Pharmaceutical development and manufacturing is often a global undertaking, requiring facilities and local market know-how. Cristin Grove, director, Global Contract Manufacturing for Pfizer CentreSource, discusses that company’s approach to accessing and serving emerging markets.

: Emerging markets are an important part of the strategy of major pharmaceutical companies. What are the implications from a supply (manufacturing) perspective in terms of a partnership strategy for finished-product manufacturing? What can a contract service provider offer in terms of access and knowledge of the market? 

: Pfizer has had and will continue to maintain a strong presence in emerging markets. The emerging markets have experienced double-digit growth in population resulting in increased demands for improved healthcare while providing products at a reasonable cost because most purchases are out-of-pocket to the consumer. 

Pfizer Global Supply (PGS), which has 19 manufacturing sites in emerging markets, understands the need to be located in the market in order to develop relationships with the respective governments, healthcare providers, and patients. Through access to Pfizer’s local manufacturing site (LMS) organization, Pfizer CentreSource (PCS) is able to provide our customers access to our facilities and technology where a relationship has already been established with the local government and community.


PharmTech: In looking at certain key markets, beginning with the BRIC countries (Brazil, Russia, India, and China), what would you identify as the unique challenges/issues in each of those markets in developing a pharmaceutical manufacturing strategy (finished product) overall and related partnership strategy for manufacturing (i.e., contract service provider) in those countries? How would you describe the competitive landscape in those markets? 

: Every market provides its own challenges. They are each unique in the regulatory and technical perspective as well as in the culture of conducting business. Many of these markets are still defining their health systems and meeting the needs of the patient while being able to provide medicines at an affordable price. 

Brazil has very stringent requirements regarding segregation of animal and human health products. There is also a long registration timeline for approval of regulatory filings.

China and India have been markets with low labor and operating costs. Unfortunately in some cases, these lower operating costs are based upon manufacturing facilities that are not operating at the required levels of compliance with cGMP. Companies need to invest in improvements to facilities and operating procedures, which will only drive up the cost of the products.

PGS has the highest standards for quality and adherence to cGMPs. When our customers entrust us to manufacture their products, they are being provided the same level of quality oversight as a Pfizer product would receive. We feel this is one of our strongest competitive advantages in the CMO space.

: How would you access market opportunity in other emerging markets outside of the BRIC countries (such as Turkey) for pharmaceutical industry growth and related opportunity for contract manufacturing (finished product)? 

: PGS has 19 manufacturing sites in our LMS organization and an additional site being built in Saudi Arabia. There are interesting opportunities in other markets outside of the BRIC countries where there are fewer competitors, smaller populations and growth rates, and less potential spending which puts more emphasis on being present in the market to provide access to medicines. PGS has understood for a long time the need to be in the local markets to be able to understand the changing market conditions and provide cost-competitive products to customers. PGS has a manufacturing site in Istanbul that currently provides contract manufacturing and has established third-party business procedures. PCS is also currently providing contract manufacturing through PGS sites in Jakarta, Indonesia, and Buenos Aires, Argentina.


PharmTech: Are there other key trends/issues as they relate to building a supply network in emerging markets? 

: Big Pharma has been relying on an expansion of the middle class in the emerging markets to drive the demand for access to more medicines, pushing the need to have local manufacturing. Current trending in the BRIC markets shows consumer spending is down and economic growth relatively flat with the exception of single-digit growth in China. The challenge will continue to be how to supply medicines at an affordable cost while still making it economically attractive to the manufacturer. In addition, many markets require manufacturing to be in the market in order to be able to sell. If a company does not already have an existing manufacturing site, they either will need to invest or find a partner.

Through working with PCS, customers have access to existing facilities in the market that have available capacity. This may eliminate the need for an investment when capital spending is a challenge across our industry. 

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Contract manufacturing organizations that are established in key markets can provide a competitive edge.

Global Markets Demand Local Knowledge

From a CMO perspective, the traditional strategy behind process development has largely been to quickly identify target operational values that hit a primary quality target. This type of development strategy has been intended to generate at-scale product for clinical trials as fast as possible. The resultant operational ranges have traditionally been either very narrow because of lack of supporting experimental studies or statistically derived with little to no data from experimental design to support the outer ranges. Timelines are often built without an opportunity to identify crucial aspects of the process, perform range finding experiments, or optimize the process. Additionally, fears of making “process changes” within the clinical-manufacturing phase have prevented many processes from being more robust and operationally friendly. The resultant process-control strategy becomes narrow and/or possibly at risk of consistent excursions outside of the acceptable ranges. As molecules progress through the clinical phase and begin gearing up for commercial submissions, the amount of development and characterization may increase and many experiments must be repeated, adding to timelines and cost. Thus, by not following a well-defined development plan up front (i.e., a quality-by-design [QbD] approach), there is a potential increased risk of delaying commercialization.

Although the phrase QbD has been thought of as a new or borrowed concept and discussed in terms of feasability, many CMOs have been using these concepts, albeit perhaps not in a well-planned, cohesive manner. Now the discussion has turned to breaking down the reality of a QbD strategy. Implementing the infrastructure of a QbD approach to process development involves formalizing the commitment and the strategy and integrating execution into quality systems. The end result is a road map for the development of the product from the very beginning. 

The purpose of this paper is to present a scenario based upon a real case study, where the project decision making followed a “traditional” approach to development and commercialization, which in turn caused longer development timelines and increased program costs. In this example, the traditional approach involved minimizing development studies to keep costs down, waiting for clinical data to perform any further optimization, and then performing a long series of univariate characterization studies to complete the information required for a submission. In contrast to this approach, a second product with a different client was planned and scheduled against a timeline with a built-in strategy to gain knowledge of the process more quickly. The predicted result not only lowers the risk of the manufacturing commercialization effort, but should also be a significant time savings. For a CMO, occupying space in manufacturing or even on the bench costs money; thus, time is money in the truest form.

 illustrates the difference in approaches. Both products are similar in complexity; therefore, the total knowledge required to be “ready to submit” (i.e., the area under the curve in 

) is relatively constant between the two products. The timeline presented in 

 represents time spent in product development at the CMO, not necessarily real time. What it does demonstrate, however, is that using the aforementioned QbD model, the CMO portion of the product commercialization is unlikely to ever be the bottleneck for a commercialization timeline. Additionally, the smarter portion of the QbD approach is minimizing redundant or inefficient characterization studies and reducing the risk of having to repeat characterization based upon late understanding of the process.


  CMC Biologics has developed a QbD development program that serves as the infrastructure of a QbD approach to the development and manufacturing of biologics. 

 identifies the different steps and responsible entities. Discussion with the client using this program tool at the beginning of a project helps establish the strong relationship needed to successfully develop a product and process using QbD principles. A good understanding of target product profiles (TPP) and quality TPP (QTPP) by the client helps immensely with design of a suitable formulation and development of analytical assays to support the product development. Though the steps in 

 are listed loosely in 
  a chronological series, much of the work is executed in parallel and some steps are performed iteratively. 

