Carsten Press
Senior VP, Key Account Mgmt., Supply Chain Mgmt. & Marketing
Vetter Pharma International GmbH

Sustainability

In response to the massive carbon footprint of our industry,¹ growing numbers of organizations have made maximizing sustainability a paramount goal for their operations. Spurred by initiatives like the EU’s “Green Deal,” these companies are actively adopting a culture of environmental consciousness and seeking new ways to balance economic performance, social responsibility and ecological impact.

As these commitments grow in scale and ambition, supply chain partners will continue to see this trend reflected in RFPs. Biopharmaceutical companies are increasingly seeking partnerships that advance both their business and sustainability goals—whether that be through eco-conscious packaging design, carbon-neutral manufacturing facilities or less resource-intensive operations.

This trend will be particularly relevant for manufacturers. CDMOs will not only need to determine how new customer requirements can be effectively mapped to validated processes, but also adopt their own culture of ecological responsibility. In 2022 and beyond, partners who swiftly and successfully “green” their operations and mindset will increasingly set themselves apart—not only by growing the value of their services, but also by demonstrating their commitment to shared societal wellbeing and environmental health. As biopharma companies, material suppliers and CDMOs work together toward these goals, look for an increasingly green value chain to take shape in the coming years.

Digitization

Long a technological laggard, biopharma has finally begun an overdue, pandemic-fueled digitization sprint. In the last two years alone, countless organizations have raced to virtualize their workforce, take their teamwork to the cloud and leverage technology to keep their operations running while keeping their people safe.

Service providers have been no exception and show no signs of stepping back from rapid digitalization. AI- and ML-powered manufacturing innovations are further gaining ground, with automation and robotics driving significant advances in supply chain productivity. With prolonged pandemic uncertainty, expect to see increasing investment in technologies like these.

Strategic Collaborations

One long-standing challenge also stands in our way: the ever-growing cost of bringing new drugs to market. This year, biopharma companies will continue their efforts to optimize the “total cost of ownership” associated with developing, manufacturing and commercializing their products. This will lead to increasing focus on not just the function but also the value of outsourced partnerships.

As savvy service providers have discovered, biopharma companies are looking for third-party experts who do more than fill an internal skill gap or enable an in-house team to focus on core competencies. These customers are increasingly looking for providers who deliver a strategic, value adding mix of specialized services, customized solutions and efficient operations—one that spans as much of the value chain as possible.

In response, CDMOs strive to actively pursue new partnerships of their own, especially between manufacturers with complementary specialties or additive skill sets. Several high-profile CDMO alliances have already taken shape recently, with the goal of syncing expertise in ways that shorten time-to-market, accelerate technological advances and deliver significant long-term value for customers.

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Stuart Needleman
Chief Commercial Officer
Piramal Pharma Solutions

Integrated Offerings

One important trend we see is that pharma innovators are more routinely partnering with their CDMO on an integrated basis. In the early days of integrated programs, CDMOs were primarily geared toward early-stage development, helping clients obtain an investigational new drug (IND) application. Today, however, integrated CDMOs like Piramal Pharma Solutions (PPS) assist companies across the entire development process, including late stage and commercial programs.

This trend is driven by multiple factors. Integration has inherent benefits in speed to market and cost efficiency. Tech transfer within a single company is more seamless. Likewise, multiple elements of the project can be overseen by a single, primary point of contact for project management. Additional benefits are also seen through supply chain integration, with synchronized material handling and raw material purchasing. Cross-functional expertise also comes into play.

For example, at PPS we have core strengths in high potency APIs, conjugations and sterile fill/finish, each at a different site. We know how to put that together into fully integrated antibody-drug conjugations that combine the payload, linker, conjugation and fill/finish, all in one integrated program.

The Pandemic and the Supply Chain

Over the past two years, everyone saw clearly how the pandemic affected global supply chains. The pharma supply chain is particularly complex—possibly the most complex of any industry. Specialization is a huge factor; our supply chain is deep, global and features materials that are in high demand. There’s a global trend built on rethinking the global supply chain, including reshoring, building redundancies in suppliers, rethinking logistics and updating systems and processes to ensure that stocks are readily available.

PPS proactively addressed the issue through its supply chain risk mitigation team. They worked to categorize and prioritize raw materials we use, grouping them based on whether they were used in new or commercial products and ranking them against certain risk criteria. The risk criteria covered details such as the commercial potential of a product, manufacturing location, whether it had a single source, current availability, reliance on China and procurement value. Based on the extent and nature of the threats linked to a raw material, the team proposed tailored risk mitigation strategies intended to deliver fast, efficient, effective and sustainable results.

Applied Technology

Digitization along with the rise of artificial intelligence is another trend facing CDMOs now and in the long-term future. This is a very broad and very deep topic, with ramifications internally and externally. On the operations side, technology is embedded in supply chain management, data collection, data management, R&D, production and project management, just to name a few.

On the administrative side, we not only have to consider accounting and finance, but also communications, cybersecurity and more. External demands are also growing intensely in clinical data and with the coming wave of digitization in drug design, such as personalized medicines. To keep up, PPS is in the midst of a global tech upgrade. This is a multiyear journey, encompassing a review and enhancements of all elements of our digital footprint.

