TABLE OF CONTENTS. 1.3 Industry Pricing Trends Recent Industry Pricing Changes Contractor Utilization Rates 1-5

Transcription

1 TABLE OF CONTENTS Chapter 1: EXECUTIVE SUMMARY 1.1 Introduction Participants Locations Industry Pricing Trends Recent Industry Pricing Changes Contractor Utilization Rates Outsourcing Strategies and Contractor Selection Users Outsource Strategies Using New CMOs for New Projects Price Premium for One-Stop-Shop CMO Price Reduction from Emerging-Market CMO Contractors Business Strategies and Customer Types Fee-For-Service versus Partnership Contracts Competition Emerging-Market CMOs Contractors Client Segments Impact on Pricing Due to Use of Disposables Contract Agreement: Expectations and Preferences Preferred Pricing Models Typical Pricing Model for Analytical Testing Preferred Pricing Model for Early Process Development Prices Paid and Prices Charged Contractors Pricing Models Pricing: Per-Batch, Per-Week, and Per-Gram Improving Contract Agreements and Solving Problems Users Perspective: Roadblocks to Negotiations Contractors Perspective: Roadblocks in Negotiations Users Experience with Changes in Contract Price Contractors Use of Cancelation Fees Final Observations 1-28

2 TABLE OF CONTENTS (continued) 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: INDUSTRY PRICING TRENDS 3.1 Introduction Participant s Locations and Job Titles Approved Biologic Products on Market Number of Biopharmaceuticals in Clinical Trials Industry Pricing Trends Recent Industry Price Changes Expected Price Changes Product or Service with Higher/Lower Prices Users Product or Service with Higher/Lower Prices CMOs Change in Optimized Expression System Pricing Models 3-22 Users Change in Optimized Expression System Pricing Models 3-24 CMOs Key Factors Affecting Manufacturing Costs Users Key Factors Affecting Manufacturing Costs CMOs Profit Margins Contractors Target Gross Profit Margins Impact of Pricing Pressures on Contractor Margins Contractors Utilization Rates Current and Planned Overall Utilization Rates Current Utilization Rates by Tank Size 3-40 Chapter 4: OUTSOURCING STRATEGIES/CONTRACTOR SELECTION 4.1 Outsource Strategies Manufacturing Budgets: In-House vs. Outsourced Outsource Budgets: Process Development vs. 4-2 Manufacturing Users Outsource Strategies 4-4

3 TABLE OF CONTENTS (continued) Chapter 4: 4.2 Contractor Relationships Users Current Contractors Plans for New or Different Contractors Contractor Selection Initial Contact with Contractors Using New CMO for New Project Current Project CMO Change Price Difference between Large and Small CMOs Price Premium for One-Stop-Shop CMO Contractor Location Use of Asian-Based CMO Use of Start-up CMO in Emerging Markets Use of Established CMO with Operations in Emerging 4-39 Markets Outsource Services to Emerging-Market CMOs Price Reduction from Emerging-Market CMOs Expectation of Lower Prices for Specific Services from 4-51 Emerging-Market CMOs Product Types Sourced from Emerging-Market CMOs 4-54 Chapter 5: CONTRACTORS BUSINESS STRATEGIES/CUSTOMER TYPES 5.1 Business Strategies CMO Focus or Business Strategy Competition from Emerging-Market CMOs Price Reduction Expected Due to Competition from 5-7 Emerging Markets 5.2 Customer Base Fee-for-Service versus Partnership Contracts Domestic versus International Clients Contractors Client Segments Technology and Product Trends Observed Shift to Perfusion Processes Impact of Pricing Due to Use of Disposables Accelerated mab Platform 5-22