. TPP/QTPP. FDA’s 2007 draft guidance for industry defines TPP as a format for a summary of a drug development program described in terms of labeling concept (1). QTPP is defined in ICH Q8 (R2) as “a prospective summary of the quality characteristics of a drug product that ideally will be achieved to ensure the desired quality, taking into account safety and efficacy of the drug product” (2).  
  
  

. For each product under development, an initial assessment of available knowledge regarding the product and its function is assessed using various methods such as previous experience, literature information, consultants, and knowledge gap analysis. Efforts will be made to close the knowledge gap. This process helps in identifying the critical quality attributes (CQA) and is a joint effort between the client and the CMO.
  CQA. CQAs are defined through execution of a risk assessment, which evaluates the impact of each product attribute on the safety and efficacy of the product. This is an iterative exercise conducted by key stakeholders from the product development team (CMO and client). Input from the clinical experts is critical for successful definition of CQAs. 

. Once CQAs are established, process parameters from each unit operation are evaluated to determine potential contribution or impact on those CQAs.  

Design of experiments (DOE) and design space

. Based upon an initial risk assessment and process evaluation, a structured experimental plan, designed for statistical analysis, begins. This analysis provides an understanding of how the process parameters and their interactions impact CQAs. Each CQA then serves as a dimension in the establishment of a multidimensional design space that provides a full understanding of process impact on product quality.

. A product developed using QbD principles will rely on manufacturing controls based on what is known to be crucial to the process. The PCS package results in a well-defined process with criticality understood and all process ranges justified with statistically significant data.

. A good CPV program assures the process is under control and that any process drift in performance is detectable and can be proactively addressed.

Breaking down the critical parts of criticality

. The first step begins with the generation of a target product profile (TPP) with safety and efficacy as central components. The main focus of QbD is to ensure that the elements of quality are incorporated into the design of the process and that the process consistently yields a safe and efficacious product. Product understanding with regard to safety and efficacy is limited at the beginning of the process unless the molecule in question belongs to a class of products already in use (e.g., as would be the case in the development of a biosimilar). Initial lack of information regarding the manufacturing process can be reduced to a certain extent based on experience, platform processes, and risk assessment exercises. The advantage of the CMO in this environment is the large breadth of experience and comparability tools available for the many diverse products using similar process steps.

The first customized tool used in a QbD-based process development is the CQA risk assessment. CQAs are product attributes that have the most impact on the efficacy and safety of the product. At the beginning, this will be a preliminary list based upon the QTPP and might include a large number of attributes. As the product knowledge and the process knowledge increase, the number of CQAs might reduce. A tool shown in Figure 2 is used to initiate CQA determination from the TPP/QTPP. Information from literature, previous experience, subject matter experts, and consultants are used to generate the list of potential CQAs. A customized risk assessment tool (separate from the tool in 

) takes into account “uncertainty” and “impact” of each CQA on safety and efficacy of the product. The preliminary list of CQAs helps prioritize which attributes to study further to understand and reduce uncertainty.

. Once the initial design is in place, a process control strategy will be developed to ensure the process delivers a product that meets the CQAs.  

) is generated per unit operation to identify all parameter inputs and outputs for each step. This tool is a good visual aid for process understanding and is also used to populate a customized risk-assessment tool called the Risk Assessment Mitigation Matrix (RAMM), as shown in Figure 4. The RAMM tool is specifically designed to identify CPPs (3). This tool allows evaluation of what input parameters contribute the most variation to individual outputs. The outputs are scored on their potential to impact the CQAs. Scores are based upon three values, as shown in 

 (1=green, 3=yellow, 9=red)  to obtain separation and clearly identify criticality. The result of the analysis for each unit operation is a list of potential CPPs. The scores in each row are totaled to understand CPPs, and the scores in each column are totaled to understand an output’s influence on CQAs. Additional development experiments are then prioritized to complete the design space. 

. A demonstrated understanding of the effects of CPPs and their interactions on CQAs is a requirement for an approved design space. Small-scale characterization experiments with appropriate experimental designs allow for a multivariate analysis including interactions, efficient use of data, and statistical modeling.  Process characterization is often an iterative process involving parameter screening, range identification and response surface mapping. This method enables revisiting the original process development plans with the client to ensure that information gathered during early DOEs is understood and leveraged for future experiments. This is how risk is reduced and commercial timelines can be compressed. It also allows for iterations of the risk assessments.

The following example shows an experiment designed to measure impact of seed density (SD), temperature shift degree, and day of temperature shift on an important CQA of a complex biologic. An on-face central composite design was employed in this experiment. The results are shown in 

 along with a visual representation of the design space.


  Following the CMC QbD Development Program allows definition of a design space earlier in the development program.  This means that even the earliest development experiments can be built upon and leveraged as the product advances towards commercialization.

 contrasts the two different approaches and demonstrates the advantages of the QbD approach to development. The deliverables associated with the product lifecycle are more robust and timely. Additionally, the long-term support through the CPV program is optimal and flexible. As shown in 

, the advantages can also represent a more robust timeline.  

The QbD development program engages the client in a strategy to address critical issues pertaining to the product quality and the process early on. This necessitates a formal plan at the start of the development program, and both the CMO and the client need the commitment to do the work upfront. This strategy enables a seamless transition when the client and CMO push together for commercialization of the product. 

Draft Guidance for Industry: Target Product Profile--A Strategic Development Process Tool

 (Rockville, MD, Mar. 2007). 
  2. 	ICH, Q8 (R2) 

Pharmaceutical Development, Step 4 version


  Clinton Weber is associate director of BioProcess Sciences, Ashok Kumar is principal scientist, Lisa Joslin is process validation manager, and Roland Ashton, James Schmid, and Michael Larson are development associates, all in the Process Development Group at CMC Biologics, www.cmcbio.com.

Traditional project decision-making is compared with a QbD approach.

Quality by Design: A CMO's Perspective on Gaining Knowledge Faster and Better

In November 2013, Catalent Pharma Solutions opened a clinical supply facility in Shanghai, China following nine months of construction. The facility, which provides clinical supply management, comparator sourcing, primary packaging, storage, and distribution, is validated to support biologics requiring refrigerated and frozen supply- chain management. 

discussed pharmaceutical drug development in that region with Catalent’s Leandra Mollanazar, vice-president, Quality Development & Clinical Services, and Lucy Sha, director, strategic marketing, Development & Clinical Services.
  
  

: From an industry perspective, what are some of the unique considerations for managing the clinical-material supply chain in China both in terms of receiving clinical-trial material supply and delivering it to the intended site? 