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Elliott Berger
Chief Marketing Officer
Catalent

Meeting Demand in Advanced Therapeutics

The accelerating growth of advanced modalities such as cell and gene therapy has led to more companies forgoing expensive projects to install internal manufacturing capabilities. Instead, they are seeking partners that can provide the sophisticated manufacturing practices and specialist expertise and technologies necessary across the different modalities to progress therapies towards commercialization.

In these areas, innovation and understanding has increased rapidly, and there is a need for development and manufacturing partners that can rapidly overcome challenges. These challenges include developing robust processes at larger scale, optimizing analytical methods, improving yields and integrating both upstream and downstream processing with supply chains of raw materials to increase efficiency.

CDMOs are also a vital part of the manufacturing supply chain of these therapies and therefore need to ensure that capacity is available to innovators to meet demand. This is leading to researchers having to seek out collaborative partners earlier in the development process to ensure capacity is available when necessary.

Increased Complexity

As drug production requirements become more complex even beyond the new modalities, biopharma companies are looking to CDMOs with specific, specialized scientific expertise and the proven ability to apply this knowledge to better address their needs. Examples of this include the need to handle the increased prevalence of high-potency drugs, the emergence of ever-more complex monoclonal antibodies, and the need to create spray-dried dispersions (SDDs) to overcome solubility challenges. The use of outsourcing partners in these fields avoids the capital expense of building the necessary containment facilities, while accessing the appropriate knowledge and experience.

A lack of available capacity can become a bottleneck, and this can be seen in areas such as gene therapy development, where outsourcing partners are few, and manufacturing capacity often needs to be booked several months in advance. This makes CDMOs strategic components in the pharma supply chain. Delays in programs can have a significant impact on future scheduled projects, but companies with expertise and capacity in faster-growing areas of the pipeline, such as high-potency APIs, mammalian biologics and cell and gene therapies, have the potential to outperform typical industry growth rates.

Virtual Pharma Business Model

Much of the innovation in biopharma pipelines is being driven by smaller biotechs, which we define as companies with revenues of less than $250 million, or listed companies with a market cap lower than $2.5 billion. There are about 5,500 of these companies, and we estimate that by 2026 they will contribute more than 60% of biopharma growth, and yet have little or no scale-up capabilities in-house. These companies are looking to partner with CDMOs, through a “virtual pharmaceutical” business model that gives access to flexible capabilities, and allows them to both simplify and accelerate development, hit milestones and retain ownership without having to invest significant capital into infrastructure.

These smaller companies often have limited in-house resource to manage CDMO partnerships, and therefore often turn to either a small number of partners, or a single CDMO that can provide integrated services to achieve the development milestones.

While the financial markets for public biotech companies are currently down, the small biotech industry is benefiting from the venture capital community having available investment for the development of novel treatments and modalities. This represents a significant opportunity for CDMOs to forge partnerships.

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Kenneth Drew
Vice President
Flamma USA

Supply Chain Management

The continued review of one’s supply chain is essential. Companies are continuing to review where materials are made and where they are coming from. They are also deciding on and deciding whether they need to reconsider where materials are made. Do they want to be in North America? Europe? Asia? Elsewhere?

I have found that the customers who did not succumb to the “knee jerk” reaction to “onshore everything” are looking at leveraging partners they trust and take advantage of their capabilities regardless of where they are located. It is more important to work with a good company regardless of their location than work in a location with a partner that may not be capable of completing the work in a timely manner.

One can find good strategic partners that have internal backup capabilities in order to not concern themselves with global issues. Unfortunately, there are not many CDMOs that have these capabilities but the ones that do can bring real value to API drug development.

Reinvest Back into Your Company

In order to stay competitive in the CDMO marketplace, one must continue to reinvest back into your company. The reality of the current state of CDMOs is that the large consolidation has led to opposing views of what a CDMO is. For the Private Equity backed CDMOs, they have become very large and are now offering other services beyond manufacturing of drug substance (DS). The addition of drug product (DP) appears to be popular but the question for many is this: Is it necessary and does it really bring value?

Customers I have spoken to have told me that they have had issues because of the sheer size of these consolidated CDMOs. Many have lost their way and the focus is solely on the bottom line. Customer service appears to take a backseat for many. This quest for a bigger profit has even produced the selloff of facilities to shift the focus back to a specific facet of drug development. CDMOs that are reinvesting in themselves are setting up for a bright future whether it is bringing in new technologies or expanding capacity to satisfy customer demand.

Supplier Trust

The demand for investment into Quality and Analytical is near the top of everyone’s list regardless of you being a CDMO or an innovator company. The industry continues to see the demands made by regulatory agencies worldwide to be an important point of emphasis. Innovator companies are being asked to control their supply chain and push even further back into the supply chain to guarantee quality.

The days of a CDMO ordering raw materials from an unknown vendor are long gone. CDMOs need to be able to show customers where materials come from and, more importantly, they must provide data from their suppliers. Data such as synthetic scheme and audits are becoming commonplace. As molecules become more complex, the starting materials are also more complex so oversight is needed to ensure quality.

