Patricia Van Arnum was executive editor of Pharmaceutical Technology.

Patricia Van Arnum

As fine-chemical producers, contract manufacturers, and pharmaceutical/biopharmaceutical companies meet this week in Madrid at CPhI Worldwide, what are the key issues on the minds of industry players?

		It is no secret that the pharmaceutical industry continues to be in a period of transition as it faces slower growth compared with historical levels. Increased generic-drug incursion, shifting growth patterns to emerging markets, and the erosion of the blockbuster drug model to more specialized drugs have all contributed to placing new demands on contract service providers and fine-chemical suppliers as their pharmaceutical customers deal with these new realities. In speaking with CMOs and fine-chemical producers here this week at CPhI, many point to the increasingly strategic and collaborative nature of outsourced relationships, the greater emphasis placed on project management in executing those partnerships, and the attendant need for suppliers to adapt their business models to the reality of their pharmaceutical customers in facing a more resource-constrained environment.

		The new reality, as one supplier explained, is that as pharmaceutical companies increase their level of external development and manufacturing, they are also obliged to deal with greater complexity in their supply chains. In general, suppliers cited an interest by pharmaceutical companies to manage their supply chains more efficiently by working with fewer suppliers, accessing contract service providers with broader capabilities to not only reduce the number of suppliers working on a given project but to also make technology transfer and project workflow more time- and cost-efficient. Suppliers also noted the increased importance of project management and the related expertise of contract service providers in not only managing their direct relationships with sponsor companies but also in facilitating the activities resulting from the external network of suppliers that a given project may entail.

		That emphasis on collaboration and project facilitation is also evident in the partnerships that contract service providers are forming with each other. For example, at CPhI this week, Almac and DSM announced a partnership in biocatalysis. The agreement grants both parties access to enzyme platform technologies, services and expertise, with Almac offering expertise in enzyme identification, scale-up, and implementation of early-phase projects and DSM providing capabilites for large-scale production. Earlier this year, Catalent Pharma Solutions and BASF formed a broad collaboration and open alliance to provide solutions to overcome bioavailability challenges of new molecular entities with solubility or permeability challenges. Last year, Hovione and Bend Research formed collaboration that married Hovione’s commercial-scale pharmaceutical manufacturing capabilities with Bend Research’s oral drug-delivery, formulation, and process engineering expertise.

		These examples show that the collaborative and strategic partnerships are not only at play among sponsor companies and their suppliers but among the contract service providers themselves as they seek to meet the needs of their customers in an evolving pharmaceutical industry.

Articles

Changing Industry Models at Work at CPhI

Biologic-based drugs are increasingly important in the drug pipelines of pharmaceutical companies. Strong growth is projected for biologic-based drugs, and a crucial issue is whether the outsourcing model for biologic-based drugs will follow a similar path as the model for outsourcing small-molecule development and manufacturing or will new paradigms emerge. That question was addressed at one of the sessions at the CPhI Pre-Connect Conference this week in Madrid. 

Although small molecules continue to dominate commercial drugs, biologic-based drugs are becoming increasingly important in the future of the pharmaceutical industry. Biologics are expected to account for about 17% of total global spending on medicines by 2016, according to a recent analysis by the IMS Institute for Healthcare Informatics. In 2011, the global market for biologic-based drugs was estimated at $157 billion and is expected to reach between $200 billion and $210 billion by 2016, according to IMS. Seven of the top ten global medicines by spending will be a biologic within five years, according to IMS. 

One question that emerges from these shifting patterns is the role of external manufacturers in the biologic-based supply chain, a topic examined by Ulrich Ruemenapp, head of biotech projects, contract manufacturing, at Bayer Pharma, and Charles Jeffries, head of supply-chain management at SkyePharma. 