: Shanghai is a strategic international port with access to all countries in Asia, including major and rapidly developing centers for clinical trials including Japan, South Korea, Taiwan, Hong Kong, Australia, and New Zealand. Catalent’s location within the Wai Gao Qiao Free Trade Zone (FTZ) will enable faster and higher quality distribution of clinical-trial materials to all China patient sites.

By considering our customers’ needs for clinical trial supply services in China and Asia, Catalent chose to locate the new clinical trial supply facility within the FTZ, which provides Catalent and its customers the flexibility to manage clinical trials under limited supervision by the customs authorities. This increased flexibility helps improve the speed of delivery and provides greater savings on duties and taxes. In addition, the FTZ location allows Catalent to employ flexible clinical-trial batch clearance through customs at the point when the materials need to be imported into China and delivered onward to clinical sites.

As an international port, Shanghai also enjoys good transportation links to all major cities and clinical sites in China, enabling appropriate, fast distribution of clinical-trial materials to patients.

: From an industry perspective, what specific issues have to be taken into account with respect to cold-chain management?

: Catalent works with industry experts to select the most appropriate temperature-controlled packaging to meet the needs of customers and the conditions that the package will likely experience in transit. Ensuring successful distribution of cold- chain products requires extensive experience in both transportation and logistics timelines, including necessary importation and customs clearance procedures. It is of paramount importance to maintain each product’s temperature within the specified range. Therefore, there is a requirement to clearly understand the environments that the shipment will be exposed to, both during transit and in storage throughout its journey to clinic and patient. Catalent uses its significant experience and historical data taken from real cases in order to specify the most appropriate packaging and methods of transit.

Having the ability to manage the shipment globally and provide tracking and analysis of materials back to our customers is vital too. Catalent works with clients to meet any additional requirements that they stipulate.
  
  

:  A newly revised policy on Good Supply Practice for Pharma Products (GSP) was adopted by the Chinese Ministry of Health and went into effect in June 2013. Can you highlight the key issues addressed in the policy and how it impacts clinical trial material supply? 

: The revision of GSP required that China adjust its policies for the improved supervision and control of drug distribution, especially after “drug injury events” happened in recent years.  More robust and specific qualification requirements and higher standards are the Chinese FDA’s goals to improve the handling and surveillance of pharmaceutical drug products; bringing China’s standards in line with international good distribution standards. Key changes included increased specificity of the quality management oversight, and the capability to control product quality risks at both wholesale and retail levels.

In addition, enhancements to the quality control processes specific to receiving, storage (including cold chain management), record keeping, and distribution were also implemented.

Catalent’s logistics handling of drug product and supply-chain management processes encompass global policies and procedures that satisfy the revisions to China’s GSP and help ensure global compliance, efficiencies, and cost effective mechanisms are in place globally. 
  
  

: From a company perspective, how does the new Shanghai facility fit into the company’s global clinical-trial supply business? Is it the company’s first facility in China? What other clinical-trial supply facilities does the company operate in Asia? Outside of Asia?

: Catalent’s clients are expanding and investing in China and in the Asia-Pacific region. The number of clinical trials conducted in China has been growing at double-digit rates for the past three years.  Based on data from clinicaltrial.gov, clinical trials in China account for about 16% of total global trials.

Catalent’s investment in the new Shanghai facility is part of our clinical supply growth strategy. This facility expands our capability in Asia to provide our clients with more flexibility and quick turnaround time for the China region of their global clinical trials. It complements our existing facility in Singapore and our extensive Asia clinical supply depot network. It brings Catalent’s world-leading clinical supply solutions and quality standards into China, to meet our clients’ local and international needs. It is the first clinical trial supply facility in China to provide global services from primary packaging to storage and distribution. 

Yes, this is the first facility in China. Catalent entered into China in March 2013 with two joint ventures, Catalent Clinical Trial Supply China and with the acquisition of Zhejiang Jiang Yuan Tang Biotechnology Co., completed in July 2013. Catalent has eight clinical-supply facilities globally. Beyond the two mentioned in Asia, we also have two facilities in the US, three in the UK, and one in Germany. 


Geographic location, customs and drug-development regulations knowledge, and transportation infrastructure were factors in Catalent Pharma Solutions' selection of Shanghai for its clinical-trials supply facility.

Clinical-Trial Material Supply by Way of Shanghai

The Avoca Group conducted a survey in 2013 to examine sponsor and provider practices and perceptions with respect to the management of risk in outsourced clinical trials (1). The survey specifically explored questions regarding the use of, challenges associated with, and benefits gained from various risk-sharing models, formal risk assessment and management approaches, and approaches to risk-based monitoring. The survey was conducted online, with respondents derived from Avoca’s contact list of industry executives and managers (not necessarily Avoca clients), as well as from links to the survey displayed on industry websites.

The survey was taken by 237 respondents; 113 were employed by 70 sponsor organizations (approximately half in the top 20 companies by revenue), and 124 were employed by 66 clinical service providers (approximately 60% in the top 20 companies by revenue). More than three quarters of each of the sponsor and provider respondents held middle or executive management roles. For questions in which respondents were asked to report their own personal opinions, data reported by all respondents are presented. For questions in which respondents were asked to report on behalf of their companies, Avoca selected one response per company (the most senior title) for analysis and presentation so that the strategies and situations of companies with multiple survey respondents would not be overrepresented.


  Sponsors and providers were asked questions regarding the use of the following risk-sharing models: 

  Guarantees of continued work/revenue stream in exchange for provider commitments

Provider penalties for failure to achieve milestones/targets

Provider bonuses for achievement of milestones/targets

Provider stake in the outcome of program (e.g., company stock). 

The frequency of use of, and success with, these risk-sharing models were examined both overall in each sample, and by the type of relationship between the sponsor and CRO (i.e., transactional, preferred provider, and strategic). Elements of a successful risk-sharing relationship were also explored.

Use of risk-sharing models involving provider stake in the outcome of a program was reportedly uncommon (2%-4% of sponsor and 3%-8% of provider respondents, depending on the relationship types). A majority of respondents from both sponsor and provider organizations reported that their companies had used at least one of the other three types of risk-sharing models addressed. Among sponsors, risk-sharing models were more likely to be employed in the context of strategic partnerships (>40% for each of the first three models listed) than in the context of either preferred provider relationships (30%-33%, depending on the model) or transactional relationships (11%-19%). Both sponsor and provider respondents were more likely to report having had “primarily positive” experiences with the use of guaranteed revenue streams in exchange for provider commitments than with the use of other risk-sharing models, and were highly unlikely to report “primarily negative” experiences with this type of model (see 

). In contrast, reports of “primarily negative” experiences were common for provider penalties. The majority of respondents reporting use of bonus/penalty models reported bonus/penalty values of between 2% and 5% of contract value.

