18 BioPharm International www.biopharminternational.com September 2010

Perspectives on Outsourcing

D o

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A fter your R&D team has had a “Eureka!”

moment, the first order of business is

to engage in process development and

production of the product for clinical supply.

Perhaps that moment came a few years ago and

now you need to ensure that you can supply

enough product to meet commercial demand.

Do you choose to build or retrofit your own

manufacturing plant or do you buy via out-

sourcing to a contract manufacturing organiza-

tion (CMO)? This complex decision shouldn’t

be made lightly because it could affect nearly

everything about your business, including your

company’s financial situation, intellectual prop-

erty position, and business and product goals.

THE CURRENT MARKET In 2009, many small- to medium-sized bio-

pharmaceutical companies struggled to raise

funds for their product development and man-

ufacturing projects, while large, financially

stable companies reigned in spending and

reassessed their pipelines. The building of new

manufacturing facilities decreased, possibly

reflecting changes in business philosophies as

well as a reduced ability by the pharmaceutical

and biotech companies to prog-

ress with construction.1,2 At the

same time, the global CMO market

declined to approximately $2.6 bil-

lion, a reduction from years past.3

In general, CMOs saw a drop in

requests for proposal, more sensi-

tivity to pricing from potential cli-

ents, and there was (and continues

to be) increased level of competi-

tiveness amongst CMOs. At least

one CMO closed its doors (QSV

Biolog ics). Mergers and acquisi-

tions also changed the landscape

of the CMO business, as CMOs of

all sizes and capabilities were integrated into

larger pharmaceutical or biotech companies

( Watson Pha r maceut ica ls/E den Biodesig n;

Merck/Avecia; Recipharm/Cobra).

Today, the business environment seems to

be on the rebound: interest in pipelines includ-

ing biologics remains strong, and for compa-

nies considering outsourcing, CMO capacity

is broadly available (though, perhaps because

of the acquisitions of 2009, capacity may not

remain readily available). Process economics

continue to improve through leaps in produc-

tivity and the acceptance of new production

technologies. There is a wider array of product

types requiring cGMP manufacture, includ-

ing the emergence of biosimilars as originator

product patents expire. But the industry has

learned some valuable lessons as a result of the

tumult of 2009. Companies remain cautious

when evaluating requirements for risk shar-

ing, product quality compliance, and business

partner compatibility. Cost-containment is still

paramount and everyone is looking to manage

their project budgets efficiently.

HOW TO DECIDE When deciding whether to build your own

capacity or buy it from a CMO, prioritization

of what is most important to you as a com-

pany should be key. Although your available

budget and the return on investment must be

considered, your choice shouldn’t be made on

potential costs alone. Several factors should be

weighed before you make your choice:

• Risk tolerance: Are you willing to put some

(or all) of the responsibilit y for product

development and manufacturing into the

hands of a trusted partner?

• People/exper tise/core competencies: Can

you assemble a team to execute various proj-

ect tasks, or do you require support from an

Build Versus Buy in the Current Biotech Market Environment Factors such as production scale and intellectual property must be considered when deciding whether to build your own capacity or buy it from a CMO

Maria Lusk is a director of client management at Eden Biodesign, a part

of the Watson Group, Liverpool, UK,

919.806.4234,

[email protected]

20 BioPharm International www.biopharminternational.com September 2010

Perspectives on Outsourcing

external source for things like

basic process development and

manufacturing, or for specialized

activities like fill-and-finish?

• Manufacturing scale and pro-

duction forecast: How much of

your product will you need to

complete your clinical trials or

to support commercial demand?

Will your company have avail-

able capacity at the proper pro-

duction scale to meet your needs?

• Technology: What technologies

will be required to manufacture,

test, and finish your product?

Do you already have the appro-

priate science and equipment in

place? Do you have the budget

and time to obtain the required

technology, or is partnering with

a CMO the best option?

• Ti mel i ne s: Is t here pressu re

from investors or the market to

achieve a clinical or commercial

milestone by a particular date?