This is where relationships are becoming a driving force for working together. Trusting your vendor is critical. Regardless of where they are located, you need to work with a trusted supplier if you are an innovator and vendors need to work with other trusted vendors to keep our drugs safe for patients.

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Tom Wilson
Contract Manufacturing Lead
Pfizer CentreOne

Digital Transformation

COVID-19’s impact on global supply chains resulted in considerable disruption, particularly in the pharma industry. In retrospect, what was troubling about the challenges the industry experienced during pandemic was that they were exacerbated by the same chronic supply chain issues plaguing pharma for the past decade or more.

It’s no surprise, then, that many CDMOs are rethinking their business priorities and focusing their attention on enhancing operational risk profiles.

For many CDMOs, the answer to this is the implementation of digital technologies and analytical tools. Digital disruption of the pharma industry has been a recurring theme for a few years now, but I think calls for these new technologies are likely to grow too loud to ignore.

However, we have been here before—the case for digital transformation is clear, yet the industry has been resistant to change in the past. If pharma is to break out of this inertia, many assumptions must be reconsidered, including the uptake and implementation of advanced digital manufacturing and analytical technologies. These are the connected, collaborative tools the CDMO industry needs to accomplish increasingly faster development timelines and achieve the stable, secure supply chains that assure patient’s safe affordable access to pharmaceutical-based healthcare.

The Biologics Boom

The fight against COVID-19 spurred considerable innovation in the biologics space in particular. In addition to the rapid delivery of viable COVID-19 vaccines, we saw the development of a range of biopharmaceutical treatments to provide immunotherapy for patients hospitalized by coronavirus.

All of this growth has led to a boom in the biologics space. Some 61 new healthtech and 23 biotech unicorns were created in 2021, joining the 179 healthtech and 166 biotech companies founded after 2000 that have crossed the $1 billion milestone.² We can expect even more companies to reach this milestone in 2022 and beyond.

These biotech companies face challenges when it comes to successfully bringing their new discoveries to market. Biologics development and manufacturing is complex, requiring specialist equipment, aseptic processing and expert insight and support. Many new biotechs simply lack the infrastructure or in-house capability to develop their own discoveries themselves. Other biotechs may have partial capabilities or resources focused on core competencies and need to add to their suite quickly and efficiently in order to meet drug strategy and go-to-market timelines. Specialist CDMOs with the dedicated biologics capacity will be well placed to support these companies in getting their innovations to market—we can expect CDMOs to invest in new lines and facilities in 2022 to accommodate this growth and support accelerating patient access to biotech’s amazing innovations and therapeutic breakthroughs.

OSDs for Cancer Treatment

Another key trend is the rise of oral solid dose (OSD) forms for cancer treatments as a more patient-centric alternative to parenteral administration.

However, this does pose a challenge for drug developers. Treatments for these conditions increasingly harness highly potent active pharmaceutical ingredients (HPAPIs) with poorly soluble chemistries, which require sophisticated formulation solutions to enhance bioavailability within the gastrointestinal tract.

Currently, a large majority of small-molecule OSD drugs in development are poorly soluble, with implications for CDMOs.³ Depending on the specific chemistry of the API, creating a commercial-scale manufacturing process may require more steps and longer lead times. Developing poorly soluble drugs for oral administration can be challenging and resource intensive.

Parenteral drugs on the other hand, can be developed, approved and brought to market faster because there are fewer steps to finishing a liquid drug product. However, the poorly soluble chemistry of today’s oncology APIs can make formulation challenging, requiring unique delivery systems and advanced OSD manufacturing techniques. From laser-drilling osmotic pumps to coating and compaction, several techniques are now available to create the highly functional delivery systems today’s cancer formulations need to manage side effects, dosing frequency and other patient-centered goals.

Nevertheless, patients prefer oral dosage, so for a growing number of developers, OSDs are worth the additional investment. With this in mind, if CDMOs want to support customers in developing innovative solutions for cancer and other serious conditions in 2022, they will have to invest in their own solubilization and formulation expertise and capability.

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James Park
EVP and Chief Business Officer
Samsung Biologics

Supporting Innovations in Biopharma with Multimodality and Flexibility

The innovative, progressive nature of biopharmaceutical development provides patients with ever more effective biologics. However, supporting the delivery of these essential drugs at a commercial scale is increasingly challenging as biologics become more complex.

The COVID-19 pandemic highlighted the need of CDMOs to offer flexibility to rapidly adapt to support manufacturing of previously widely unfamiliar mRNA-based vaccines. Manufacturers had to respond to the unprecedented demand by expanding capacity and facilities to serve the dynamic market changes and balance existing and new projects. This entailed offering more robust technologies and cold chain capabilities to effectively meet the demand.

As mRNA treatments become more advanced, targeting advanced cancers and heart disease, and the potential of cell and gene therapies widens, offering adaptability and flexibility to support these projects is critically important. By preparing for the multi-modalities of new technologies, these CDMOs have subsequently placed themselves in good stead for an array of new therapeutics on the horizon, including multi-modal mRNA, plasmid DNA (pDNA), viral vectors and other gene therapy products.

