time when analytical methods were not nearly as advanced as they are today. As a result, products were additionally defined by their manufacturing processes and the facilities in which they were manufactured (including scale and specific equipment used in processing operations). The practical outcome of this regulatory approach to biopharmaceuticals was that companies felt they needed to invest in a licensable, full-scale production facility before entering pivotal clinical trials. (Another practical consequence of this regulatory framework was that generic biologics were essentially 166 BioPharm International October 2007

3 Table 1. Most early entrants to the biotech contract manufacturing market were later acquired. Company name Biochemie (Sandoz) Acquired by Novartis (merger with Ciba-Geigy) 1996 Bio-Intermediair Gist-Brocades; DSM 1997 Bio Science Contract Production Cephalon; North American Vaccines; Baxter 1992 Boehringer Ingelheim N/A N/A Celltech Biologics Alusuisse-Lonza 1996 Corning BioPro Goodwin Biotechnology Invitron Verax Covance; AkzoNobel (Diosynth); Schering-Plough 1996 Wallace Pharmaceuticals 2004 Centocor; Chiron; Wyeth; Centocor 1990 Creative Biomolecules; Stryker Biotech 1993 impossible within this framework. With conventional small molecule therapeutics, the same active pharmaceutical ingredient could be made using significantly different processes and could be considered equivalent based on analytical and limited human safety and biodistribution data. As long as the process at least partly defines the product, this concept of equivalence cannot be applied to biological products.) [Last sentence reworded in attempt to remove ambiguity: orig said..this can never be true for biological products. ] 2. The second challenge was the requirement in the US that companies submit two license applications for commercialization of a new biologic product: a product license application (PLA), and an establishment license application (ELA). Biologics regulations required that the PLA and ELA be held by the same company. Moreover, in order to hold an ELA, a company had to either perform s i g n i f i c a n t manufacturing steps Year first itself, or be responsible acquired for the clinical testing of the product and perform the final manufacturing steps of the process. Regulations were very specific about who held the PLA and ELA, the products to which these type of license applications applied, and how and where the product was manufactured. Changes to any of these criteria required submission of a new license application and reapproval of the license. In that environment, any approach other than in-house m a n u - facturing resulted in significant loss of control of the product. For both of the above reasons, the companies that developed the first biopharmaceuticals invested significant resources and capital in manufacturing and in process and analytical development, including staff and facilities. The type of company arising from this model was termed a fully integrated biopharmaceutical company (FIBCO). Genentech, Amgen, Genetics Institute, and Biogen are examples of successful FIBCOs that arose during this period. For many other companies that developed at this time, the FIBCO model presented significant financial hardships. These companies were unable to sustain the cost of operating as FIBCOs when products failed or didn t advance quickly enough in the clinic; such companies include Repligen, Seragen, Synergen, Somatogen, and Celtrix, all of whom have either been acquired or shifted to a different business model. One important impact of the FIBCO model, which was prevalent during this early period, was the lack of demand for significant contract manufacturing services, resulting in a weak biopharmaceutical outsourcing sector. In spite of this situation, a number of organizations pioneered the development of biopharmaceutical contract manufacturing capabilities during the late 1980s and early 1990s; these include Boehringer Ingelheim, Celltech Biologics, Bio- Intermediair, Damon Biotech, Corning BioPro, Biochemie, By the mid-1990s, the availability of CMOs enabled biopharmaceutical companies to consider outsourcing. Invitron, and Verax. Several early entrants used proprietary technologies (e.g., encapsulated microspheres, fluidized bed bioreactors, perfusion systems, proprietary expression technologies) as differentiating features. As illustrated in Table 1, many early entrants in the market subsequently were acquired or exited the business, with Boehringer Ingelheim being quite possibly the only exception. The Invitron facility in St. Louis is a particularly interesting example, having changed hands four times in the past two decades. 5 Post-FDA Modernization Act ( ) Because the timelines for construction of FIBCO-type facilities range BioPharm International October