As in any outsourced relationship, security of supply, product quality, and effective project management are important components of a successful external manufacturing partnership, noted the speakers, but additional complexity may arise in technology transfer for biologic-based drugs and in the supply chain itself as a result of the cold-chain logistics required for biologic-based drugs. Strategic sourcing, also important in small-molecule outsourcing, is also a key consideration for biopharmaceutical/pharmaceutical companies as they decide whether to keep a project in-house or to outsource. 

But one area where biologic-based manufacturing may take a different path than small-molecule based-manufacturing resides in emerging biomanufacturing technologies and the resulting greater flexibility in managing biomanufacturing capacity. Jeffries pointed to the use of modular biomanufacturing as way to add capacity on-demand. Modular manufacturing as applied to biomanufacturing is an alternative to the traditional method of estimating product demand and building new, or expanding manufacturing capacity to meet projected demand, an estimation that is not easy given the uncertainty of the drug-development process. Reflective of the growing interest in modular manufacturing is GE Healthcare’s acquisition earlier this year of Xcellerex, a company specializing in turnkey biomanufacturing solutions that include modular and portable production trains based on single-use technologies, advanced process automation, and compact cleanroom architecture. Modular biomanufacturing offers the opportunity for companies to better manage the development and market risks associated with drug development by not adding fixed manufacturing capacity. Modular manufacturing may also provide a way for biopharmaceutical/pharmaceutical companies to more cost-effectively establish a manufacturing presence in local markets where a manufacturing presence may be needed to access a given market.

Given the complexity and cost of biomanufacturing capacity, strategies that offer greater flexibility, reduce fixed costs, and help to mitigate the associated risks of drug development will be important factors in the models for biomanufacturing outsourcing. 

Over the years, CPhI has expanded to cover several areas connected with pharmaceutical manufacturing, but one of the prime focuses of the show is still on ingredients, fine chemicals and intermediates. PharmTech Europeâ€™s exceutive editor, Patricia Van Arnum, tells us more.

Strategies for Effective Biologics Outsourcing Examined at CPhI

Biologic-based drugs are increasingly important in the drug pipelines of pharmaceutical companies. Strong growth is projected for biologic-based drugs, and a crucial issue is whether the outsourcing model for biologic-based drugs will follow a similar path as the model for outsourcing small-molecule development and manufacturing or will new paradigms emerge. That question was addressed at one of the sessions at the CPhI Pre-Connect Conference this week in Madrid.

		Although small molecules continue to dominate commercial drugs, biologic-based drugs are becoming increasingly important in the future of the pharmaceutical industry. Biologics are expected to account for about 17% of total global spending on medicines by 2016, according to a recent analysis by the IMS Institute for Healthcare Informatics. In 2011, the global market for biologic-based drugs was estimated at $157 billion and is expected to reach between $200 billion and $210 billion by 2016, according to IMS. Seven of the top ten global medicines by spending will be a biologic within five years, according to IMS.

		One question that emerges from these shifting patterns is the role of external manufacturers in the biologic-based supply chain, a topic examined by Ulrich Ruemenapp, head of biotech projects, contract manufacturing, at Bayer Pharma, and Charles Jeffries, head of supply-chain management at SkyePharma.

		As in any outsourced relationship, security of supply, product quality, and effective project management are important components of a successful external manufacturing partnership, noted the speakers, but additional complexity may arise in technology transfer for biologic-based drugs and in the supply chain itself as a result of the cold-chain logistics required for biologic-based drugs. Strategic sourcing, also important in small-molecule outsourcing, is also a key consideration for biopharmaceutical/pharmaceutical companies as they decide whether to keep a project in-house or to outsource.