End-to-End Services

To ensure patients receive vital biologics at speed, their development and manufacture must avoid all potential delays. However, during the COVID-19 pandemic, high demand for urgent vaccines was at odds with supply delays. These delays could be further exacerbated by time taken for tech transfer to multiple CDMOs.

As speed-to-market priorities remain strong and COVID-19-associated delays become a common occurrence moving forward, biopharma will look to manufacturing partners ready to fulfill their drug strategies start-to-finish with end-to-end capabilities. Offering these services is prompting the CDMOs in the space to expand both their capabilities and facilities.

Those CDMOs expanding to provide end-to-end services will not only minimize the impact of potential delays but improve overall efficiency. These include both accelerated processes, cost efficiencies, reduced resource requirements and simplified technology transfers.

Speed to Market

It is imperative that essential biologics are delivered to patients as fast as possible while maintaining high quality. The COVID-19 pandemic applied further pressure on CDMOs to deliver this offering as the demand for urgent vaccines was witnessed globally.

However, production of biologics is fraught with challenges and potentially time-consuming processes that can be at odds with accelerating market timelines. Technology transfer complexities, lengthy timelines to Investigational New Drug (IND) and Biologics License Application (BLA), and dated data management systems are prevalent challenges.

Minimizing the impact of these obstacles to improve project timelines can be achieved in various ways. Adapting and expanding facilities to offer robust and proven end-to-end processes can obviate potential delays associated with tech transfer. Optimization of development processes with an overarching strategy to produce a streamlined platform approach can expedite the timeline to IND and BLA. Finally, implementing robust digitalization approaches to introduce digital technologies could act to further harmonize processes and increase efficiency.

Fast delivery of high-quality drugs to patients therefore requires careful evaluation of every aspect of biologic development and manufacturing. Processes, capabilities and facilities must be adapted and optimized to meet the demand for speed that is likely to continue in the future.

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Joe Mase
Chief Commercial Officer
August Bioservices

Increased Collaboration Between Sponsors and CDMOs

The first major trend we are seeing is the desire for deeper collaboration and better consultation between innovator companies and their CDMO partners.
We know this—and have lived this first-hand—because the team at August Bio came from the innovator side of the business. We have decades of pharmaceutical development and commercialization expertise, having launched hundreds of branded and generic pharmaceutical products into U.S. and global markets. During that time, we worked with a wide range of CDMOs around the world and found the customer service experience across providers to be uneven at best.

Addressing this service gap is a core reason why the leadership team came together to build August Bio–a U.S.-based, customer-centric CDMO that places a premium on proactive and strategic project planning, coupled with responsive client service and guided by nearly three decades of sterile injectable fill/finish expertise.

The trend will continue to grow because the need is tangible. Pharma and biotech innovators realize they want CDMOs to be more than, “an outsourcing vendor.” They want their CDMO to be equal parts expert advisor, scientific collaborator and technical operator.”

Sponsors Want More “D” Capabilities from CDMOs

The second trend we are seeing, which is related to the first trend, is that pharma and biotech innovator companies are specifically looking for CDMOs that have robust, “capital D” drug development capabilities in house. More and more, the drug formulations we are seeing are becoming increasingly complex as new, cutting-edge technologies are incorporated. As such, the interactions, behaviors and stability profiles of these compounds may or may not be well characterized by clients before they engage with August Bio.

Going from bench scale to batch scale can be a challenge for any company, but it can be particularly difficult for smaller, mid-size or virtual companies that don’t have the resident formulation and scale up experience to tackle those challenges themselves. This is precisely where CDMOs like August that have a team of in-house drug development experts can help.

We take a risk-based, data-driven approach, with an eye towards optimizing the optionality of a compound’s development pathway.

As an end-to-end solutions provider—from research and development to laboratory testing services to manufacturing all under one roof—August’s integrated teams work together in person and side by side to develop formulations and conduct analytical investigations at the same site. This real time collaboration yields significant efficiency gains for clients.

Domestic and Global Sponsors Are still Looking for US-Based CDMOs

The third trend we are seeing began with the onset of the COVID-19 pandemic in March 2020. Both domestically based (US) innovators as well as global sponsors of drug development, testing and manufacturing projects, continue to seek CDMO partners based in the U.S.

The reasons for desiring a U.S.-based CDMO are well understood. First, the U.S. remains the largest and most lucrative pharmaceutical market in the world. Second, because of this, pharma and biotech companies worldwide would like to get their drug candidates into clinics in the U.S. market with the goal of achieving FDA approval.

What the pandemic brought to light for the world to see was the actual dearth of available manufacturing capacity in the U.S. The problem was exacerbated when COVID-19 vaccine production consumed much of the available manufacturing capacity, sending pharma and biotech innovator companies scrambling to find CDMO providers who could fill and finish their products within their timelines.

In the process, pharma and biotech companies both large and small have discovered highly capable and highly flexible CDMO partners that not only could meet their manufacturing timelines but could also deliver exceptional service along the way.