4 from 30 to 48 months from project initiation to production of drug substance, 4,6 facility decisions for the first FIBCOs had to be made early in development well in advance of knowing the outcome of pivotal clinical trials. In the early 1990s, several biotechnology products failed in late-stage clinical trials after the companies developing these products had invested significant capital in manufacturing facilities. Few were more publicized than the failure of Synergen s Antril (anakinra). This product failed to demonstrate efficacy in treating sepsis in a Phase 3 trial in 1994, after the company had made a substantial investment in a manufacturing facility. The resulting financial distress was one factor leading to the sale of Synergen to Amgen. 7 (Anakinra was eventually approved as Kineret and is now marketed by Amgen to treat rheumatoid arthritis.) The challenges faced by Synergen and others during the early 1990s were among the driving forces that caused regulators and industry participants to reexamine the prevailing approach to the development of biopharmaceutical products. By the mid-1990s, the availability of contract manufacturers and other outside service providers had increased to a level that enabled biopharmaceutical product developers to consider routes other than in-house manufacturing. In addition, regulatory changes, such as the 1997 FDA Modernization Act (FDAMA), were implemented during this period, and these changes enabled contract manufacturing in several important ways. Among the most important changes for biopharmaceutical manufacturers was the replacement of the product license application and establishment license application for biologics with a single biologics application The use of contract manufacturers for production of biopharmaceuticals increased significantly in the late 1990s. license (BLA). This new license, similar to the traditional new drug application used for small molecules, had the practical impact of enabling product companies to retain control of their products whether manufacturing was conducted in-house or through a contract manufacturing organization (CMO). Following the introduction of the BLA, guidance documents were published defining well-characterized biologics (also referred to as specified biologics ) and the use of comparability protocols to support process modifications during development and after product approval. 8 This change enabled companies with well-characterized products to improve processes, increase manufacturing scale, and even change manufacturing facilities without conducting extensive additional clinical trials, assuming comparability could be demonstrated. As a result of these changes, the use of contract manufacturers for production of biopharmaceuticals increased significantly in the late 1990s. This situation was particularly true for early-stage companies with high capital costs, especially when viable contract manufacturing options existed. The growing availability of contract manufacturing options made outsourcing a viable option for many products, even among large companies with ready access to capital. Much has been written about the make-versus-buy decision, 9,10,11 so that topic will not be covered here. Emerging Capacity Concerns ( ) Most of the industry s early products were highly potent molecules, such as erythropoietin and interferon, which required relatively little product to meet market demands. (One noteworthy exception to this observation is insulin, a ton-scale product that was the first biopharmaceutical product developed.) In the late 1990s, monoclonal antibody and Fc-fusion proteins began to be approved. For manufacturing Figure 1. Comparison of total amount required and average selling price (2004 data) between mammalian cell culture-derived recombinant protein (rproteins), and monoclonal antibody and Fc-fusion products (MAbs) Mammalian products Amount required (kg/yr) rproteins Average sales price ($/mg) MAbs 168 BioPharm International October 2007