		But one area where biologic-based manufacturing may take a different path than small-molecule based-manufacturing resides in emerging biomanufacturing technologies and the resulting greater flexibility in managing biomanufacturing capacity. Jeffries pointed to the use of modular biomanufacturing as way to add capacity on-demand. Modular manufacturing as applied to biomanufacturing is an alternative to the traditional method of estimating product demand and building new, or expanding manufacturing capacity to meet projected demand, an estimation that is not easy given the uncertainty of the drug-development process. Reflective of the growing interest in modular manufacturing is GE Healthcare’s acquisition earlier this year of Xcellerex, a company specializing in turnkey biomanufacturing solutions that include modular and portable production trains based on single-use technologies, advanced process automation, and compact cleanroom architecture. Modular biomanufacturing offers the opportunity for companies to better manage the development and market risks associated with drug development by not adding fixed manufacturing capacity. Modular manufacturing may also provide a way for biopharmaceutical/pharmaceutical companies to more cost-effectively establish a manufacturing presence in local markets where a manufacturing presence may be needed to access a given market.

		Given the complexity and cost of biomanufacturing capacity, strategies that offer greater flexibility, reduce fixed costs, and help to mitigate the associated risks of drug development will be important factors in the models for biomanufacturing outsourcing.

Biologic-based drugs are increasingly important in the drug pipelines of pharmaceutical companies.

Merck Serono, a division of Merck KGaA, has launched a new spin-off company, Asceneuron, which will focus on developing therapies for treating Alzheimer’s disease and Tau protein-related pathologies. Asceneuron is the third company to be launched from Merck Serono’s Entrepreneur Partnership Program (EPP), which the company launched in April 2012 as a way to mitigate the impact of the closure of its Geneva headquarters and related restructuring, which was announced earlier this year. The company also provided an update on that restructuring.  

Merck Serono will invest EUR 5 million ($6.5 million) as seed funding in Asceneuron. Merck Serono Ventures will manage the investment and will be represented on the company’s board of directors. The founders of Asceneuron are: Dirk Beher, chief scientific officer; Christoph Wiessner, head of discovery; and Frank Armstrong, executive chairman of the board. The newly founded company will initially employ eight current Merck Serono employees to develop Merck Serono’s Alzheimer’s disease programs from lead optimization up to clinical Phase I and will seek partnership and licensing opportunities for further development. Asceneuron will initially approach Alzheimer’s disease with three complementary drug-discovery programs through the modulation of molecular pathways known to be involved in memory loss and neuropathology. 

Asceneuron is the third company to be spun off from the Merck Serono EPP program. It launched Prexton Therapeutics, which specializes in developing drugs to treat Parkinson’s disease and drugs that target the metabotropic glutamate receptors mGluR3 and mGluR4, in June, and Quartz Bio, a company that offers biomarker data management and exploratory biomarker analysis services, in September. EPP is part of a EUR 30-million ($39 million) commitment to support the creation of spinoff and start-up companies focused on continuing activities and compounds that originated at Merck Serono. This program is aimed at reducing the impact on employment following the announced closure of the Geneva headquarters due to recent restructuring.

Merck Serono announced earlier this year plans to consolidate all headquarter functions in one Merck Serono campus in Darmstadt, Germany and to transfer key R&D positions from Geneva to Darmstadt, Boston, and Beijing. As a consequence, out of the 1250 positions in Geneva, more than  750 positions are being transferred and 500 positions are being eliminated. 

Late last month, Merck Serono provided an update on its redeployment of its Geneva-based staff, 100 days after announcing its decision to close its site there. The company reported that job prospects have been clarified for more than 500 employees, or 40% of Geneva-based employees. Two-hundred and sixty employees have accepted the offer of a transfer to another Merck Serono site: 170 within Switzerland and 90 abroad. In addition, 35 employees have yet to decide on the transfer offer, and 170 employees have found jobs elsewhere, including 16 employees through Merck Serono’s program to support the creation of start-ups. Eighty employees are taking early retirement.

Merck Serono Announces Final Restructuring Plan

Merck Serono's Asceneuron is the third company to be spun off from the company's Entrepreneur Partnership Program that was launched to mitigate the impact from recent restructuring at its Geneva site.