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Kevin Reid
Global VP of Marketing & Corporate Development
Almac Group

Innovative Therapies for Rare Diseases

The portfolio of products in development has shifted in recent years to have more of a focus on therapies for rare diseases and innovator products. Advanced therapeutical medicinal products (ATMPS) are a key area of growth—currently, there are over 3,000 of these therapies in development, the majority in oncology, according to Global Data. Sponsors are increasingly looking to CDMOs to assist with the formulation, manufacturing and commercialization of these innovator drugs where the company lacks the capacity or expertise. Many CDMOs are investing in the technology and resources required to meet these needs.

ATMPs are expensive and hard to make—meaning they require a carefully managed supply chain to match patient demand with supply. Moreover, labelling, packaging and distribution requirements for ATMPs differ significantly from those of products that don’t need to be held at low temperatures, therefore it is critical to work with a vendor who has experience in this area. While no two products and situations are exactly alike, a body of knowledge can gradually be amassed to circumvent much trial and error in developing the supply chain and packaging processes.

At Almac, we offer this experience across our clinical supply chain, product development and commercial services, and have made investments to ensure our offerings are future-proof and can meet the demands of innovative therapies. For our clinical stage clients, that has meant further investing in cold chain solutions to deliver an innovative clinical supply solution for clients and patients. For our commercial clients, that has meant expanding our state-of-the-art Ultra-Low Temperature commercial packaging, labelling and distribution solutions from our European Center of Excellence, where we currently provide solutions for over 30% of EU approved/pre-registration ATMPs and have processed and QP released over 600 batches to date.

Continued Demand for Small Molecule Therapies

Despite an increased focus on rare diseases and ATMPs, small molecules continue to make up a significant portion of the development pipeline. An analysis by Global Data reveals that in 2021, 47% of drugs in the pipeline were small molecules, and they continue to be the number one technology for approved products. Small molecule, and specifically solid oral dose products, are also targeting more specific indications with smaller patient populations. This, alongside an increased focus in oncology, is driving specific needs in the market.

The industry is more demanding in terms of flexibility and smaller batch sizes, while the bioavailability of these therapies creates challenges with poor solubility. The nature of these products requires an ability to handle more complex, challenging and potent molecules, coupled to smaller batch sizes and scales of manufacturing technology.

Customer Expectations: Flexibility and the Need for Speed

The pandemic and the resulting fast approval of COVID-19 vaccines has highlighted the ability of drug developers and regulatory authorities to move much more quickly through the drug development process than was ever thought possible. The challenges drug developers faced in the initial stages of the pandemic highlighted how important it is to be nimble and flexible to continue important life-saving medical research during periods of significant disruption, and also reimagine typical processes to drive efficiencies across the board. For instance, within our clinical technologies business, Almac supported a multinational pharmaceutical client by expediting the stand-up of our IRT system used for patient randomization and clinical trial material management to enroll patients in just seven days, a timeline that pre-pandemic would not have come across the table. 

Pharmaceutical companies are under more pressure than ever before to bring clinical candidates through the pipeline faster and with greater efficiency. That’s why to be successful now and into the future, CDMOs must be ready to respond to the ever-changing landscape and provide expert, adaptable solutions to meet their clients’ ongoing requirements.

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Mike Radomsky
President & Co-founder
CMC Pharmaceuticals

Flexibility

Ongoing supply chain issues have resulted in significant delays in the manufacture of APIs for clinical and commercial use. The ongoing shortages of critical chemicals, APIs, excipients, disposables, equipment and components required for pharmaceutical manufacturing can result in a serious delay in pharmaceutical manufacturing. Organizations, personnel and processes that have built-in flexibility during development are much more likely to be successful. For example, evaluating alternate container closure systems for a vial and stopper combination, or evaluating both disposable and cleanable equipment trains can mitigate the risks associated with procurement delays associated with a specific item.  

Speed

Many CDMOs are quoting significant lead times to develop, manufacture and test products. CDMOs that can adapt quickly and provide clients with timely laboratory and manufacturing services will win the best customers. Small pharmaceutical and biotech companies that may only have one or two products in development, need to move toward cGMP manufacturing with limited delays. These small companies are typically funded by venture capitalists and have limited capital. A six-month delay in producing clinical trial material can have a significant impact on the success of the company. 

Scientific Expertise

In addition to increased regulatory scrutiny, and as pharmaceutical and biotechnology products become more and more complex, CDMOs will need to provide sound scientific services for successful development and manufacturing efforts. New formulation approaches (long-acting formulations or solubilizing or stabilizing technologies), analytical methodology (new LC detectors) or processes (continuous production and disposable product contact parts) require the CDMO’s scientists and engineers to not only keep up to date with the technology, but also with new and evolving regulatory requirements. Selecting a CDMO with adequate technical horsepower will be critical in getting your product successfully developed and manufactured.

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Mandar Dixit
Head of Value Chain Services Bioprocess Solutions
Sartorius

Increased Biologics Outsourcing

Significantly higher growth of biologics over the last several years compared to small-molecule pharmaceuticals has resulted in the increased need for outsourcing clinical development and commercial manufacturing. This trend, in turn, has resulted in higher growth of the CDMO market segment compared to the Innovator Biologics market. China and India have seen an over-proportional growth in their CDMO markets compared to North America and Europe, attributed to lower manufacturing costs and favorable regulatory environment. This trend is expected to continue over the next several years.     

