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Maturing biopharma creating CMO opportunities

By Kirsty Barnes , 09-May-2008

As the biopharmaceutical industry matures, new opportunities are being created for biopharmaceutical contract manufacturers.

According to new research from Frost & Sullivan, the strengthening of mid-size biopharmaceutical companies is serving as the "engine" for a rapidly growing biopharmaceutical pipeline and is a strong signal for future potential that exists in outsourcing manufacturing. Contract manufacturing of biopharmaceuticals has moved beyond simply being a function of "available capacity" and "cost" to a strategic option offering flexibility, quicker time to market, and lower scale-up costs, the firm said. The manufacturing of biopharmaceuticals is a capital-intensive, complex, and highly technical process in comparison to that of small molecules. "Investment in captive manufacturing capacity for biopharmaceuticals is a tricky decision for most companies as product development timelines are lengthy and often risky with a high risk of failure", said Frost & Sullivan industry analyst Barath Shankar Subramanian.


However, biopharmaceutical contract manufacturing organisations (CMOs) are specialists in the field and are generally better equipped to handle manufacturing and improve process efficiency and productivity in comparison to small and emerging biopharmaceutical companies. Contracting out the manufacturing to these organisations is enabling smaller and mid-tier companies to retain greater control over their products rather than out-licensing or selling them to bigger biotechnology or pharmaceutical companies, and can therefore help ensure the sustainability of the business in the long term, said Subramanian. With that in mind, Frost & Sullivan has estimated that the biopharmaceutical CMO market will grow to $6.48bn by 2014, witnessing double-digit growth from its present value of $2.45bn, with demand being largely driven by first-generation products - rh protein therapeutics and monoclonal antibodies (MAbs) targeted for cancer. "A large number of first-generation biopharmaceutical products are maturing and major biopharmaceutical companies are likely to move these out to CMOs and focus on next-generation drugs, which could offer higher revenues and margins", said Subramanian.


Indeed, the pharma industry has seen a biotechnology revolution in the past few years and it is estimated that biologics now make up 13 per cent of the total prescription drug sales in the US. With currently more than 400 biologic products in clinical trials and approximately 700 biologics products in pre-clinical or early stage development, biopharma firms have their hands full focusing on bringing these therapies successfully to market.


Meanwhile, the report, titled: 'Global Biopharmaceutical Contract Manufacturing Markets', pointed out that CMOs in this field are also now starting to mature and branch out beyond offering typical manufacturing services, to add-ons such as formulation development, consulting, logistics, packaging, as well as proprietary technology platforms in order to grab more from the value chain.

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