Biomanufacturing Strategies: Market drivers, build-vs-buy decisions and opportunities in contract relationship management

Executive Summary 10
Introduction 10
Manufacturing of biologics 11
The contract biomanufacturing market 12
Outsourcing biomanufacturing 13
Contract Manufacturing Organizations 14
Trends in biomanufacturing 15

Chapter 1 Introduction 18
Summary 18
Introduction 19
The state of the biomanufacturing industry 20
Biotech drugs as blockbusters 21
The contract biomanufacturing sector 22
Overview of the biomanufacturing process 23
Microbial Fermentation 24
Mammalian cell culture 24
Transgenics/plant systems 24
Conclusions and key findings 25

Chapter 2 Manufacturing of biologics 28
Summary 28
Introduction 29
The biopharmaceutical process 30
The Upstream Process 32
Cell banking and seed culture 32
Production 32
Harvest and concentration 37
The Downstream process 37
Purification of biopharmaceuticals 38
Formulation 41
The importance of process integration 42
Expression systems for therapeutic protein production 43
Therapeutic protein production in microbes 44
Mammalian cell culture 46
Emerging production systems 48
Pichia and filamentous fungi 48
Transgenic protein production systems 49
Transgenic animals 53

Chapter 3 The contract biomanufacturing market 56
Summary 56
Introduction 57
Overview of the global contract biomanufacturing market 58
The contract biomanufacturing market as part of the global pharmaceutical
market 58
Total market size forecasts 59
Global biomanufacturing capacity forecasts 63
Current market drivers 67
Expansion of the market for biopharmaceutical products 67
Facility cost 70
Manufacturing expertise and innovation 72
Risk reduction and time to market 73
Growing regulatory burden and shortage of personnel 75
The emergence of biosimilars 78
Current market restraints 79
In-house production and overcapacity 79
Loss of manufacturing control 81
Technology transfer and intellectual property (IP) concerns 82
Increased competition among CMOs 83
Longer clinical and approval times for biopharmaceuticals 84

Chapter 4 Outsourcing biomanufacturing 88
Summary 88
Introduction 89
The build vs. buy decision 90
What is the strategy for the future of the biotech company? 90
The outsourcing option and availability of external manufacturing capacity 92
Capital requirements and operating cost structure 96
Risk management 99
Managing contract biomanufacturing 101
Key selection criteria 101
The CMO Selection Process 105
The sponsor – CMO relationship 108
Starting the relationship 108
Technology transfer 109
Weekly and daily interaction 112
The reality of costs 114
When things go wrong 114
Conclusions 117

Chapter 5 Contract Manufacturing Organizations 120
Summary 120
Introduction 121
Major players 122
Lonza Group 122
Mammalian cell culture 122
Microbial fermentation 123
Biopharma services 124
Boehringer Ingelheim 125
Boehringer Ingelheim’s expansion strategy 125
Boehringer Ingelheim’s contract services and proprietary technology
platforms 126
DSM Pharmaceutical Products 128
DSM Pharmaceuticals’ contract services 129
Celltrion 130
Bioreactor facilities 130
Celltrion expansion 131
Diosynth 133
Diosynth’s contract manufacturing deals 135
Medium-sized and small players 136
Baxter BioPharma Solutions 136
Baxter’s contract services 137
Cobra Biomanufacturing plc 138
Cobra’s contract services and proprietary technology platforms 140
Xcellerex 141
PDMaxTM Process Development Platform 141
FlexFactoryTM Manufacturing 142
XDRTM – Xcellerex Disposable Reactor 142
Xcellerex’s funding and manufacturing deals 142
Avecia 143
The pAVEwayTM production platform 144
Avecia’s manufacturing deals 144

Chapter 6 Trends in Biomanufacturing 148
Summary 148
Introduction 149
Bioprocess development strategies 149
Production line selection and engineering 151
Cell culture media 153
Disposable technology 154
Drivers for disposable technologies 155
Single use and disposable bioreactor systems 156
Disposable systems in downstream processes 159
Improving productivity in downstream processing 159
Harmonizing upstream and downstream capacities 160
Transgenic production systems 161
Cost considerations 161
The perception of transgenics 163
Process analytical technology (PAT) 165
Regulation shifts from product to process 165
Defining PAT and its meaning to a biomanufacturing company 165
PAT in biomanufacturing 166
Process control tools used for PAT 167
Globalization / Offshoring to Asia 169
Shared capacity – the future of biomanufacturing? 172
Conclusions – The future of contract biomanufacturing 174