4 TABLE OF CONTENTS (continued) Chapter 6: CONTRACT AGREEMENT: EXPECTATIONS/PREFERENCES 6.1 Users Expectations of Pricing Models Expectations of Core Charges: Users vs. Contractors Preferred Pricing Models Typical Pricing Model for Analytical Testing Typical Pricing Model for Formulation Development Typical Pricing Model for Cell-Line Development Price Difference for Accelerated mab Projects Shift from Fed-Batch to Perfusion Processes Pricing Models for Perfusion Processes Pricing Models for Perfusion Processes for Clinical Trial Antibody Conjugates in Product Portfolio Outsourced Antibody Conjugation Services Contractors Pricing Practices and Preferences Preferred Pricing Model for Early Process Development Current Trends in Cell-Line Development Licensing Fees Long-Term Contracts with Clients Trends Towards Alternative Business Arrangements 6-31 Chapter 7: PRICES PAID AND PRICES CHARGED 7.1 Process Development Prices Examples of Process Development Prices: Microbial Examples of Process Development Prices: Mammalian Process Development Hours FTE Rates for Process Development FTE Rates Contractors Pricing Models Contractors Short-Term vs. Long-Term Rates Contractors Batch Pricing Contractors Time-in-Facility Pricing Pricing: Per-Batch, Per-Week, and Per-Gram Per-Batch Pricing: Contractor vs. User Averages Time-in-Facility Pricing: Contractor vs. User Averages Price-Per-Gram: Contractor vs. User Averages Special Analysis: Price Per-Gram 2013 vs Special Analysis: Price, Per-Batch or Per-Week, Per-Liter 7-32

5 TABLE OF CONTENTS (continued) Chapter 7: 7.8 Typical Charges for Additional Services Typical Charges for Mammalian Cell Culture Services Typical Charges for Microbial Fermentation Services 7-40 Chapter 8: IMPROVING CONTRACT AGREEMENTS AND FUTURE OBSERVATIONS 8.1 Contract Negotiations for Production Users Perspective: Roadblocks to Negotiations Contractor Perspective: Roadblocks to Negotiations Users Perspective: Preparing for Problems Experience with Changes in Contract Price and the 8-10 Consequences Users Experience with Cancelation Fees Users: Frequency of Change Orders Contractors Perspectives: Preparing for Problems Contractors Use of Reservation Fees Contractors Use of Cancelation Fees CMOs: Typical Number of Project Change Orders Future Observations Contractors Future Market Trends Users Perspective: Other Observations Contractors Perspective: Other Observations 8-36

6 LIST OF TABLES Chapter Reason to Use New CMOs for New Projects Reasons to Pay or not Pay a Premium for a One-Stop-Shop CMO Users Perspective: Contract Sections Most Difficult to Negotiate Contractors Perspective: Most Common Roadblocks in Negotiations Additional User Pricing and Contract Agreement Observations Additional Contractor Pricing and Contract Agreement Observations 1-30 Chapter Market Research Steps Acronyms 2-4 Chapter Titles of Respondents Listed Alphabetically Product or Service Experiencing Higher or Lower Prices Users Product or Service Experiencing Higher or Lower Prices CMOs Factors Affecting Manufacturing Costs Users Factors Affecting Manufacturing Costs CMOs Contractors Target Gross Profit Margins Contractors Current Utilization Rates by Tank Size and Production 3-41 Technology Chapter Contract Manufacturers Used by Respondents Contract Manufacturers Being Considered by Respondents Reasons Why a New or Different CMO is Being Considered Reasons to Use New CMO for New Projects Reasons for Switching to New CMO for Current Project Summary of Comments about Price Differences Between Large and 4-25 Small CMOs Reasons to Pay or not Pay a Premium for a One-Stop-Shop CMO Conditional Use of Start-Up CMO in an Emerging Market Advantages of an Established CMO in an Emerging Market Services Considered Sourcing from an Emerging-Market CMO 4-46

