Every biopharmaceutical company developing its own drugs must make a strategic decision about how to have its product manufactured. The conventional options are to use the services of a contract manufacturing organization (CMO) to “buy” capacity, or to build a manufacturing facility to “make” capacity. Although the decision to outsource manufacturing was originally dominated by small, financially constrained companies, large companies are increasingly contracting out manufacturing1. This “buy-or-make” decision applies to preclinical, clinical and commercial supply.

There are many factors that influence the buy-or-make decision, and the importance of each of these factors varies by company and stage of development. This article examines the various factors which influence the buy or make decision and how a new technology and business model may be able to bridge the gap between buy and make.

Factors Influencing the Buy-or-Make Decision
Facility Cost: The capital investment to build a manufacturing facility is considerable. A small pilot plant with 100L cell culture capability may cost roughly $10 million, a 1,000L scale plant roughly $40 million, while large commercial plants with 10,000L capacity cost upwards of $200 million to build2,3,4. Beyond the initial cost of construction and validation, there is a considerable cost to maintain the facility in a GMP state and keep it staffed with skilled employees. Because these costs are incurred whether the plant is in production or sitting idle between campaigns, plant utilization needs to be estimated in determining the return on investment. A company with a good pipeline of drugs in development may have a high enough percentage utilization to justify the cost of constructing a clinical facility, and the projected revenue of a drug headed for the market may cover the cost of a commercial manufacturing facility. Even if the capital expense of a facility can be justified, there are several other factors to consider.

Facility Construction Time: A manufacturing facility takes an average of three to four years to build and bring on line5. This time may be compressed to about 30 months with good program management and use of construction techniques like standardization, modularization and off-site fabrication6,7. Drug development companies must therefore make the buy-or-make decision at least three years before manufacturing is needed, to avoid being required to find external manufacturing capacity. The speed of accessing manufacturing capacity is a major reason that companies choose to outsource the manufacture of material for early phase clinical trials. The need for commercial manufacturing is easier to anticipate, but three years or more in advance it may be difficult to accurately predict the exact size and timing of the manufacturing need.

Flexibility: Another consideration is the flexibility of accessing manufacturing capacity. Building a commercial facility requires making predictions about the final productivity of the manufacturing process, market size and market penetration, and typically assumes product approval with no regulatory delays. Many of these assumptions may not be accurate, and the cost of making changes to a facility design rises sharply throughout the design and construction process6. Similarly, a clinical facility design must anticipate the range of product types, scales and processes it may be required to handle. Use of contracted manufacturing capacity has the advantage of allowing a company to identify and pay for the manufacturing capacity it needs without having to make commitments many years in advance. Owning a manufacturing facility offers a different type of flexibility, allowing the drug development company to quickly change priorities and shift capacity from one project to another.

Manufacturing Expertise: Manufacture of biotherapeutics requires expertise in manufacturing operations, process development, project management, process engineering, QA, analytical development, QC, regulatory and many other specialized functions. For a small company or one that has made a strategic decision to focus on drug development rather than manufacturing, gaining access to this expertise is a strong driver to work with a CMO. Large companies may also choose to work with CMOs to compliment their own expertise in specific areas of interest. A company that has made the strategic decision to enter into drug manufacturing will consider such capabilities an asset and wish to build this expertise in-house.

Technology and Intellectual Property Concerns: Technology and IP can be a factor for keeping a project in-house or working with a CMO. If the manufacturing process contains sensitive technology or process steps, a company may be reluctant to release it to an outside organization. Conversely, development and operation of the manufacturing process may benefit from technology that can only be accessed by working with a CMO.

Cost: Contract manufacturing is a market-driven industry and CMOs must be competitive with not only each other, but with the option to build manufacturing capacity. The fact that the contract manufacturing industry is projected to continue growing suggests that it is delivering value to its customers1,8,9. The cost of outsourcing manufacturing does include a profit margin for the CMO which is not incurred for in-house capacity. If the cost of building a facility is justified by the anticipated capacity demand and utilization, and if there is sufficient technology and expertise in-house to design and operate an efficient manufacturing process, building capacity may ultimately be the most cost effective option.

Eliminating the Buy-or-Make Decision?
But are the only choices to buy or to make? Is it possible to develop a third way? By rethinking the manufacturing models and employing new tools, there is the potential to strike a compromise in the buy-or-make decision. Three technologies in particular—disposable manufacturing components, process automation (including electronic batch records), and isolator-style modules—can be (and now have been) integrated to create an alternative to traditional cleanroom and stainless steel manufacturing facilities. This platform has been used to rapidly produce clinical trial material10.