5 Figure 2. Analysis of the biopharmaceutical pipeline for products derived from microbial fermentation and mammalian cell culture Number of products % 90% 80% 70% 60% 50% % 30% 20% % 0% Market BLA Phase 3 Phase 2 Phase 1 Market BLA Phase 3 Phase 2 Phase 1 Stage capacity requirements, this situation represented a very significant change because these products were generally antagonists that required significantly high doses (Figure 1). Partly as a result of the low quantities required for the industry s early products, the topic of industry-wide capacity for manufacturing biopharmaceutical products had not received significant attention or media coverage during the 1980s or 1990s. This changed abruptly in the year 2000 when Percent MAb-based Mammalian Microbial Stage several factors led to a significant concern that manufacturing capacity might not be available to meet the needs of the industry s developing monoclonal antibody pipeline: Immunex failed to construct or contract for adequate capacity to manufacture Enbrel, one of the most successful biopharmaceutical products ever commercialized. Enbrel is an Fc-fusion protein, requiring hundreds of kilograms per year to meet market demand (by contrast, less than 10 kilograms of erythropoietin are required to meet industrywide demand). This situation led to rationing of the product and the eventual sale of the company to Amgen. 12 The unparalleled level of financing of biotech companies in 1999 and 2000 led to a large number of products entering clinical trials in 2000 and Production capacities for clinical materials were limited, leading to delays in product development and rising concern about the industry s ability to meet manufacturing demands for new b i o - pharmaceutical products. A report by JP Morgan presented the first industry-wide analysis of mammalian cell culture capacity. 13 The report s conclusion was a dire prediction that demand for manufacturing capacity will exceed current capacity by a factor of four by The report was quickly Figure 3. Annual product requirements for large volume mammalian cell culture-derived biopharmaceuticals 1000 Estimated bulk requirements (kg/yr) Requirements 2005 Requirements 0 Rituxan Enbrel Remicade Herceptin Product Avastin Erbitux Xolair All others (37) 170 BioPharm International October 2007

6 Figure 4. Estimated recent and forecast industry-wide mammalian cell culture bioreactor capacity (equivalent fed-batch basis) Figure 5. Estimated recent and forecast industry-wide microbial fermentation capacity Estimated installed bioreactor volume (1000 L) CMO Product company Year followed by other analyst reports forecasting similar doom and gloom for the biopharmaceutical industry. 14,15 As a result of the financing environment in 1999 and 2000 and concerns regarding future capacity for the growing number of biotherapeutics (particularly monoclonal antibodies), many companies, now flush with capital, initiated mammalian cell culture construction projects, some on speculation. Thus, the trend toward increased outsourcing of biopharmaceutical manufacturing, which had begun in the late 1990s with FDAMA, was temporarily slowed or reversed as companies worked and spent to avoid being the next Immunex. What happened next was predictable: the significant supply shortage expected in the early-tomid 2000s did not occur, and growing numbers of product companies began offering to perform contract manufacturing services to take advantage of the excess capacity in their facilities. Estimated installed fermentor volume (1000 L) Every aspect of the development and manufacturing of MAb and recombinant protein products can now be outsourced. Growth-Driven Expansion (2003 Present) The current decade could arguably be termed the decade of the monoclonal. From both a pipeline perspective and a manufacturing capacity perspective, monoclonal antibodies have assumed a dominant presence in the biopharmaceutical industry. Figure 2, from one of BioProcess Technology Consultants recent industry-wide analyses, 16 shows the high percentage of MAbs in the industry pipeline. Figure 3 highlights the fact that the top seven mammalian cell culture manufacturing volume drivers in 2005 (on a kilogram-per-year basis) were monoclonal antibodies or Fc-fusion proteins. 