7 LIST OF TABLES (continued) Chapter Additional Business Strategies Challenges and Opportunities for CMOs in Emerging Markets Services Most Affected by Emerging-Market CMOs in Established Markets Average Percentage: Fee-for-Service versus Partnership Contracts Contractors Client Base by Segment Perfusion Processes Impacts of Disposables 5-20 Chapter Pricing Models Preferred by Users by Percentage Pricing Models Preferred by Users by Product Phase Pressures on Choosing Fed-Batch or Perfusion Processes for Manufacturing Trends in Cell-Line Development Licensing Fees Types of Price Adjustments in Long-Term Agreements 6-29 Chapter Contractor Preferred Pricing Models by Project Phase Average Numbers of Batches Per Project By Tank Size Average Numbers of Weeks Per Project By Tank Size Average Numbers of Grams Per Project By Tank Size Number of Users Products Included in the Analysis Prices Paid, or Prices Charged, for Additional Services for Mammalian 7-39 Cell Culture Prices Paid, or Prices Charged, for Additional Services for Microbial 7-43 Fermentation Chapter Users Perspective: Contract Sections Most Difficult to Negotiate Contractors Perspective: Most Common Roadblocks in Contract 8-7 Negotiations Cause of Changes in Contract Price Consequences of Changes in Contract Price Future Market Challenges for Biopharmaceutical Contract Manufacturing Additional User Observations about Pricing and Contract Agreements Additional Contractor Observations about Pricing and Contract Agreements 8-37

8 LIST OF FIGURES Chapter A Locations of Study Participants A Opinions Regarding Price Changes in the Past Two Years B Utilization Rates: 2013 and A Summary of Outsourcing Strategies B Willingness to Pay a Premium for a One-Stop-Shop CMO C Price Reduction Expected for Sourcing from Emerging-Market CMO A Average Percentage: Fee-for-Service versus Partnership Contracts B Competitive Assessment of CMOs in Emerging Markets C Contractors Client Base by Segment D Pricing Impact of Disposables in Upstream Development and Manufacturing A Pricing Models Preferred by Users B Pricing Model for Analytical Testing C Contractors Pricing Model for Early Process Development A Contractors: Primary Pricing Models B Per-Batch Pricing: Average Prices Charged and Paid: Mammalian C Per-Batch Pricing: Average Prices Charged and Paid: Microbial D Time-in-Facility Pricing: Average Prices Charged and Paid: Mammalian E Time-in-Facility Pricing: Average Prices Charged and Paid: Microbial F Per-Gram Pricing: Fee Per Gram by Project Volumes: Mammalian G Per-Gram Pricing: Fee Per Gram by Project Volumes: Microbial A Experience with Changes in Contract Price B Contractors Cancellation Fees 1-28 Chapter A Explanation of Box-and-Whiskers Plot 2-4 Chapter A Locations of Study Participants B Respondents with Biologic Products on the Market C Distribution of Biologic Products on the Market D Respondents with Biopharmaceuticals in Clinical Trials E Distribution of Biopharmaceuticals in Clinical Trials A Opinions Regarding Price Changes in the Past Two Years B Expected Changes in Price C Current and Proposed Price Changes Users D Current and Proposed Price Changes CMOs E Price Changes for Optimized Expression Systems Users F Changes in Optimized Expression Systems Pricing Models CMOs 3-25

9 LIST OF FIGURES (continued) Chapter A Contractors Target Gross Profit Margins by Phase: 2013 and B Impact of Pricing Changes on Margins A Utilization Rates: 2013 and B Contractors Current Average Utilization Rates by Tank Size and 3-41 Technology Chapter A Manufacturing Budgets: Outsourced versus In-House B Outsource Budgets: Process Development versus Manufacturing C Summary of Outsource Strategies A Plan to Use New or Different CMO A Initial Discussions with Contractors B Differences in Prices Between Large and Small CMOs C Willingness to Pay a Premium for a One-Stop-Shop CMO A Willingness to Use an Asian-Based CMO B Willingness to Consider a Start-Up CMO in an Emerging Market C Concerns Regarding Use of a Start-Up CMO in an Emerging Market D Willingness to Consider an Established CMO in an Emerging Market E Challenges of Using an Established CMO in an Emerging Market F Price Reduction Expected for Sourcing from Emerging-Market CMO G Specific Services with Expected Lower Pricing from Emerging-Market 4-52 CMOs 4.4-H Outsourcing Innovative or Off-Patent Products from Emerging-Market CMOs4-55 Chapter A Phase-Based Business Focus B Competitive Assessment of CMOs in Emerging Markets C Price Reduction Due to Emerging-Market CMOs A Contractors Using Fee-For-Service Model Exclusively B Percent of Clients Located in Same Country as Contractor s Facility C Contractors Client Base by Segment A Use of Perfusion Processes B Pricing Models for Perfusion Processes C Pricing Impact of Disposables in Upstream Development and Manufacturing D Accelerated Platform Availability E Accelerated Platform Pricing 5-23