Merck Serono Launches New Spin-off Company; Provides Update on Restructuring

The pharmaceutical industry is engaged in a multitude of global health initiatives, which include partnerships with governments, intergovernmental organizations, nongovernmental organizations (NGOs), private-sector companies, and universities.  To help evaluate these partnerships, the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA) recently partnered with BSR, a global business network consultancy focused on sustainability. To carry out the review, BSR developed an evaluation framework to help IFPMA, its stakeholders, and companies better understand how individual partnerships are contributing to improving global health 

Last month, IFPMA published the 2012 update to its Developing World Health Partnerships Directory. The directory outlines 220 partnerships between the research-based pharmaceutical industry and its partners, including governments, intergovernmental organizations, NGOS, private-sector companies, and universities that serve people in 160 countries. The launch of the directory coincided with the release of an independent review by BSR of the contributions these health partnerships make to the health of people in low- and middle-income countries. 

“Global health issues are complex, and solutions often require a range of organizations working together,” said Eduardo Pisani, IFPMA Director General, in a Sept. 11, 2012, IFPMA release. “Understanding the value of partnerships, our industry and partners have increased these programs dramatically in recent years as highlighted in our directory. This year, we are pleased that BSR analyzed these programs and made suggestions for increasing the benefit people in developing countries.” 

 The industry-led health partnerships catalogued in the IFPMA’s 

Developing World Health Partnerships Directory 

 focus on a wide range of activities: developing new treatments, improving the availability of new and existing drugs, strengthening health systems, raising awareness, prevention, and training. They also cover various types of diseases, such as HIV/AIDS, neglected tropical diseases, malaria, noncommunicable diseases, and other multifaceted health challenges, such as improving women’s and children’s health. 

 Of the 220 global health partnerships reviewed by BSR, 20% were focused on HIV/AIDS, 16% on neglected tropical diseases, 16% on women’s and children’s health, 14% on malaria, and 14% on noncommunicable diseases.  On a program basis, 50% of the partnerships strengthen health-system infrastructure, and 79% focus on training. Thirty-six percent focus on improving availability of treatments, including donation programs. Fifty-nine percent of the partnerships are R&D-based collaborations focused on the development of new treatments, and 38% focus on awareness raising, prevention, and outreach. The majority of partnerships (62%) involve NGOs, and also include partners from government and academia, and 15% of the partnerships involve multiple research-based pharmaceutical companies. 

According to BSR’s review, 90% of companies surveyed expect to increase partnership commitments toward noncommunicable diseases while maintaining commitments across other therapeutic areas. While 65% of the industry-led health partnerships currently operate in Sub-Saharan Africa, expansion is planned in South Asia, East Asia, and Latin America. Forty percent of companies interviewed expect to increase investments in partnerships. 

 The BSR review also examined the critical success factors for increasing the impact of the health partnerships, including the adoption of a health needs-based approach, engaging in broad-based and multi-company partnerships, and aligning existing and future partnerships to maximize shared resources and expertise. Using existing country systems and local ownership  also is important as is providing comprehensive outcome tracking and impact measures, according to the BSR review. 

A recent review evaluates the nature of global health partnerships and critical factors for their success.

Pharmaceutical Companies Partner in Global Health

Pharmaceutical companies are increasing their investment in Russia as that country’s pharmaceutical industry, like other emerging markets, are expected to see strong growth. Encouraged by a state plan to increase domestic production and R&D in Russia, pharmaceutical companies are making greenfield investments as well as partnering with local companies as a means to access Russia’s pharmaceutical market. 