Elements of, and challenges in achieving, successful risk-sharing relationships were explored. Commonly mentioned elements of a successful risk-sharing approach included trust, clear expectations, good communication, and commitment on both sides. Conversely, commonly mentioned pitfalls to avoid in risk-sharing arrangements included unclear and/or unrealistic expectations, poor planning, and poor communication.


    The survey collected data regarding sponsor and provider risk-assessment practices, as well as data regarding the outcomes of these practices. Sponsors were asked to report both on their experiences with internal risk assessment and management practices, and on their experiences with the risk assessment and management practices of their clinical service providers.

The majorities of each of sponsor and CRO respondents reported using systematic risk-assessment processes for more than half of clinical trials (see 

). Sponsor respondents from top 20 firms were more likely to report frequent use of systematic risk-assessment processes than were those from non-top 20 companies for both in-house and outsourced trials; in fact, a substantial minority of non-top 20 respondents reported never using formal risk-assessment processes in either context.

When asked who contributed to systematic risk assessments, 47% of sponsor and 39% of provider respondents reported that this task was performed jointly by their own companies and their sponsor/provider partners; those who felt that this task was performed primarily by one party were much more likely to report performance by their own companies than by their partners (see 

). Based on the commentary provided to the question, each group’s tendency to see itself as the primary driver of the process was likely due to the fact that risk assessment was often conducted independently within each company, with each partner not necessarily sharing its risk-assessment process or outcome with the other. Within each type of company, project/program managers were most often said to be involved in the risk-assessment process, though operational team members were also stated by a majority to be included.

Nearly 60% of provider respondents indicated that senior management personnel from their company were involved, consistent with the common practice among providers of including business/reputation/relationship risks among those assessed.

Respondents were asked about the types of risks typically reviewed during the systematic risk assessments conducted by their companies; the results are depicted in 

. As can be seen, most of the risks addressed by the survey were typically assessed by a majority of the respondents’ companies, with patient enrollment risks assessed by the greatest majority of each sample. The majority of respondents reported assessing the probability, severity, ability to proactively reduce, and ability to remediate each risk; only a minority reported assessing each risk’s detectability.

The vast majority of respondents reported at least sometimes changing or refining aspects of clinical trial design, execution, or management based upon information gathered from risk assessments, but most of the possible changes addressed by the survey were made by most respondents only occasionally (see 

). Both sponsor and provider respondents were most likely to report adjusting the capture of performance data and/or the review plan for performance data in response to their risk assessments. Nearly half of the sponsor respondents also used information gathered during the risk-assessment process to adjust their levels and/or types of CRO oversight for a majority of clinical trials (data not shown). This practice was more common among non-top 20 sponsor companies than among larger companies, perhaps reflecting the greater flexibility and/or resource constraints among the smaller companies. 

All respondents were asked to rate their levels of satisfaction with their own clinical trial teams’ performance with respect to eight different aspects of risk assessment; sponsor respondents were also asked to rate their satisfaction with the performance of their CROs and other services providers in these respects. As can be seen in 

, mean satisfaction ratings for the areas examined were generally in the neutral to positive range (i.e., between 3 and 4) for own-team assessments, considerably lower than has typically been seen in Avoca Industry Surveys for other aspects of clinical trial performance. Sponsor respondents reported higher levels of satisfaction with their own teams than with their CROs and other service providers on every attribute, with the latter typically receiving mean ratings in the dissatisfied to neutral range (i.e., means between 2 and 3), again lower than has typically been seen for other performance areas in Avoca Industry Surveys. 

Despite the lackluster satisfaction ratings, 52% of sponsor and 79% of provider respondents stated that their risk assessment and management approaches at least sometimes resulted in more efficient use of resources, and 66% and 84%, respectively, stated that these approaches at least sometimes resulted in increased quality. The majority of the remaining respondents stated that it was too soon to evaluate the benefits, since the use of formal risk assessment approaches was fairly new within their organizations.


    Respondents were asked by the survey to report on their use of risk-based monitoring (RBM) both overall and by phase and type of clinical trial. Nearly half of top-20 sponsor companies and approximately one-quarter of smaller sponsor companies reported using RBM for a majority of their in-house and outsourced clinical trials (see 

). Among CROs, 39% reported use of RBM for a majority of clinical trials, likely reflecting the mix of preferences among their sponsor clients. With respect to phase of clinical development, experience with RBM approaches was most common for Phase III trials (60% of sponsors, 72% of providers), and least common for Phase I trials (15% of sponsors, 22% of providers). Only a minority of sponsor respondents had experience with use of RBM for trials involving seriously ill or vulnerable patients (33%), adaptive or complex designs (27%), subjective or complex endpoint assessments (24%), complex or device-dependent treatment administration (24%), sites in developing regions (28%), or investigational products for which limited safety information was available (15%). Not surprisingly given their experience with multiple sponsor companies and development programs, more of the CRO respondents reported having had experience with RBM approaches in such contexts (19%-55%).

A variety of monitoring elements were adjusted by respondents based upon the assessed risks as depicted in 

. The frequency of site visits and aggressiveness of data monitoring were adjusted by the greatest percentages by respondents.

Respondents were asked to rate their levels of satisfaction with their CROs’ (for sponsors) or with their own clinical-trial teams’ (for CROs) experience/expertise in RBM, as well as with their ability to efficiently deliver a quality study using RBM. As was seen for the risk-assessment and risk-management variables, mean satisfaction ratings for these areas were in the neutral to positive range (i.e., between 3 and 4 on a scale of 1 [very dissatisfied] to 5 [very satisfied]). Sponsor ratings of CRO performance were lower than CRO self-ratings for each variable (3.0 [N = 40] for experience/expertise and 3.1 [N = 33] for ability to deliver among sponsors; 3.6 [N = 45] and 3.9 [N = 37] among CROs, respectively). Again these mean ratings were lower than has typically been seen in Avoca Industry Surveys for other aspects of clinical-trial performance.


    The results reveal approaches to risk assessment and management within the industry to be in an early stage of evolution, with practices and outcomes varying considerably across companies and no clear and common “best practices” in evidence. The majority of respondents do not see risk assessment and management practices to be performance strengths, either within their own organizations or within their providers (where applicable), and many have not yet put into place the infrastructure, including the partnering practices, to take full advantage of their potential. However, most have seen the potential efficiency and quality benefits to be gained and appear to be “believers” in these approaches, so we can expect a focus on this area, and a demand for increased knowledge and skill, to continue. Close attention will be paid in particular to the potential benefits of RBM, and to the impact of quality by design and other “best practice” initiatives that have become top priorities for many organizations. 


