The Timely Rise of the CDMO

Transcription

1 OneSource Simplicity and speed. Delivered. The Timely Rise of the CDMO The healthcare sector can improve its margins by tens of billions of dollars and improve patient safety by making supply chain improvements. 1 1 McKinsey report, Building New Strengths in the Healthcare Supply Chain

2 Why revisit your supply chain? The cost of bringing new drugs to market continues to rise. Regulators are demanding more (and more detailed) clinical evidence. Today s complex molecules small and large require an enormous range of technologies that usher in new challenges. Being first to market matters more than ever before. And when you factor in that a growing majority of new molecule development is coming from small and emerging companies, it s clear that a new method of drug production has to emerge. Biopharma companies of all sizes look to vendors to help manage development, manufacturing, and capacity needs. The question is: are they keeping up? For a very specific set of development partners, the answer is yes. A new breed of solution-centric CDMOs has emerged, with capabilities spanning the entire development and manufacturing process from pre-clinical drug development to commercial-scale manufacturing. While the outsourcing relationship has traditionally been driven by specialty, price or proximity, today s more evolved CDMOs can inject a new value into the equation: strategy. Expertise across the development process gives the savvy CDMO the ability to approach the entire drug-development path holistically to lower costs, shorten timelines, simplify project management and inject needed expertise in areas that biopharmaceutical companies have divested from intentionally. Clearly the rise of the CDMO couldn t have come at a better time. 2

3 Filling a gap While the phrase Best Practices implies the best for an industry, it isn t always the case. Best can differ by company size, scope of project and intended result. After all, the small or emerging company looking to sell their discovery after reaching Proof of Concept probably has a very different set of criteria than a Big Pharma company looking to bring a compound to market. A company that can be put out of business by a low bioavailability score needs to take much more care with their approach than one that can weather setbacks on the way to finally releasing a therapy to market. Where companies of all sizes can agree, however, is that outsourcing to the right partner can provide efficiencies and access to expertise not otherwise available. Perhaps then, there is at least one Best Practice for drug development and commercialization: a strategic CDMO relationship. Virtual & small pharma Small pharma companies have typically found themselves challenged by manufacturing, with its high asset intensity and minimum efficient scale. 2 For the smaller company, it stands to reason they may not have the expertise in-house to move past discovery and on to development. So for them, outsourcing that portion of the process simply makes sense. What also makes sense is to outsource manufacturing capacity, as building it requires huge infrastructure and capital investments that are impractical for a company of this size. Midscale to large pharma As costs have spiraled, more and more larger players have felt the need to trim staff. While that was once restricted to support functions, recent years have seen a growing number of experienced scientists looking for work. Increasingly, they find new roles with CDMOs, which are growing rapidly in size and scope, and hungry to add more talent and capabilities to their roster. Upon joining the CDMO, these scientists find they are exposed to a greater number of projects with more technical variety and many wind up broadening their expertise. As a result, large pharmaceutical companies are, in essence, turning to CDMOs to find the experts they ve lost but who now have even greater skills than before. Any pharma The rise of the CDMO has shifted investment and forecasting risk away from pharmaceutical companies and towards CDMOs. However, it might be more accurate to say that it s a reduction of risk, rather than simply a shift. Given the size, scope and global relationships of CDMOs, they can disperse the forecasting and capacity risk they take on by spreading it across a large number of clients and facilities worldwide. At this scale, the ebb and flow of regular business tends to normalize the peaks and valleys thereby protecting the CDMOs just as they protect their clients. 2 Strategy + Business Is Pharma Ready for the Future? 3

4 A shift from tactical to strategic By virtue of having reached a critical mass of expertise, and holding a fundamentally different point of view about how they can add value, CDMOs are in the position to supply a vertically integrated service with measurable benefits to biopharma: Speed as a product of quality By being responsible for the entire development process, an integrated CDMO can address drug substance and drug product steps at the same time, eliminating typical tech transfer and scale-up issues. Additionally, they can proactively address solubility or manufacturability challenges early in development to avoid costly and timeconsuming rework in late development. While any company can talk about speed, and maybe even impact it for a discrete step or two, only a CDMO with extensive end-to-end experience can deliver speed as a product of quality. Simplified management Working with a single, integrated partner reduces time and complexity in multiple ways: simplified sourcing, fewer contracts, elimination of repetitious project kickoffs, and streamlined process management due to the removal of hand-offs between vendors. Problem resolution is also enhanced with a single point of contact for the entire process, regardless of step. Increased return Given that 80% of prescriptions are for generics, 3 being first to market matters more now than ever before. But merely being first isn t enough. The more time that passes between IND/CTA submission and regulatory approval, the less time there is to capture the market and recoup the investment. Twenty years may sound like plenty of protection, 4 but the average effective patent life is only 11-1/2 years, given the amount of time it takes to navigate clinical trials. 5 Anything that can be done to speed the development process will increase the commercial profile of a drug. Likewise, a CDMO with a large footprint and global capabilities can also reduce risk for clients with second-source options, which gives the ability to flex production up or down to meet actual market demands without requiring costly capital investments or reducing ROI on the drug due to the pervasive practice of over-building to protect against revenue loss from under-capacity. Better problem-solving As the industry continues to create more complex molecules to address more complex conditions, it requires new technologies and processes that add their own levels of complication to the process. This, too, speaks to the value of CDMOs. When a CDMO reaches a size where they are involved in the majority of development programs, they gain firsthand knowledge that can be applied to other projects. Size also leads to end-to-end capabilities, which can promote a holistic view of development. This creates opportunities to proactively solve challenges the CDMO knows will come up before they actually do. Manufacturing process as a strategic advantage While many large pharmaceutical companies view owning manufacturing as vital to their success, it s yet another opportunity for a CDMO to add value. Tier 1 CDMOs bring more products to market in any given year than even the largest pharmaceutical company. That level of experience pays dividends across the entire process, including manufacturing especially when the product or ingredients are unstable, cytotoxic or require other special handling. 3 FDA (fda.gov/drugs/resourcesforyou/consumers/buyingusingmedicinesafely/understandinggenericdrugs/ucm htm) 4 FDA (fda.gov/drugs/developmentapproval Process/ucm htm) 5 4