How will the required project

tasks fit with the expected time-

line? Will building or retrofitting

a facility fit with the timeline, or

do you need to use a CMO to

achieve your milestones?

• Geography/cultures/currencies/

com mu n icat ion: Does closer

necessar ily mean better? A re

currency exchange rates critical

to your project budget? Are you

prepared to communicate across

various time zones and possibly

cultural influences?

• Regulatory affairs (RA)/clinical

sites: What is your target market

and will you need to include

severa l locat ions a rou nd t he

globe in your plan to submit a

regulatory filing? Do you need

to have your own facility and

R A staff in the same location

as the clinical sites? Is there a

CMO out there that can fully

support your regulatory plans?

• Intellectual proper ty/control:

Does you r compa ny w ish to

control its IP completely, or are

you willing to share your know-

how with a trusted CMO part-

ner? Will you grant a license to

a business partner who will take

your product through to com-

mercialization, or do you prefer

to maintain control, including

manufacturing, throughout the

product’s lifecycle?

• Number of products and their

development/clinical phase: You

should plan for success, but the

“what ifs” of failure also need

to be considered. Do you have

one or two products in the early

phase of development, or is your

por t folio well balanced w it h

products in all stages of clinical

development and clinical trials?

It does not make sense to build

a new facility if your pipeline

cannot support it.

GREENFIELD OR RETROFIT? If you have the option to build a

facility from scratch (“greenfield”)

or to retrofit an existing space, you

must carefully scrutinize what is

available to support the production

of your product. A greenfield facil-

ity will be fit for purpose from the

beginning, but various challenges

may arise for a company that cho-

ses to build, including keeping to

the construction budget and time-

line; employing people with the

proper background to ensure that

the facility is fit for purpose; and

training staff to install, validate,

and operate equipment. On the

other hand, it may be more dif-

ficult to retrofit an existing space

because the existing space must

be able to accommodate the new

equipment while perhaps main-

taining (and re-validating) some

of the legacy infrastructure (e.g.,

clean-in-place and steam-in-place

skids, utilities, tanks, water supply).

Any compromises in facility design

will need to be weighed against

planned production and regulatory

requirements.

If you do decide to build, consider

that there are several manufacturing

technologies to choose from:

• Disposable, single-use, or limited-

use manufacturing equipment:

Some of the benefits of these

components and systems include

a low initial capital outlay, fast

installation, and reduced routine

operating costs, because these can

reduce or eliminate the require-

ment for cleaning or cleaning

validation. Although the use of a

completely disposable production

train is not common, biotechnol-

ogy companies are beginning to

investigate this as an option.4 For

particular types of products such

as viral vaccines, disposables are

indispensable.

• St a i n le ss – steel systems on ly:

Stainless-steel systems are proven

for manufacturing products reli-

ably and reproducibly; the tech-

nology is common, so process

transfer between manufactur-

ing sites (internal and external)

is relat ively st ra ight for wa rd,

and these systems can support

various types of products. But

consideration should be given

to budget and timeline require-

ments for installation because

they tend to be expensive and

time-consuming to order, install,

and validate. Cleaning will be

a continuous challenge for the

lifetime of the system.

Before making the decision to buy, get to

know your potential CMO partner. Ask questions

and be prepared to answer some, too.

September 2010 www.biopharminternational.com BioPharm International 21

Perspectives on Outsourcing

• Hybrid systems consisting of dis-

posable and stainless-steel com-

ponents: This option seems to be

the most popular for manufac-

turing biopharmaceutical prod-

ucts.4 Systems can be designed

to meet your facility and prod-

uct requirements, using a “best

of both worlds” approach.

Before mak ing your decision

to build or retrofit, consider that

regardless of the equipment you

choose to install, maintenance

and mater ials supply w ill be a

continuous endeavor. Planning

for time and costs to operate and

maintain these systems should be

included in your overall product

lifecycle design.