  1. The 2013 Avoca Report, Industry Survey Executive Summary: “Sponsor and Provider Perceptions on Managing Clinical Development Risk,” The Avoca Group, Princeton NJ.    

The relatively low success rates for bio/pharmaceutical compounds in clinical development have prompted many organizations to explore ways of reducing risk in clinical development.

Managing Clinical Development Risk: Pharma and CRO Report

After many years of stagnant or even declining revenues as a result of lackluster sales in the pharmaceutical industry, the global contract manufacturing market is growing steadily again. Toward the end of 2011, CMOs started seeing a positive change. Growth of approximately 11% per year brought global revenues for CMOs to nearly $30 billion by the end of 2012, and that figure is predicted to double by 2018 (1). Furthermore, a report by London-based consulting firm Frost & Sullivan suggests that nearly 80% of the top 15 pharmaceutical companies are expected to grow their biologics portfolio over the next four years (2). 

Yet even as many CMOs stabilize and grow, it is no guarantee that every CMO will be able to experience the same level of growth. In fact, today’s CMOs may find themselves challenged by a multitude of variables that have not previously existed. 

Internally, CMOs will find that certain aspects of their business—including their geographic location, the types of products and services offered, and the partnerships created—will play a bigger part in determining their ability to find success. Externally, CMOs will have to pay close attention to the market they are working in and remain flexible regarding the “new dawn” in the industry. 

Product launches, updated technologies, and scientific breakthroughs are driving growth for the foreseeable future, but the abandonment of big pharma’s traditional pursuit of “blockbuster” drugs presents a challenge. Experts forecast that cost-control measures, changes in R&D spend, introduction of novel technologies, and the increase in competition and patent expirations (better known as the patent cliff) are driving the proliferation of specialized—in some cases, “orphan”—drugs and generic drugs (3). 


The change toward specialized medicines has also led to an upswing in new drug approvals to keep up with market demand. Demographics, increasing life expectancy, and the fact that the “pharmerging” countries will double their spending on drugs within the next five years have all spiked global demand for pharmaceuticals. In the mid 2000s, approvals hovered in the low to mid 20s, but in 2011 and 2012, new drug approvals reached their highest level in 15 years. The approvals of new molecular entities (NMEs) jumped to 30 in 2011 and 39 in 2012 from 21 NMEs approved in 2010. Approximately 70% of these are small-molecule drugs (4). 

The rise in the rate of drug approvals reflects a paradigm shift in the industry. Because pharmaceutical companies are no longer able to rely on multibillion-dollar selling blockbuster drugs for most of their revenue, they must now develop and launch more agents aimed at multiple niche markets with considerably smaller patient populations. In their report, Frost & Sullivan estimates this loss of revenue from diminishing blockbuster patents to be $100 billion over the next six years (2). Therefore, the transition to more specialist-care types of drugs is one of the most notable changes observed in the market, but there are other important factors driving change in the industry. 


In today’s market, Western CMOs are undoubtedly seeing increased competition from CMOs in Asia, which makes it more crucial than ever to understand the fundamental cause of change. By remaining focused and informed, Western CMOs will find new ways to address potential barriers, as well as maximize many advantages leading them to success.

The increasing use of generics has presented a particular challenge. With healthcare cost-saving programs becoming progressively more important in developed countries and a large number of drug patents expiring, the use of generic drugs has been growing quickly, with no signs of letting up. Industry analysts predict that by 2015, 85% of all drugs by volume will be generic drugs (5). 

Patent expirations on remaining blockbuster drugs and the growth of generic drugs have also led to a wave of mergers and consolidations of big pharmaceutical corporations with prolific drug-production facilities. The influx of unused reactor capacity in these facilities has driven some large pharma companies—Sanofi, GSK, Pfizer, and Merck, to name a few—to use that capacity to directly compete with independent CMOs.

A comprehensive analysis of the overall pharmaceutical and biotechnology outsourcing industry shows that by making this capacity available, large pharmaceutical companies have contributed to an estimated 40% reactor overcapacity for the manufacture of high-volume, small-molecule APIs. At the same time, a number of these companies are shifting parts of their own high-volume, small-molecule API-manufacturing operations to Asia for lower costs, thus adding further to the overcapacity in Europe and the US.

Interestingly, overcapacity does not seem to be an issue for CMOs involved in innovative APIs. This observation is supported by the fact that 2012 saw a 5-10% growth in activity in Europe and the US for innovative, highly potent APIs, orphan drugs, biologics, and critical raw materials used for the manufacture of biologics. In some cases, there has even been a capacity shortage, with some specialist capabilities underserved. Understanding the cause of this phenomenon is crucial if CMOs want to be successful. 


The observed growth is partly triggered by a change in the customer base. As in-licensing projects for biopharmaceutical products rapidly pass the proof-of-concept stage, large pharmaceutical companies are driving significant growth in demand from smaller players. These smaller companies have rather different requirements than the traditional big pharmaceutical corporations, whose outsourcing needs are often driven by cost, capacity constraints, or a need for specific technical expertise. Hence, today 82% of innovation takes place outside of the top 25 companies of Big Pharma, with 54% of the originators of highly potent APIs having only a limited number of drugs in their development pipeline (6).

Smaller companies aspire to boost productivity to expedite their proof-of-concept development. The security and support needed comes generally through close partnerships with CMOs. The notable difference between Big Pharma and smaller biotech companies often creates a challenging environment for CMOs. Even so, the demand for productivity from smaller companies is now also spreading to some of the larger players in the industry. Therefore, to successfully meet customer needs, CMOs must be fast and flexible and employ highly skilled and educated workers.


The need for a skilled workforce is further amplified by an increase in approval pathways for the next generation of biopharmaceuticals, making workforce one of the key drivers of innovation and progress in the drug development process. This is particularly true for CMOs operating in Asia, where the workforce continues to meet with changing demands and needs.

At first glance, highly educated postdoc chemists in the US or Europe appear to earn a higher salary than their counterparts in India or China. Labor costs in 2013 were estimated to be $83,232 in the US and $104,040 in Europe, as compared with $36,675 in India and $30,106 in China. However, it is important to note that while salaries are noticeably higher in the US and Europe, Asia is witnessing rapid growth in remuneration, as double-digit increases are quickly bringing employees up to the same level as those in the West. In the US and Europe, the standard salary increase is approximately 2% a year, compared with 15% in India and 12% in China (7-9). 

In contrast to rapidly rising employee costs, productivity in most Asian countries is often considerably lower, estimated to be only two-thirds of that in the West. This is primarily due to much higher employee turnover. In China and India, the rate of labor turnover is estimated to be between 10-20% per year. And for every skilled worker who leaves, a new one must be trained as a replacement, which takes time and can result in a temporary loss of productivity Therefore, unless a CMO is designing its business to serve the Asian market, there is now far less rationale for building a facility in Asia that handles sophisticated chemistry (10). 