Rise of New Modalities

The rise of new modalities such as cell and gene therapies, ADCs, viral vector vaccines and mRNA-based therapies is causing many start-ups and smaller innovators who may not have the capital to invest in their own development and manufacturing to turn to CDMOs experienced in development and commercialization of these modalities. Many CDMOs in this space report their development and manufacturing project pipelines will be full for quite some time into the future, creating opportunities for up-and-coming CDMOs to fill the void. Significant manufacturing expansion plans have been announced by many CDMOs to meet this demand.   

Increased M&A Activity

The CDMO market traditionally has had a few dominant players and a considerable number of smaller companies. This fragmented market has seen several large mergers and acquisitions in recent years. It is preferable for many innovators to work with a smaller number of contract manufacturers to limit the risk of errors during technology transfers and scale-up; and to reduce timelines to commercialization especially for new modalities. It is not uncommon for the acquirers, who are generally large life science companies or private equity firms, to pay as much as 15-18x earnings before interest, taxes, depreciation and amortization (EBITDA) to buy successful smaller CDMOs. It is important to note, however, that the CDMO market still is highly fragmented with the top few leading CDMOs only holding 15% of the market share. These few large CDMOs are likely to lead further consolidation of the industry.

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Andrew Henderson
Chief Commercial Officer
Sterling Pharma Solutions

Development Pipelines Driven by Smaller Biotechs and mid-Sized Pharma

The nature of companies with programs in the later stages of development has evolved from being dominated by large pharma companies, to smaller biotech and mid-sized companies now being in the majority. This shift has put increased reliance on CDMOs as, typically, these innovator companies do not have the required internal resources to support scale-up and manufacturing.

Funding for small companies is currently very favorable, especially in the U.S., where systems and access to funding is mature with IPO and venture capital routes, alongside the academia/industry connectivity. This allows smaller innovators to work with CDMO partners early on in the development process, and their needs are often specifically to find companies that can match their flexibility and agility, and meet the required development milestones.

Large Pharma using CDMOs to Bolster Supply Chains

During the COVID-19 pandemic, the importance of supply chains in all areas, including pharmaceuticals, was highlighted, and the importance of domestic markets was put into the spotlight. There had already been a trend of large pharma companies looking to reshore manufacturing programs, but the pandemic accelerated the need to readdress the geographical spread of operations, as well as increasing the outsourcing of complex programs to CDMOs in domestic markets.

This has, in part, been driven by the cost differential of domestic providers being less but, perhaps most importantly, large pharma companies are looking to develop partnerships that add value to their teams and increase output, rather than focusing on cost. The need to protect IP and work with partners that have the experience and specific technologies required for complex projects is more important than ever.

For CDMOs that have invested in differentiating capabilities, this has brought new opportunities, and allowed partnerships to be forged in this area. Companies that are prepared to work in close collaboration with customers to develop new ways of working, and spend time exploring alternative options to traditional business models to maximize efficiency, time to market, cost and alternative technologies, can look to benefit the most.

Increasing Complexity of Drug Programs

In small molecule development, many of the less-complex molecules have already been researched, developed and approved, so any new drugs must demonstrate a clear advantage over those that already exist. Aside from this, the growing requirement for personalized medicines and more niche indications means that the path to market is much more complex than before.

While this means that innovators are outsourcing more complex projects to CDMOs, the increase in work needs to be matched by innovation and investment in new technologies to support them. Developing scalable new technologies, and working with leading academics to commercialize research is key to CDMOs differentiating themselves in the market.

Alongside the complexity of projects, there is a growing expectation for sustainability throughout a molecule’s lifecycle to be considered, where reducing energy use, raw materials, waste and carbon footprint has to be balanced against the desire to accelerate innovation and research.

It is an exciting time for CDMOs, as opportunities in the market increase and organizations invest, adapt and drive the pharmaceutical industry in what is proving to be a time of significant change.

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Ben Wylie
Senior Product Manager
ChargePoint Technology

Heightened Demand for Cancer Treatment Innovation

The rise in demand for highly specialized treatments for orphan illnesses and cancers has led to the dramatic increase in value of the global biologics market, set to reach nearly $750 billion by 2028,⁴ with the orphan drugs market alone expected to contribute to over $318 billion by the end of 2025.⁵ This has also resulted in significant growth in the highly potent active pharmaceutical ingredient (HPAPI) market, now expected to reach $37.5 billion by 2028.⁶

The HPAPIs used in many of these drugs are often poorly soluble. This means they need to be administered parenterally to overcome bioavailability issues. Parenteral drugs have particular and unique production requirements, especially when it comes to ensuring uncompromised sterility during the manufacturing process.  Ensuring this sterility requires specialist equipment and dedicated facilities, expertise and capabilities to manufacture, which many pharmaceutical companies lack in-house.