10 LIST OF FIGURES (continued) Chapter A Percent of Respondents Expecting Certain Services to be a Core Charge B Pricing Models Preferred by Users C Pricing Model for Analytical Testing D Pricing Model Used for Formulation Development E Typical Pricing Model for Cell-Line Expression Services F Difference in Pricing for Accelerated and Standard Antibody Projects G Movement Towards Use of Perfusion Manufacturing Processes H Pricing Models for Perfusion Processes I Pricing for Manufacturing Clinical Materials by Perfusion Processes J Respondents with Antibody Conjugation Projects K Type of Molecule Conjugated to Antibody L Outsourcing Conjugation Services M Pricing of Conjugation Services A Contractors Pricing Model for Early Process Development B Long-Term Contracts with Clients C Trends Toward Alternative Business Arrangements 6-31 Chapter A Estimates of Process Development Fees for a E. Coli Process B Estimates of Process Development Fees for a Mammalian Process C Estimates of Process Development Hours D Annual FTE Rates for Process Development E Users Expectations vs. Experience: FTE Rates for Process Development A Annual FTE Rates for Manufacturing Staff B Annual FTE Rates for QC Staff C Annual FTE Rates for Project Management Staff D Annual FTE Rates for Regulatory Support Staff E Annual FTE Rates for Analytic Development Staff F Users Expectations vs. Experience: FTE Rates for Management Staff G Users Expectations vs. Experience: FTE Rates for QC Staff H Users Expectations vs. Experience: FTE Rates for Project Management I Users Expectations vs. Experience: FTE Rates for Regulatory Support J Users Expectations vs. Experience: FTE Rates for Analytic Development A Contractors: Primary Pricing Models B Contractors Preferred Pricing Models by Project Phase A Batch Pricing: Average CMO Rates Per Batch or Run: Mammalian B Batch Pricing: Average CMO Rates Per Batch or Run: Microbial C Time-in-Facility Pricing: Average CMO Rates Per Week: Mammalian D Time-in-Facility Pricing: Average CMO Rates Per Week: Microbial A Per-Batch Pricing: Average Prices Charged and Paid: Mammalian B Per-Batch Pricing: Average Prices Charged and Paid: Microbial C Time-in-Facility Pricing: Average Prices Charged and Paid: Mammalian D Time-in-Facility Pricing: Average Prices Charged and Paid: Microbial E Per-Gram Pricing: Average Prices Charged and Paid: Mammalian F Per-Gram Pricing: Average Prices Charged and Paid: Microbial 7-28

11 LIST OF FIGURES (continued) Chapter A Per-Gram Pricing: Fee per Gram by Project Volumes: Mammalian B Per-Gram Pricing: Fee per Gram by Project Volumes: Microbial A Per-Batch Pricing: Fee per Batch per Liter by Tank Size B Time-in-Facility Pricing: Fee per Batch per Liter by Tank Size C Explanation of Box-and-Whiskers Plot D Box-and-Whiskers Plot: Per-Batch Pricing: Mammalian Cell Culture E Box-and-Whiskers Plot: Per-Batch Pricing: Microbial Fermentation A Average Price Paid by Users for Additional Services: Mammalian B Average Price Paid by Users for Additional Services: Mammalian C Average Price Charged by CMOs for Additional Services: Mammalian D Average Price Charged by CMOs for Additional Services: Mammalian E Average Price Paid by Users for Additional Services: Microbial F Average Price Paid by Users for Additional Services: Microbial G Average Price Charged by CMOs for Additional Services: Microbial H Average Price Charged by CMOs for Additional Services: Microbial Chapter A Experience with Changes in Contract Price B Cancellation Fees Paid by Users C Users: Frequency of Change Orders A Contractors Reservation Fees B Average Percentage Charged for Reservation Fee C Contractors Cancellation Fees D Comparison of Contractor and User Cancellation Fees E CMOs: Distribution of Average Number of Project Change Orders F CMOs: Pricing Method for Change Orders G Comparison of Number of Typical CMO and Reasonable User Change 8-25 Orders