Yet for chemical manufacturing that requires less-skilled workers, the global salary gap is closing far more slowly. In fact, it is estimated it will take at least a decade or two before parity is reached with Western counterparts. For example, in 2013, the labor cost for a chemical operator in the US was $53,045, with an average salary increase of 3%. In Europe, those numbers are very similar—$72,828, with a 2% standard salary increase. These numbers are substantially lower for India and China: $9000 per year with an approximately 15% salary increase in India, and $7900 for China, with an approximately 12% standard salary increase (10). 

This difference means that it takes 7-12 years for an Indian operator and 8-14 years for a Chinese operator, to “break even” with counterparts working in the West. Any decreased productivity becomes offset by the drastically lower wages--to the tune of a 70% cost advantage remaining for the manufacture of high-volume products in Asia. As such, many Western companies will continue to outsource this type of work to Asia for the foreseeable future (11). 


  As the CMO market continues to evolve, the shift from blockbuster drugs to specialist-care drugs has undoubtedly changed the game. The increasing complexity of new biopharmaceutical agents creates real opportunities for companies that are able to offer specialized, innovative chemistries that are being carried out by skilled workers. 

Biologics and highly potent APIs are projected to grow by more than 60% during the next five years, giving CMOs an incentive to truly invest in developing their workforces. Furthermore, successful CMOs will be recognized by their ability to deliver high-quality, customized manufacturing materials and services designed to drive the performance of their customers’ end products. In addition to a strong workforce, offering differentiating technologies and services leveraging their capabilities in biologics and highly potent APIs is crucial.

While focusing on these strategies, successful CMOs should also consider expanding in Asia, because the production of high-volume generic drugs will—for the foreseeable future—be owned by Asian companies. Such a strategy, however, should not just be driven by cost savings. Rather, globally operating CMOs should look to Asia as a hub to serve local Asian markets’ growing populations and demands.

Big and small pharma companies have drastically different key drivers in today’s market, which requires greater flexibility from CMOs than ever before. Such greater flexibility—reinforced by an understanding of novel technologies, the competence to offer specialized chemistries, and the ability to meet undercapacity in some specialized niche areas—highlights the potential for Western CMOs to continue to win business and find success ahead of their Asian rivals. The new dawn has broken.

Contract Manufacturing Organizations to 2018

Competing in the Global Contract Manufacturing Market

 (October 2013). 
  3.	S.S. Dewan and K.A. Setia, BCC Research, 

Global Markets for Contract Pharmaceutical Manufacturing, Research and Packaging-—Focus on Contract Manufacturing 

” , accessed Jan. 8, 2014.
  5.	IMS Health, 

Competition in the API Market, Generic Association

, 90 (23) 36-38 (June 4, 2012).  
  8.	J. Sincavage, C. Haub, and O. Sharma, 

 133 (5) 3-22 (2010). 
  9.	A. Badrot, “

,”  accessed Jan. 20, 2014.  
  10.	P. Pollak, 

 (Feb. 24, 2009) p. 183. 
  11.	P. Pollak, 

Fine Chemicals: The Industry and the Business


Andreas Weiler is global head of strategic marketing, SAFC Contract Manufacturing Services for Life Science Products, and a member of the 

 Editorial Advisory Board, andreas.weiler@sial.com. 

Increased competition from CMOs in Asia means that Western CMOs need to understand fundamental changes in the market.

A New Dawn for Western CMOs

A revolution is under way in the biopharmaceutical industry as it faces global economic and demographic pressures, rising customer expectations, and new clinical development models.  At the same time, emerging market growth opportunities beckon. R&D stands at the vanguard of this revolution. In fact, some 35% of life-science companies have revamped their R&D models in the past three years, according to PricewaterhouseCoopers’ (PwC) Health Research Institute (HRI) research.

The biopharmaceutical industry, already among the most research-intensive industries, faces an immense challenge to develop a constant stream of profitable new products. Thousands of drug compounds are in some phase of clinical trial today.  There’s no guarantee, however, that the comparatively few compounds that launch will earn enough to counteract lost sales from patent expirations. 

Additionally, companies now have to factor in therapeutic development along with biomarker/companion diagnostic development for most new products.  For pharmaceutical companies, the advantage in partnering with diagnostic companies can reflect that more drugs require or benefit from having a companion diagnostic.  In many cases, the pharmaceutical company itself does not have the expertise in diagnostics, including diagnostics development and the necessary regulatory pathway being different from those for Pharma. 


  Companies are confronting this challenge by shifting R&D models to be more externally focused to share costs and risk. They are changing how they conduct R&D, not only reconfiguring existing operations, but also looking outside for promising new alliances that will help boost capabilities and replenish the pipeline more rapidly. Partnerships with academic medical centers (AMCs) and third parties, such as contract research organizations (CROs), are the two most common, aside from government contracts. In this new pressure-cooker environment, traditional competitors are teaming up to tackle shared R&D challenges. Consortiums, alliances with foundations, and crowdsourcing are among the new approaches. Done well, these relationships complement in-house R&D and allow companies to share both risk and reward with external partners.

, some 29% of companies have one or more partnerships, with another 27% reporting having at least one corporate research partnership or consortium, and 31% have partnerships with AMCs.


  Five partnership models predominate:  Consortia, alliances, CROs, AMC relationships, and crowdsourcing.  
  
  

. Sometimes the need to confront basic issues can justify collaboration, or a pre-competitive alliance, among firms that usually compete. The semiconductor industry created SEMATECH, a not-for-profit consortium, to tackle shared manufacturing challenges. The pharmaceutical sector appears to be taking similar steps. In 2012, 10 large drug makers formed a consortium, TransCelerate, to reduce drug development costs and exchange ideas on standardizing methods of discovery and development. TransCelerate has an ambitious agenda to develop clinical data standards and a risk-based monitoring methodology designed to satisfy guidance provided by FDA for clinical trials (1). 

Boehringer Ingelheim and Eli Lilly took on the challenge of medication adherence by teaming up to engage patients with My Well Planner, a program launched in 2012 that targets Type 2 diabetes patients. Based on a behavioral-change approach, it offers personalized information that adjusts to patient use. The program allows patients with type 2 diabetes to partner with clinicians to set modest lifestyle goals at their own pace, building toward bigger goals. A scoring mechanism gives the patient a sense of accomplishment and momentum rather than just indicating compliance (2).  

. Much of the industry has embraced alliances as a way to tap into more scientific minds. BioPontis Alliance, a North Carolina-based investment firm, connects academia and established companies. The consortium aims to reduce risk by identifying the most promising therapies in academia and developing partnerships with for-profit firms or manufacturers. To date, 10 academic institutions, three large pharmaceutical companies, and one CRO participate.
  Some alliances involve a foundation, such as the research partnership of the Cystic Fibrosis Foundation (CF Foundation) and Vertex initiated in 2000.  This partnership has resulted in the development and launch of Kalydeco, a targeted therapy for some cystic fibrosis patients. 