5 How do you know if you could benefit by partnering with a CDMO? The indicators are clearer than you might think: If you re concerned about growing beyond your current funding, a CDMO gives you access to the expertise you need at much lower cost than hiring. This is especially useful for companies angling for a quick sale of their molecule after achieving Proof of Concept. a CDMO lets you transfer the risk of building new capacity to meet uncertain market demand to them. As stated above, a CDMO can shift excess capacity between projects or clients much more readily than a pharmaceutical company can. If you fear you ve lost your agility, a CDMO can help you gain speed efficiencies that may be difficult to find internally without significant process changes. If you need to control capital expenditures, Evaluating a new class of partners According to a Nice Insight survey, quality and reliability topped the priority list for sponsors looking to outsource development for the third year in a row. 6 As more companies start to refer to themselves as CDMOs, however, it raises the question of how to evaluate them properly. A few key offerings across development and commercialization certainly aren t enough. Nor is a cobbled-together process that seems to cover the entire spectrum but lacks the free flow of information and expertise across disciplines. The true CDMO offers superior, integrated, end-to-end quality across the entire drug-development continuum and backs it with measurable results. It is our view that quality is the single attribute that can never be sacrificed. It must be central to the entire process for an integrated offering to have any value. To help discover whether the quality and reliability are there, look at the following criteria when evaluating a CDMO: 1. Proof of expertise through the number of approved NMEs and NDAs 2. Proven ability to fast-track through parallel-process activities 3. Global reach and access to full range of capabilities 4. Range of technologies to address today s niche and specialty products (e.g., cytotoxic, high-potency) 5. Ability to eliminate redundant activities 6. Proven skill in tech transfer 7. Solubility and bioavailability expertise 8. Solution focus versus capacity utilization focus 9. Ability to optimize use of precious API 10. End-to-end project management and partnership approach 11. Routine regulatory inspections with minimal defects These criteria are important because the number of companies that meet them is certainly much smaller than the number of companies that refer to themselves as CDMOs. And unlike in investing, past performance is absolutely an indicator of future success in drug development and commercialization. 6 Life Science Leader - Outsourcing Increasing To CROs And CMOs Known For Quality And Cost-Effectiveness 5

6 Setting the standard for CDMOs Understanding why this new breed of CDMO exists, and how to evaluate them, leads very naturally to the topic of which CDMO is the best. Talk to a pharmaceutical company that has worked with Patheon and you ll hear about our deep expertise across Drug Substance, Formulation Development and Drug Product services. You ll also hear about, our unwavering commitment to quality, and our ability to add value to any development process. Patheon excels at every individual step, which makes us the natural company to pioneer the complete integrated offering. We have no weak links, so you experience no disappointments. And that is the singular strength of our singular offering. The market created the need. Patheon OneSource is the answer. Patheon OneSource offers: A single, integrated end-to-end offering A single point of contact and accountability who manages every step of your development journey About Patheon Patheon is a leading global provider of pharmaceutical development and manufacturing services. With approximately 8,400 employees worldwide, Patheon provides a comprehensive, integrated and highly customizable set of solutions to help clients of all sizes satisfy complex development and manufacturing needs at any stage of the pharmaceutical development cycle. A Healthier World. Delivered. Continuous collaboration of DS & DP teams to deliver informed decisions throughout your entire product lifecycle Elimination of incomplete information transfer Unified quality system for DS & DP Single harmonized Quality Agreement Savings of 8-20 weeks, depending on molecule type Patheon 4815 Emperor Blvd, Suite 300 Durham NC USA P: F: To learn more about Patheon OneSource, visit or call Patheon Kingfisher Drive Covingham, Swindon Wiltshire SN3 5BZ UK P: F: Patheon 7F Wakamatsu Building, Nihonbashi Hon-cho, Chuo-ku, Tokyo Japan P: F: doingbusiness@patheon.com