The concept behind this type of facility is effectively to shrink the cleanroom down around the unit operations by enclosing process equipment in modules. These modules are similar in design to isolators but, in contrast to the typical application of isolators for aseptic processing, the modules are engineered to provide a clean process environment of equivalent quality to a cleanroom (e.g. Class 10,000). Like isolators, the modules remove the operator—
a major source of contamination—from the manufacturing environment and make efficient use of space. These modules are portable and can be connected to create a “process train” of unit operations, or disconnected to be changed over or serviced independently.

The use of disposable components provides a number of economic and operational advantages11,12. Most significantly, extensive use of disposables in this type of integrated platform eliminates the requirement for most plant utilities. Disposable components are provided clean and pre-sterilized, eliminating the need for cleaning and sterilization process steps, the utilities that support them and the validation of these operations. Most modules require only power and data connections.

The use of disposable components also reduces the engineering and operational complexity of each unit operation by removing the requirements for cleaning, sterilization and extensive piping to connect unit operations. Bioprocess bags of buffer and media can be moved into and out of the manufacturing area as needed, making the best use of floor space, and transfers can be made with a variety of equipment designed to connect flexible tubing. Disposable components have the added benefit of improving quality by eliminating the possibility of cross-contamination between batches and products as well as the carry over of “objectionable organisms” in difficult to clean process equipment.

Automation and electronic batch records can also make operation of the platform more efficient. Manual operations inside the modules can be performed using glove ports, but process automation and integration of the process hardware with the modules reduces the number of these operations, improving operability. Process automation coupled with electronic batch records allows quality assurance to be built into manufacturing operations. Batch record operations can be automatically date and time stamped, process values confirmed, and process steps automatically started and stopped, eliminating the possibility of operator error.

Advantages of Integration
This manufacturing platform takes the current concept of modular construction one step further, with increased benefit to the construction timeline. In practice, a process train of modules can be rapidly constructed for a 100L monoclonal antibody process. Modules with integrated process equipment can be fabricated and commissioned off-site while a “shell” (a clean, empty manufacturing space with only power and air handling) is constructed. Using this platform, the facility can be designed, constructed and validated in fewer than six months and subsequently used to successfully produce GMP material for clinical trials. I contend that the capital cost for this project is less than 50% of the cost of a comparable cleanroom and stainless steel design.

Companies that do not have the capital or time to invest in constructing a facility or that wish to access outside manufacturing expertise may have their products manufactured in this type of platform. For a contract manufacturing facility, the platform offers customers the advantages of quick reconfiguration of unit operations to accommodate new processes, rapid changeover between products, elimination of the possibility of product-to-product carryover between campaigns, and greater control of process quality through automation and electronic batch records.

The manufacturing platform can also be acquired by the client in order to establish in-house manufacturing capabilities. The rapid construction timeline of less than one year allows companies additional flexibility by delaying capital investment until the process and manufacturing demands are more fully understood. This, as we know, is a major chicken-and-egg hurdle for emerging Biopharma companies. The short construction timeline also means that a company can bring on additional in-house capacity quickly if the pipeline or product demand increases unexpectedly. The simplicity of the platform and elimination of utility requirements significantly reduces the capital cost of establishing internal manufacturing capability.

The Third Way
I believe that this manufacturing model can replace buy-or-make with “try and take.” Because the platform is self-contained and portable, companies that require access to external manufacturing capacity can have contract manufacturing performed using the platform, then down the road, purchase the entire platform and transfer it to their own shell facility to establish in-house manufacturing capability. Establishing internal manufacturing capacity requires only a controlled space with power and process gasses. The modules, which are moveable by hand, can be rolled onto a truck, transported to the new facility and started up in a few weeks.

This application of new technologies—disposable components, process automation and isolator-modules—can signify a paradigm-shift for Biopharma manufacturing. The ability to easily acquire contract manufacturing capacity and convert it to internal manufacturing capacity allows emerging companies to avoid having to make many of the choices involved in the buy-or-make scenario. They can buy and make capacity at the same time, accessing external technology and expertise early in the clinical development of the drug and maintaining flexibility until internal manufacturing capability becomes strategically important.

The big decision, and its attendant capital outlay, can be deferred for several years longer than with the construction of a traditional facility. Once the decision is made, internal capabilities or additional capacity can be rapidly established at reduced capital cost. Manufacturing crews can be trained during contract manufacturing operations, which, combined with the transport of the full manufacturing platform and process equipment, eliminates most of the traditional concerns with the technology transfer of a process from one facility to another.

Choosing between outsourced manufacturing and building internal capability is a complex decision that is fundamental to the operating strategy of a drug development company. As the biopharmaceutical industry continues to grow and more products enter the clinic, CMOs are expected to play an increasing role in providing capacity and expertise. Advances in manufacturing technology will allow CMOs to provide better service, increased flexibility and more options to their customers including the ultimate flexibility of try-and-take instead of buy-or-make.

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