CF Foundation invested $76 million contingent on meeting certain research milestones, and in return, received future guarantees on sales royalties. The Foundation also provided access to its national clinical trials network for the research, helped recruit patients, provided leading practices in clinical trial design, and helped define outcome measures as understanding of the disease evolved. Kalydeco was reviewed and approved within three months by FDA. 

. CROs historically focused on services such as data management and site monitoring.  Today, CROs represent one of the fastest growing partnership approaches and can range from early-stage development and product design through clinical trials and post-launch studies. Next to government-sponsored research, CROs are the most common type of partnership (see 

) and now encompass more than 40% of drug discovery and development spending (1, 3). Beyond clinical trials, CROs are becoming more tightly embedded with Pharma, sharing both risk and reward, while moving away from a historic fee-for-service model. 

Some of the most interesting work today involves CROs looking to gain access to and integrate data from sponsors, payers, and providers with the intent to enable predictive analytics for clinical site selection and monitoring levels. The immediate intent is to reduce the time and cost to move a drug through development.  It is also, however, anticipated that effective assessment of such data will enable pharmacoeconomic evaluation and drug-safety assessment.   
  One example is the strategic partnership announced by Quintiles and Allscripts to jointly develop software solutions to enable improvements to the drug-development process and demonstrate the value of biopharmaceutical products in the real world. The partners’ goal is to develop products that are designed to significantly reduce some of the bottlenecks that traditionally impede clinical research, outcomes, education, and proof of new compound safety, effectiveness, and value. Their areas of focus include late-phase research, recruiting for and monitoring of clinical trials, and post-market surveillance--with the objective to create new solutions to enable customers to leverage de-identified longitudinal data from many sources in a HIPAA-compliant manner. 

Still, deeper CRO relationships are not pervasive. A survey by HRI found that 38% (see 

) of survey respondents characterize their partnership with a CRO as highly integrated and strategic, while 47% describe it as arm’s length, suggesting that some companies still see CROs as low-cost vendors for limited services and may be missing a broader opportunity. A strategic CRO partnership requires breaking out of a project-oriented mindset, sharing more proprietary information, and considering the full range of capabilities a CRO offers. This approach engages the CRO in every stage of the R&D process, from early-stage planning of drug development to clinical trials and beyond.

University and academic medical center relationships

. Many companies are going straight to an external source of early-stage innovation and scientific talent: the AMCs and research institutions that account for an estimated 13% of total US R&D expenditures (4).  All large pharmaceutical companies have established at least one AMC partnership, often specific to a disease. And the survey highlighted in HRI’s “The future of academic medical centers,” reports that 31% of pharmaceutical and medical device companies engage with AMCs (5). 

Pfizer’s Global Centers for Therapeutic Innovation was established in 2010 to pair teams of researchers from academic medical centers with company scientists. Researchers gain access to Pfizer’s library of drug candidates and work side by side with Pfizer scientists, while Pfizer retains first rights on any biologics developed. And in 2012, Novartis and University of Pennsylvania launched a $20 million effort to investigate personalized cancer therapies, citing Penn researchers’ intellectual capacity as a reason for the agreement (1).  

. For years, technology firms such as Apple and Google have used public contributions (“the crowd”) to supplement internal software development. In the life sciences industry, two major events boosted the cause of open innovation in 2012. First, the National Institutes of Health (NIH) announced an initiative pairing industry-abandoned drug compounds with NIH-funded researchers. Three companies made the initial asset donation, with five more following suit. The compounds have gone through preclinical or Phase I testing before donation. NIH provided $20 million in funding for grant applicants in addition to streamlined legal and administrative documents between the researchers and drug companies. Second, GlaxoSmithKline announced the open availability of 4500 clinical trials results and gave away the chemistries for hundreds of drug compounds that may fight tuberculosis (1). Outside scientists now have a complete view of all clinical trial data including adverse effects that may have been underreported in the past. 

Another company, Transparency Life Sciences, operates a drug-development crowdsourcing website that seeks the talents of two groups--patients and researchers. Three projects today target Crohn’s disease, multiple sclerosis, and Parkinson’s disease. Patients contribute ideas on real-world outcomes they hope to achieve with a treatment. Researchers help review compounds that have made it to Phase II, where abandonment rates can be high. Professional development and a chance to contribute ideas outside their field motivate some scientific contributors.

A strategic business model approach to partnership solutions


  Healthcare companies, with their traditional concentration by specialty on narrow diagnostic or therapeutic niches, historically made few efforts to integrate or even coordinate care. But driven by changing industry dynamics and healthcare reform, companies across the health spectrum, including those in Pharma, are now compelled to shift to a more systems-based approach that reflects an integrated professional continuum.  

The volume-based, fee-for-service approach to healthcare is being supplanted at the provider level by one that rewards quality and outcomes, a change driven by payers’ demand for results and the growing capacity of personalized care being made possible by genomics and similar advances. Pharma is facing increased pressure to deliver greater value, generally defined as providing better outcomes at lower cost. Increasingly, this is a global challenge. Both developed nations, with their aging populations and costly technologies, and emerging nations, with fast-growing populations, scarcity of medical professionals, and constrained finances, find cost a key variable in care.

In response to each of these forces, pharmaceutical companies are changing their focus in three important ways: shifting from selling “products” to providing solutions; from focusing on silos to a broader systems approach; and from generating profits by increasing volume to winning by delivering greater value. In turn, these strategies are transforming the fundamental business model for pharmaceutical companies, resulting in companies taking a more comprehensive approach that compels them to seek to “own” the diseases or conditions their products are intended to treat.

In healthcare, chronic disease states—such as diabetes, some forms of cancer and, in some countries, AIDS—require active management over a lifetime. In the United States, more than 80% of healthcare expenditures relate to such chronic conditions (6).  In such cases, “owning the disease” enables a company to provide behavioral, diagnostic, and therapeutic solutions on an integrated platform, thereby improving patient outcomes, lowering system costs, and capturing the full value of their solutions and innovation. 

The following example of applying an “Owning the Disease” business model shows the value of partnership strategies that cross established business model boundaries.