To meet this demand, we can expect an increasing number of pharmaceutical companies to outsource their manufacture of APIs to companies with the capabilities to handle their specialized requirements. We can also expect to see more specialized CDMOs and suppliers of processing equipment to emerge to offer these technical capabilities to pharma companies.
Rise in Demand for Large-volume

Sterile Processing

The drive to deliver an enormous number of COVID-19 vaccines at unprecedented speed has meant that sterile manufacturing is required on a much larger scale than ever before. We’ve seen rapid advancements in containment technology to support pharmaceutical companies in keeping up both with the evolving regulatory landscape and meeting the unique sterility requirements of parenteral treatments at greater capacities. Some pharma companies may be required to invest in new infrastructure or adapt their existing cleanroom spaces to offer greater capacity to their customers, harnessing new technology to do so.

For example, we’ve seen an increase in pharma companies turning to the new generation of hybrid Single Use (SU) technologies, which are designed to be used once prior to disposal. Technologies such as these eliminate the lengthy cleaning and validation processes required after each use and enable faster drug transfers, and we can expect to see more pharma companies turning to them to future-proof their cleanroom spaces.

Compliance with Annex 1 Amendments

Annex 1 amendments to the Good Manufacturing Practice (GMP) are set to come into force in 2022, requiring pharma companies to adjust their processes to ensure greater levels of aseptic sterility in their cleanrooms. As a result, we can expect more pharmaceutical manufacturers to take proactive measures as soon as possible to ensure compliance and minimize disruption to their operations.

This will require them to implement a formally documented action plan, known as a Contamination Control Strategy (CCS), which examines a holistic set of control mechanisms within their cleanroom environments. We can also expect them to adopt similar technologies such as SUTs into their processes to meet the closed processing and isolated filling requirements of Annex 1.

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Joe Haugh
Vice President
Cognizant Life Sciences Manufacturing

Pharma’s Transition to Manufacturing 4.0

Recent global events like the COVID-19 pandemic and geopolitical shifts are proving to be catalysts for change in the pharma industry. The pandemic’s impact on the pharmaceutical manufacturing supply chain has been profound. Across the space, operations managers began reporting shortages and delays in critical supplies of everything from vials to single-use disposables used in manufacturing biopharmaceuticals. Although pharma’s response proved its resiliency, COVID-19 stressed operations and manufacturing in new ways, revealing how important it is to reverse decades of underinvestment in digital controls and automation and accelerate the industry’s transition to manufacturing 4.0.

These last two years have proved to be a not-so gentle reminder to pharma that it is time to accelerate its efforts to meet global realities and manufacture higher quality drugs more affordably to support patient access. Pharmaceutical Manufacturing’s fifth annual Smart Pharma survey found just over 88% of pharma manufacturers believe their company will choose to automate processes if given the opportunity and approximately 90% of those responding had begun their digital transformation efforts.⁷ It is a competitive imperative pharma can’t ignore as it seeks benefits that range from lower-cost manufacturing and faster development timelines to more breakthrough drugs and better patient health outcomes.

Increasing CAPex for Capacity and Full-stack Transformational Technologies

Global demand for all pharmaceuticals is growing at an accelerated rate. According to Grand View Research, the global pharmaceutical manufacturing market size was valued at $405.52 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 11.34% from 2021 to 2028.⁸ The expansion of global pharmaceutical-based healthcare is prompting tremendous capital spending as manufacturers seek to build the capacity it needs to meet the world-wide demand for safe, affordable drugs and therapies.⁹ To assure the best possible return on CAPex, pharma is making a corresponding  investment in full-stack digital and analytical tools. Additionally, global pharma, which faced critical supply chain issues during the pandemic, is increasingly interested in regionalizing manufacturing capabilities—a go-to-market focus that is also enabled by comprehensive technology investment.

The industry’s expectations are set extremely high for these full-stack solutions, driven by the need to: increase manufacturing capacity and speed to market; improve flexibility and efficiency in manufacturing; and drive and enable digital transformation.  

Turning to Expert Partners

Understanding the critical impact this technology must have on operations from the CEO to CFO, pharma’s business strategists are increasingly interested in engaging expert partners experienced delivering the full-stack benefits associated with full-stack Manufacturing 4.0 solutions. Interestingly, among pharma manufacturers and equipment vendors, it’s felt that the burden of pushing the drug industry to automate belongs to equipment manufacturers and software providers.

Of the many issues pandemic has brought to pharma’s attention, the Smart Pharma survey revealed how important reliable, trusted supply partners were in overcoming them.⁷ Pharma’s core competency is discovering innovative treatments, so an increased reliance on partners to provide the necessary tools, explained the report’s authors, could free up the industry to do what it does best. Regardless, considering the complexity of the task, such collaborations are becoming increasingly necessary to support pharma in its effort to transform operations and be more efficient delivering the billions of doses patients around the world are taking today.

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Bruce Frazier
Vice President, Business Development & Sales
Bionova Scientific

Robust Regulatory Compliance

A continuing trend for CDMOs is the need to maintain robust regulatory compliance while maximizing speed and flexibility in moving product development programs forward. Drug developers are under constant pressure to rapidly move their programs forward to first-in-human trials and beyond, especially with the increase in fast-track or breakthrough therapy designations, and accelerated approvals. 