Russia’s role in pharmaceutical industry growth 

Russia’s pharmaceutical industry growth is part of shifting industry growth from developed markets to emerging markets. Annual global spending on medicines will reach nearly $1.2 trillion by 2016, according to the IMS Institute of Healthcare Informatics. In the developed markets, including the United States, Europe and Japan, spending will decline to 57% of the global total due to expiring patents for a number of significant brand-name drugs, slower increases in spending on branded products, and increased cost containment measures by payers. Alternatively, so-called “pharmerging” markets will reach 30% of global spending by 2016, as population and economic growth contribute to dramatically higher use of medicines in these markets. The pharmerging countries, which include the major emerging markets of the BRIC (Brazil, Russia, India, and China) countries and second- and third tier emerging markets, are expected to nearly double their pharmaceutical spending by adding $150 billion and $165 billion in growth by 2016, according to the IMS Institute of Healthcare Informatics. Among the BRIC countries, China’s pharmaceutical market is expected to be the largest and reach $161 billion by 2016, followed by Brazil at $47 billion, India at $29 billion, and Russia at $27 billion, according to IMS. Russia’s pharmaceutical market was ranked eleventh in 2011 and is expected to move to the ninth position by 2016, surpassing established markets of Canada and the United Kingdom, according to the IMS Institute for Healthcare Informatics. Russia’s pharmaceutical market is expected to reach $27 billion by 2016, increasing by $10.7 billion between 2011 and 2016. 

Unlike other BRIC countries, such as India and China, which have a domestic manufacturing base, Russia is largely dependent on pharmaceutical imports. Its domestic biomedical industry accounts for only 0.2% of the global market, but the country is committed to change that through an ambitious program, Pharma 2020. Pharma 2020, a state-initiated plan, seeks to boost output of local medicines from 25% of gross sales in 2010 to 50% by 2020, upgrade domestic pharmaceutical manufacturing operations to GMP standards, and increase the level of innovator pharmaceuticals in the Russian market (1). Several pharmaceutical majors are increasing their presence in Russia with manufacturing and R&D investment.

 Pharmaceutical companies position in Russia 

In September 2012, Takeda Pharmaceutical completed construction at its pharmaceutical manufacturing facility in Yaroslavl, Russia. The company has invested approximately EUR 75 million ($97 million) in the 24,000-m

production plant, which is expected to be fully operational by 2014. The plant, which is approximately 280 kilometers from Moscow, is one of the first by a major multinational company in Yaroslavl’s pharmaceutical cluster. 

 The Yaroslavl facility will enable Takeda to meet demand in Russia initially for several products: Cardiomagnyl (acetylsalicylic acid and magnesium hydroxide), Actovegin (derived from calf blood), and calcium tablets. The plant will have the initial capacity to manufacture 90 million sterile ampuls and more than two billion tablets per year. Liquid-sterile production includes solution preparation, washing of ampuls, sterilization, filling, inspection, and packaging.  Solid production will encompass all stages, from weighing, mixing, and granulation through compression, coating, and packaging. The company expects to create 200 managerial and technical jobs during the next three years with the new plant. 

Takeda estimates that it is the seventh largest pharmaceutical company in Russia and expects company annual growth rate of 15% in Russia between 2012 and 2016. “The completion of this ambitious project further demonstrates Takeda’s transition into a truly global business, and strategic investment into key emerging markets, such as Russia, is a major part of this strategy,” said Yasuchika Hasegawa, president and CEO of Takeda Pharmaceutical, in a Sept. 11, 2012, company press release. “Russia is our largest emerging market in terms of revenues and is expected to contribute significantly to our growth over the next few years.” 

 In April 2012, Novo Nordisk broke ground today on a new $100 million plant in Russia that will formulate and fill insulin into Novo Nordisk’s Penfill cartridges and pack the FlexPen prefilled insulin delivery device for the Russian market.Located in Grabtsevo Technopark in the Kaluga region, the plant is expected to start manufacturing in 2014. The company's intention to establish insulin production in Russia was first announced in April 2010 during the visit to Denmark by Dmitry Medvedev, President of Russia. At that time, an agreement of cooperation between the Government of the Kaluga Region and Novo Nordisk was signed.  Sanofi also recently increased insulin capacity at its facility in Orel, Russia. Sanofi obtained the facility following its acquisition of a controlling stake in the pharmaceutical company Bioton Vostok in 2010. 