ARE CMOS THE ANSWER? An alternative to building or ret-

rofitting a facilit y is to partner

with a CMO. Indeed, innovator

companies have started looking

at the strategic benefits of engag-

ing CMOs to support their prod-

ucts throughout their lifecycle:

in general, it is likely t hat t he

CMO’s facilit y and qualit y sys-

te m s a l r e ad y me e t r eg u l ator y

requirements, including interna-

tional regulations; an innovator

company can choose a CMO in a

particular location (or locations)

as there continues to be signifi-

c a nt C M O b u s i n e s s d e v e l o p –

ment in Singapore, Israel, Japan,

and the BR IC countries (Brazil,

Russia, India, and China); CMOs

are differentiating themselves by

increasingly offering specialized

technolog ies a nd ser v ices, a nd

several major CMOs are engag-

ing the innovator companies by

e x plor i ng a lte r nat ive bu si ne ss

models. In addition, companies

have access to C MO s t hat a re

already prepared to not only man-

ufac t ure a my r iad of produc ts,

but also provide you with tech-

nologies and personnel already in

place to “hit the ground running”

in support of your project needs.

Expression Systems

O ne of t he b e ne f it s of work-

i n g w i t h a C M O i s t h a t i n

s ome i n st a nc e s t he I P hold e r

f o r a p a r t i c u l a r e x p r e s –

s i o n s y s t e m i s t h e C M O

(for e x a mple, G – Pe x /C at a le nt;

G S/ L on z a; BI – H E X / B ohe r i nge r

I n g e l h i e m ; C H E F – 1 / C M C

Biologics), or a technolog y may

be available to the CMO (SUR E

( S e l e x i s), U C O E ( M i l l i p o r e)/

E den Biodesig n) a nd accessi ng

it through the CMO may allow

your company to obtain prefer-

ential business terms. Discussion

of available options that may be

most appropriate for the produc-

tion of your product should be

based on your company’s supply

requirements (current and future);

your available budget; any target

product delivery date(s); and your

c omp a ny ’s r i sk tole r a nc e a nd

regulatory strategy.

NICHE TECHNOLOGIES There are a few areas of special-

ization that commonly are out-

sourced by innovator companies,

including those who have their

own internal manufacturing capa-

bility. These include:

• Product characterization: This usu-

ally includes highly specialized

analytical techniques such as

mass spectrometry, amino acid

analysis and post-translational

modification analysis. Because

these analytical methods usually

require expensive equipment and

highly skilled technicians, many

companies choose to engage the

services of an external contract

testing house.

• Drug product fill-and-finish: This

can include vial fill and lyophi-

lization, combination products,

and transdermal patches.

• V i r a l p r o d u c t p r o d u c t i o n :

There are several product types

in development requiring spe-

cialized knowledge and exper-

t i se. E x a mple s i nc lude v i ra l

vaccines, gene therapies, and

cell culture products compris-

i ng or made usi ng bac u lov i-

ruses, adenoviruses, or a wide

variety of other viruses. Some

i n novator compa n ies choose

to outsource the production of

these types of product because

of constraints in their existing

facility (e.g., segregation of pro-

duction suites and air handling

units), technical expertise, or

regulatory requirements.

FINAL THOUGHTS B efore ma k i ng t he dec ision to

b uy, get to k now you r p ote n-

tial CMO partner. Ask questions

and be prepared to answer some

too. You should understand and

t hen sha re what you r expec ta-

tions are for working with your

c hose n C MO, a nd you shou ld

have an understanding of how its

capabilities stack up against your

internal capabilities and project

requirements.

In general, those who choose to

build tend to be the large pharma-

ceutical and biotech companies that

have sturdy pipelines and plenty of

cash on hand. Smaller companies

with fewer products and less cash

often outsource production of their

products. But regardless of who you

are, the choice to build or buy is one

that could have a significant impact

on your present and future busi-

ness success, and therefore should

be made very carefully. ◆

REFERENCES 1. Langer E. Build or Buy? Strategic

Choices in Biomanufacturing.

2010 BIO International Convention.

Chicago, IL. 2010 May 3–7.

2. Bush L. Build or Buy? Strategic

Choices in Biomanufacturing.

2010 BIO International Convention.

Chicago, IL. 2010 May 3–7.

3. Liu C