3 (Enbrel is an Fc-fusion protein; the other six products shown in Figure 3 are monoclonal antibodies). The success of antibody and antibody-based biotherapeutics has fueled the growth of the biopharmaceutical industry as a whole, from approximately $20 billion in revenues in 2000 to approximately $55 billion in CMO Product company Year The biopharmaceutical contract manufacturing industry has benefited similarly, growing to an estimated $1.5 billion in In contrast to the early years of the industry, the contract manufacturing industry has matured into an established, profitable, and important segment of the biopharmaceutical industry. Virtually every aspect of the development and manufacturing of monoclonal antibody and recombinant protein products can now be outsourced. Biopharmaceutical startups now have little justification to invest in infrastructure for development and current good manufacturing practices (cgmp) manufacturing of early-stage biopharmaceuticals. As a result, the FIBCO model of the early years has been replaced by a virtual company model, emphasizing limited in-house infrastructure and efficient use of outsourcing. Additionally, large companies with a significant inhouse infrastructure, such as Genentech, are increasingly using contract manufacturers as part of their overall manufacturing strategies. 17 There is little doubt that the outsourcing segment for biopharmaceuticals, of which contract manufacturing is a significant component, will continue to grow in the coming years. BioPharm International October

7 Figure 6. Estimated current and future distribution of mammalian cell culture capacity product companies Wyeth Biopharma 17% BIOPHARMACEUTICAL MANUFACTURING CAPACITY CURRENT ANALYSIS As a result of the explosive growth of monoclonal antibody products, demand for mammalian cell culture manufacturing capacity has increased dramatically in the past decade. As described above, both contract manufacturers and product companies have benefited from this trend. Although the increase in demand has led to certain challenges in the biomanufacturing area, the industry has responded effectively with significant increases in both the supply of manufacturing capacity and process yields. Figure 4 shows BioProcess Technology Consultants analysis of recent and forecast growth in industry-wide mammalian cell culture manufacturing capacity from 2003 through Figure 5 shows BioProcess Technology Consultants estimate and forecast of industry-wide microbial fermentation capacity, which is increasing at a significantly lower rate. Commercial products manufactured in microbial fermentation systems are generally mature, and as shown in Figure 2, a smaller percentage of product candidates in the biopharmaceutical pipeline are made in microbial fermentation systems (as Abbott Labs Other 6% 20% Other Amgen 23% 21% Novartis 6% Genentech 21% Biogen Idec 9% Wyeth Biotech 10% Roche 10% Imclone 6% Amgen 12% Biogen Idec 9% Genentech 24% opposed to mammalian cell culture systems). Thus, the trend shown in Figure 5 is not unexpected. This is a dynamic industry, however. The majority of manufacturing growth is clearly in the mammalian cell culture area at present. There are promising early developments, however, both in the production of therapeutic antibodies in bacterial or yeast systems, as well as in the development of nonantibody protein therapeutics that can be made inexpensively in microbial host strains. Should either of these trends develop in Bristol Myers Squibb 6% a significant way, a shift back to microbial fermentation systems in the next decade is certainly a possibility. [Order of phrases re-arranged a bit]. As shown in Figures 4 and 5, CMOs currently hold approximately 15 20% of industry-wide capacity, both for microbial fermentation and mammalian cell culture capacity. As described above, we at BioProcess Technology Consultants believe there is an industry trend, particularly for pipeline products, toward increased outsourcing, so we expect that the share of industry capacity held by CMOs will rise in coming years. In addition, CMOs have a greater incentive to operate their facilities at high utilization rates. For example, Lonza reported utilization rates of more than 75% in 2005 and in the first quarter of Figures 6 and 7 show our estimate of the distribution of mammalian cell culture capacity in 2006 and 2010, both for product companies and CMOs, respectively. One clear conclusion to be Figure 7. Estimated current and future distribution of mammalian cell culture capacity contract manufacturing organizations Lonza Biologics 31% Schering Plough (Diosynth) 5% Baxter Other Baxter Biosciences 13% Biosciences Other 4% 6% 18% Celltrion 11% Boeringher Ingelheim 34% Lonza Biologics 32% Human Genome Sciences 7% Boeringher Ingelheim 23% Celltrion 16% 172 BioPharm International October 2007