Many biopharmaceutical companies have chosen to establish strategic partnerships with CDMOs, allowing them to be more nimble in the execution of their product development programs. By outsourcing to a CDMO, these companies eliminate the downtime, hassle and cost of equipment maintenance, product change-overs and instrument obsolescence that distract from their core mission.

Bionova had the opportunity to design and build a brand new, commercial-ready GMP facility that utilizes the latest single-use technologies. Investing in these state-of-the-art technologies has the added benefit of maximizing speed, flexibility and global compliance while reducing risk, cost and downtime for us and our clients. We also applied this mentality in building our technical team, whose depth of expertise in cell line and process development, combined with an integrated service from DNA to Drug Product in one facility allows us to significantly reduce the overall CMC timelines for our customers.

Staffing Shortages

Labor shortages are a pain point across multiple industries and biopharma has not been immune to that trend. CDMOs are an important tool for biopharmaceutical companies to leverage to mitigate the impact of these shortages.

Trusted CDMOs can become a critical safety valve for clients under pressure to keep programs moving forward. CDMOs can complete critical projects, either as a one-time solution or as a strategic partner on a longer-term basis.

It is critical for CDMOs to maintain staffing, while also cross-training teams so they are ready to respond quickly to client needs. CapEx investments, including facilities built for speed and flexibility, are also critical tools. Strategic locations with high concentrations of biopharma talent (San Francisco Bay Area, San Diego, Boston) can enable CDMOs to sustain a capable workforce.

Adapting to New Therapeutic Modalities

CDMOs are also adapting to new trends in therapeutic modalities. The advent of bispecifics, fusion proteins, cell and gene therapies and the recent explosion of mRNA vaccines have reinforced the expectation that the CDMO industry must be ready to handle a wide variety of innovator needs. 

As each new modality gains traction and accelerates, the CDMO industry must quickly pivot in both operations and technical know-how to meet the demand. The precipitous increase in demand for manufacturing of mRNA vaccines and other COVID-19 therapeutics during the pandemic quickly outstripped capacity and created severe manufacturing capacity shortages for other non-COVID treatments. Bionova’s flexible new GMP facility allowed us to meet client needs for a range of biologics during the pandemic rush. In addition, we are now moving forward with plans for plasmid DNA production to meet the needs of cell and gene therapy clients as well as mRNA vaccine developers.

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Mike O’Mara
Chief Operating Officer
Cellipont Bioservices

The Challenge of Talent Shortages

The rapid expansion of the cell and gene therapy market is straining the availability of good talent. Cell and gene therapy innovators are often lean organizations that may not have the manpower (quantity and/or skill-set) to keep their programs on track. Turning to CDMOs to outsource key functions is a proven strategy that will be increasingly important as therapeutic candidates move to and through the clinic. 

Meanwhile, CDMOs are also facing tight labor markets and need to cultivate new talent to fulfil client demand for their services. Finding scientific expertise, manufacturing associates and others in the sector is increasingly challenging as capacity expands. At Cellipont Bioservices, we are pursuing innovative partnerships with universities to attract and prepare new graduates to join the cell therapy industry.

It’s clear our industry has to do a better job educating everyone how exciting this space is when it comes to the patient outcomes. To this end, we are investing in promoting the cell therapy sector as a rewarding place to build a career. We further support this effort by building internal training programs to effectively transition promising talent from complementary industries that work in fast-paced, procedure-driven jobs such as food services, military and industrial manufacturing.

Testing Technology for Cell Therapies

Traditionally, cell therapies rely on analytical technologies and methodologies developed for conventional large molecule biologics (protein therapeutics). However, because cell therapies are living and change with every manipulation, new purpose-built process analytical technologies are needed to generate robust, accurate, compliant and reproducible data for cell therapy products. A critical task facing the industry is streamlining and developing more efficient ways to test product for release. This involves identifying the best analytical methods to characterize products and cells with a laser focus on those characteristics that really matter. It also means thinking ahead to address ease of duplication, automation and regulatory compliance.

Thus, the development of high throughput and automated testing platforms is critical, especially with autologous products. At Cellipont Bioservices, we are aggressively pursuing the use of new technologies to solve some of these challenges. We are building a team of dynamic individuals and are collaborating closely with industry to help drive the organization toward effective and efficient new solutions.

Driving Down Cell Therapy Costs

The cost of advanced cell therapies remains a critical barrier to the industry’s growth. Meaningful reductions in development, manufacturing and logistics costs are essential to expanding patient access to the promise held by innovative cell therapies. The lower costs will assist sponsors in lowering COGS and more importantly, reduce the cost of treatment to patients and providers. The most reliable strategy for consistently driving down costs is to design and engineer processes—from the very beginning—with the end in mind. Too often, processes that are developed for early stages are not adequately scalable for efficient late stage or commercial production.

Cellipont is evaluating and deploying several types of manufacturing technologies to meet our clients’ current and future needs while driving down cost. We are pursuing methods to stagger unit operations in ways that allow us to improve utilization of production suites and support services. We are prioritizing use of electronic batch records, MES and other systems that harmonize with our production flows. We know there is no single silver bullet that will drive down costs overnight, so instead we collaborate with clients every day to do things better, faster and smarter every step of the way. 

References

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