Novartis is proceeding with a new $140-million manufacturing plant for pharmaceuticals and generic drugs in St. Petersburg, Russia. The plant is expected to produce approximately 1.5 billion units per year (oral solid dosage forms). The new greenfield facility is in the Novoorlovskaya Special Economic Zone located to the north of the St. Petersburg city center. Novartis began construction of the facility in 2011. The facility is expected to be completed and approved for commercial production in 2014. 

 The facility is part of a $500 million five-year investment into Russian healthcare infrastructure announced by Novartis in December 2010. This plan addresses three core areas: local manufacturing, R&D collaborations, and public health development in Russia. These activities include collaborations with both universities and academia, but also with emerging Russian private business in different areas of medical science. The scope of these collaborations may include such efforts as out-licensing of Novartis compounds to Russian companies with proven scientific capabilities, in-licensing and scouting for promising drug candidates from Russian scientists and universities, and modeling and simulation activities for clinical trials. Novartis is actively working in all of these areas, identifying high potential projects to be jointly developed. Additionally, Novartis also has made a commitment to double its investments in drug development in clinical trials in Russia and expects to enroll approximately 4000 individuals by the year 2013, said the company in announcing its plans in December 2010. 

 In 2011, AstraZeneca announced  plans to establish a Predictive Science Center in St. Petersburg, the company’s first such center in Russia. The center will focus on developing bioinformatices, data-analysis methods, software, and systems to evaluate safety and efficacy of new drugs. Approximately 30 people will be employed at the center through local collaborations and organizations. Also in 2011, AstraZeneca began construction of a new $150-million manufacturing facility in the Kaluga region in Russia to supply locally produced medicines. The company also has partnerships with several R&D institutes in Russia, including the the Skolkovo Innovation Center and Russia Venture Company, for research and clinical trials. 

 Abbott Laboratories signed an agreement in July 2012 for several R&D projects in Russia with the country's ChemDiv Research Institute (CDRI).  The first collaboration between CDRI, the research entity of ChemRar Hi-Tech Center, and Abbott will focus on creating an advanced new formulations of existing Abbott's pharmaceutical products. CDRI and Abbott are also discussing regarding several programs for joint small molecule medicine's development and enhancement. ChemRar's R&D company, Intellectual Dialog, also launched a research project with Abbott aimed at prevention and treatment of selected viral diseases impacting children and the elderly. Intellectual Dialog will conduct discovery research in collaboration with Abbott. 

 In July 2012, Pfizer granted exclusive development and marketing rights to Russian firm SatRx for its dipeptidyl peptidase-4 (DPP-4) inhibitor PF-00734200 for Type 2 diabetes.SatRx, which is part of the ChemRar Hi-Tech Center, received worldwide rights (excluding China) to the drug as monotherapy or in combination with other diabetes drugs. Pfizer will receive royalties and milestone payments based on commercialization activities. The agreement was developed as partial fulfillment of a memorandum of understanding reached in March 2011, under which Pfizer and ChemRar agreed to explore collaborations focused on research, development and commercialization of innovative compounds and vaccines to treat cardiometabolic, infectious and oncologic diseases in Russia and other countries.In 2010, GlaxoSmithKline formed an alliance with JSC Binnopharm for the local secondary manufacture of several GSK vaccines. Under this alliance, which was announced in November 2010, GSK will supply bulk vaccine and provide technology and expertise to enable Binnopharm to undertake the secondary manufacture, including filling and packaging of GSK vaccines. Binnopharm will be responsible for gaining approval of their facilities to allow supply of GSK cervical cancer, rotavirus, and pneumococcal vaccines under Binnopharm's trademark for the Russian public market. 

1. 1. G. Peach, “Russia Pledges $4 billion for Pharma-2020 Plan,” 

Several Big Pharma companies strengthen their manufacturing presence in Russia.