8 drawn from this distribution is that the majority of industry capacity is held by a relatively small number of firms. For example, we estimate that in 2006, Genentech, Wyeth, and Amgen held 59% of industry-wide product company mammalian cell culture capacity. On the CMO side, capacity is not as well-distributed, with Lonza, Boehringer Ingelheim, and Celltrion holding more than 75% of CMO capacity. Forecasts for 2010 do not indicate a significantly broader distribution. A strong outsourcing segment can improve the industry s ability to use capital efficiently and to develop products more rapidly. CONCLUSION Decisions related to manufacturing are among the most important ones faced by biopharmaceutical companies. Biopharmaceutical manufacturing capacities and development capabilities have repeatedly proven to be commercially and strategically critical. As the industry has grown and matured during the past 20 years, we have seen a number of significant changes related to biopharmaceutical manufacturing and outsourcing. There has been a shift from a regulatory environment that strongly discouraged the use of contract manufacturers, to one that is far more supportive of outsourcing. The prevailing model for start-up companies has also changed: from one in which companies developed as fullyintegrated biopharmaceutical companies (FIBCOs) to one favoring the virtual company model. And of course, the manufacturing requirements have changed for products being developed: previous products could meet the world market with fewer than 10 kilograms per year, but today more than one ton per year can be required for a product to meet market demands. The current industry situation, although far more stable and predictable than even 10 years ago, is still a dynamic one. Knowledge of biopharmaceutical processes and analytical methods continues to increase at a significant rate. The level of sophistication in manufacturing is increasing as companies begin to apply operational excellence practices and improve their abilities to adjust to ever-changing market demands. The industry will continue to expand beyond comfortable definitions of biopharmaceutical, driven by opportunities to harness advances in life sciences research to create novel approaches for treating disease, from cell and gene therapy products to RNA interference (RNAi). As a result, the types of products and the manufacturing technologies and approaches required will continue to evolve. A strong outsourcing segment can improve the industry s ability to use capital efficiently and to develop products more rapidly while maintaining the flexibility required to address the everchanging biopharmaceutical demands. In this environment, we expect the contract manufacturing and outsourcing segment of the biopharmaceutical industry to continue to expand. REFERENCES: 1. Seymour P. Building versus buying manufacturing capacity. Scaling-Up from Bench to Clinic & Beyond. IBC Pre-Conference Symposium; 2002 Aug 14; San Diego, CA. 2. Approved biotechnology drugs. In: Strickland D, editor. Guide to biotechnology, Washington, DC: Biotechnology Industry Organization; p Ransohoff T. Evaluating strategic options for biomanufacturing. IBC Biopharmaceutical Manufacturing and Development Summit; 2006 Dec 6; Orlando, FL. 4. Machulski J. Case study: Lonza Biologics cell culture contract manufacturing facility, Portsmouth, NH, USA. BioLOGIC USA 2003 Conference; 2003 Oct 15; Boston, MA. 5. Koplove HM. Building, buying, remodeling, and selling biopharmaceutical plants: a tale of two facilities. BioProcess International Conference & Exhibition; 2005 Sep 19; Boston, MA. 6. Williams G. Large scale manufacturing facility development: balancing speed, cost, and quality. BioManufacturing. Barnett International Conference; 2002 Sep 30 Oct 1; Boston, MA. 7. Herrmann M. When products fail. Nat Biotechnol 2001 Jun;19 Supp 6:BE US Food and Drug Administration. Guidance for industry. Changes to an approved application for specified biotechnology and specified synthetic biological products. Rockville, MD; 1997 Jul. 9. Nicholson I, Latham P. When make or buy means make or break. Biotechnol May;12(5); Seymour P, Galliher P. Make vs. buy: the continuing debate of managing manufacturing capacity. Amer Pharm Outsourcing. 2002;3(1): Ransohoff T. Considerations impacting the make vs. buy decision. Amer Pharm Outsourcing Mar Apr;5(2): Aldridge S. Overcoming challenges in biomanufacturing. Genetic Eng News. 2003;23(14): Molowa DT. The state of biologics manufacturing. Parts 1 and 2. New York: JP Morgan Securities, Inc.; 2001, Mallik A, Pinkus GS, Sheffer S. Biopharma s capacity crunch. The McKinsey Quarterly 2002 midsummer special edition;risk and Resilience: Ginsberg PL, Bhatia S, McMinn RL. The road ahead for biologics 174 BioPharm International October 2007