Chapter 7 Appendix 178
Bibliography 178
Index 181

List of Figures
Figure 2.1: Schematic flow diagram of a typical biopharmaceutical process 31
Figure 2.2: Expression system decision framework 44
Figure 3.3: CMO market growth as part of the global pharmaceutical market, 2001 and 2007 59
Figure 3.4: Size of the contract biomanufacturing market, 2000-2008e 60
Figure 3.5: Ratio of biopharma companies producing 100% in-house (mammalian cell culture), 2003-2011e 61
Figure 3.6: Biopharma companies planning to outsource at least part of their production, 2006 and 2011e 62
Figure 3.7: Mammalian Cell Culture Bioreactor Capacity, 2003 -2009e 64
Figure 3.8: Microbial Fermenter Volume Capacity, 2003 -2009e 65
Figure 3.9: Number of biotech drugs and global biotech industry revenues, 1990-2005 68
Figure 3.10: Antibody-derived therapies in biotechnology pipeline, 2007 69
Figure 3.11: Cash reserves of biotech companies, 2005 71
Figure 3.12: Sensitivity of fermentation volume required depending on yield and market demand74
Figure 3.13: Factors creating capacity constraints by 2008 77
Figure 3.14: CMO Mammalian Cell Culture Production Capacity Increase 2003 -2006 80
Figure 3.15: Mean clinical and approval time-frames for biopharmaceuticals approved, 1996-2000 vs. 2001-2005 85
Figure 4.16: Framework for the build vs. buy decision 92
Figure 4.17: Mammalian Cell Culture Capacity Distribution for CMOs, 2004 and 2008(estimate) 93
Figure 4.18: Distribution of biomanufacturing capacity 94
Figure 4.19: Proposed timeline for commercial contract biomanufacturing 95
Figure 4.20: Financial ‘Build or Buy’ decision tree 98
Figure 4.21: Transition (success) probabilities for biopharmaceuticals in different clinical phases, 2007 99
Figure 4.22: Key criteria for selecting a CMO, 2006 102
Figure 4.23: Critical issues when selecting a CMO, BioPlan Associates Survey, 2006 105
Figure 5.24: Celltrion’s bioreactor capacity in Incheon, South Korea, 2007 131
Figure 5.25: Revenue by lines of business in 2006 and 2007 139
Figure 5.26: Revenue by geographical origin in 2006 and 2007 140
Figure 6.27: Timelines for constructing and selecting high quality clonal cells 152
Figure 6.28: Different types of culture media 154
Figure 6.29: A 20L Wave bioreactor (Wave Biotech) 157

List of Tables
Table 1.1: Top 10 biotech drugs by US sales ($bn), 2005 and 2006 21
Table 2.2: Examples of production methods for recombinant therapeutic products 35
Table 2.3: Marketed biopharmaceuticals and their expression platforms 47
Table 2.4: Plant-based transgenic companies and their pipeline of recombinant proteins 52
Table 2.5: Therapeutic proteins produced in transgenic animals 53
Table 3.6: Number of operating facilities per segment 2004 and 2008(estimated) 63
Table 3.7: New Technology – Modified Production Plant: Kogenate Bayer/FS® 82
Table 4.8: Capital investment costs for antibody facilities using mammalian cell culture, 2000-2009e 97
Table 4.9: Cost of inaccurate capacity planning 100
Table 4.10: Example of a request for proposal (RFP) content 107
Table 4.11: Typical areas of responsibility as reported by sponsors 115
Table 5.12: Capacity expansions in mammalian cell culture fermentation 123
Table 5.13: Capacity expansions in microbial fermentation 124
Table 5.14: Diosynth Biotechnology, US facilities, Research Triangle Park, NC 134
Table 5.15: Diosynth Biotechnologies, microbial fermentation and mammalian cell culture volumes, 2007 135
Table 5.16: Process development and cGMP manufacturing at Avecia, 2007 144
Table 6.17: Capital investment estimates for antibody production for two different expression technologies 162
Table 6.18: Comparison of cost per gram estimates at specified production rate 163