Large pharma to boost CMOs’ biologics business; report

Biotechs have embraced outsourcing but large firms have historically kept biologics production in-house. However, factors underpinning large pharma’s resistance are changing and this will result in 30 per cent of biologics production being outsourced by 2013, up from 20 per cent in 2008.

This is the view of a report by Scientia Advisors. Harry Glorikian, managing director of Scientia, told Outsourcing-Pharma that large pharma’s concerns about regulatory and quality requirements have limited outsourcing of biologics production.

In recent years these concerns have been reduced by contract manufacturing organisations (CMO) increasing expertise and demonstrating their capabilities. Establishing a US presence has also helped CMOs, said Glorikian.

Outsourcing of biologics production was also limited by pharma’s desire to control personnel, production schedules and intellectual property. Glorikian said the importance of these factors has been lessened by CMO improvements and increased emphasis on cost-cutting.

In some cases the improvements at CMOs make them more qualified to produce biologics than large pharmas that have been focused on small molecules. This is particularly true if the large pharma has built its biologics pipeline through acquisitions.

CMOs can also help shorten the time needed to get a programme started. The personnel and infrastructure are already in place at CMOs and this can help reduce time to market.

Facilities for sale​

​

Large pharma’s efforts to replenish pipelines and cut costs combine to create an opportunity for CMOs and generics companies. Glorikian said he expects large pharma to reduce biologics production capacity and that “it is fairly likely​” CMOs and biosimilar firms will acquire it.

Attempts to replenish pipelines by acquiring biotechs could increase the sale of biologics plants. A likely scenario is a pharma will buy a biopharm to boost its biologics pipeline but any manufacturing or development plants including in the acquisition will be sold, said Glorikian.

This has already happened. In 2007 Eli Lilly acquired Icos, adding Cialis (tadalafil) to its portfolio, and promptly sold the manufacturing plant in Washington, US to Danish CMO CMC Biopharmaceuticals.