Merck Serono and Easypod--Owning growth disorders. Merck Serono S.A. has deployed a solution within the United Kingdom market to own human growth hormone therapy for endocrine and metabolic disorders. It is doing so by integrating diagnostic screening, counseling, and monitoring services with the Easypod wireless injection device. It partnered with international design and innovation consultancy PDD to develop the device. Approved for use in more than 40 countries, including the US and the European Union, the Easypod is employed in the injection of pharmaceuticals, and merges the delivery of drugs, the documentation of the dosages, and the monitoring of compliance. Data are shared automatically with physicians to promote compliance and integrated into electronic medical records for provider accessibility. The use of the Easypod reflects a changed business model. Merck Serono no longer concentrates solely on selling pharmaceuticals to providers but instead delivers value, with compensation linked to overall results. Quality of results, rather than quantity of sales, determines profitability, which aligns Merck Serono with the primary payer, the National Health Service (NHS). Because the higher levels of patient compliance with medication regimens produce better health and reduced lifetime treatment costs, the overall cost of the therapy for the NHS is lower, while Merck Serono enjoys greater market share and higher profits (7).

Partnerships help meet the innovation imperatives 


  The innovation process is fundamentally different from most other business activities and requires a different logic, infrastructure, and style of management.  Partnership strategies can help pharmaceutical companies achieve their innovation needs by helping to deliver the following three key imperatives of innovation:

. Companies must operate as  “lean startups”—importing the “fast, frequent, frugal failure” model of innovative startups. Concurrently, they must maintain lean six sigma discipline to sustain their core businesses.
  Measure innovation in new ways. Companies must manage the innovation cycle differently than managing operations by setting different goals and measurement methods. 

Collaborate to get closer to the patient. Pharmaceutical companies must look increasingly to external customers (from healthcare providers to pharmacies to patients), partners, and even competitors to help them generate valuable insights and widen the funnel of ideas flowing into the organization.


  Disease needs and efficiency to adapt to the new health economy require pharmaceutical R&D to embrace increased flexibility and explore a greater range of partnership approaches.  Partnerships can be instrumental in helping R&D achieve the innovation needed to remain competitive in the face of these industry challenges.  An “owning-the-disease” approach to business and partnering offers a thorough solution aligned with the shifting dynamics driving change in healthcare.  

(PwC, February 2013). 
  2. 	PwC Health Research Institute, 

Customer Experience in the Pharmaceutical Sector

 (PwC, November 2013).
  3.	 PwC Health Research Institute, 

Survey on Human Capital in the Health Industries 

(2012).
  4.	BIO, “The Economic Contribution of University/Nonprofit Inventions in the United States: 1996-2010,” BIO (2012).
  5.	PwC Health Research Institute, 

The Future of Academic Medical Centers: Strategies to avoid a margin meltown

 (PwC 2010).
  6.	G. Anderson, “Chronic Care: Making the Case for Ongoing Care,” RWJF.org P.16. (Robert Wood Johnson Foundation, March 2010).
  7. 	PwC Health Institute, 


Benjamin K. Gill and Jim Prutow are both principals in PwC’s Health Industries practice, focused on the pharmaceutical and life-sciences sector.

Pharmaceutical companies are adopting multiple choice partnership strategies to meet the challenges of today's R&D instead of being focused primarily on internal development.

Partnership Models Structure R&D Change

The biopharmaceutical industry is changing the way it manufactures. According to BioPlan Associates’

 10th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production

 (1), outsourcing and off-shoring have migrated into much more high-value areas of opportunity over the past 10 years. BioPlan’s annual studies receive input from between 300-400 global respondents and facilities, on a broad range of issues. Outsourcing and offshoring are some of the many key areas analyzed. Over the past decade, BioPlan has found that developing regions, including China, India, and Brazil, as well as the substantial investments in technologies that improve productivity and efficiency are making outsourcing more strategic. Beyond typically outsourced activities like fill-finish, validation services, and assays, companies are increasingly relying on their suppliers to address more challenging processes. From expertly packing chromatography columns, to providing higher-quality liquid media and buffers at large-scale, suppliers with technical competence are taking on some of the industry’s most challenging operations.

Trend one: Outsourcing is growing across all production systems


  Before looking at the finer details of the outsourcing landscape, it’s worth taking a broader view and data from BioPlan’s studies confirms that biomanufacturing outsourcing is a growing market. Part of BioPlan’s industry-wide census involves the percentage of facilities that are outsourcing at least some of their production. The results over the past 10 years tell show that outsourcing is not only increasing across traditional systems including mammalian cell culture and microbial fermentations, but also across newer systems such as plant and insect cells. 

Only 46.2% of facilities involved in mammalian cell culture were keeping all manufacturing in-house, down from 57.6% in 2006 

An even smaller share (34.8%) of facilities involved with microbial fermentation were manufacturing 100% in-house, with that down from 58.1% in 2006 

 For yeast systems, exactly half claimed to keep all their production in-house, down from 86.2% in 2006 

For plant cells, a strikingly small 28.6% of respondents kept all production in-house, down from a range of 68.6-88.9% not outsourcing any production from 2006 through 2012 

A similar story emerged for insect cells: only 37.5% kept all production in-house, down from a range of 64.7-100% from 2006 through 2012.  

Trend two: More core activities are geing outsourced


  There is a growing trend towards outsourcing of activities previously deemed too core to be outsourced. In this latest survey, for example, 44.4% of respondents said that they outsourced downstream process development, a significant increase from 29.2% a year earlier and 22.1% in each of the prior two years. 

Similarly, the proportion of respondents reporting having outsourced upstream process development has more than doubled since 2010, from 17.1% to 43.2%. Comparable rates of growth are also seen with outsourcing of design of experiments (from 21.4% to 43.2%) and quality-by-design (QbD) services (from 19.3% to 42%). These activities are still at the bottom of the list in terms of outsourcing popularity, but they are growing rapidly, signaling a greater degree of comfort on the part of clients with the technical expertise of their partners (see 

Trend three: Most outsourcing remains with lower-value activities


  While the range of activities being outsourced is broadening into new areas, the heaviest levels of outsourcing activity are still centered on lower-value services. 

From the responses gathered, BioPlan estimated the average percentage of outsourcing done by biomanufacturers across the various activities listed. On average, facilities outsource 32.3% of analytical testing/bioassays (up from 27.6% in 2012 year), 31.8% of their fill/finish operations (down from 34.5%), and 28.5% (27.3% in 2012) of their toxicity testing (see 

A changing biopharmaceutical industry is going beyond typically outsourced activities and is using CMOs for more challenging processes. Review the top 10 outsourcing trends.

Pharmaceutical Technology-02-01-2014

Global Markets Demand Local Knowledge

Quality by Design: A CMO's Perspective on Gaining Knowledge Faster and Better

Clinical-Trial Material Supply by Way of Shanghai

Managing Clinical Development Risk: Pharma and CRO Report

A New Dawn for Western CMOs

Partnership Models Structure R&D Change

Outsourcing Trends in Biopharmaceutical Manufacturing

Ensuring Sound Bioanalytical Methods Transfer

Jubilant HollisterStier