Biopharmaceuticals may be the wave of the future, but some protein-based drugs are already boosting the performance of parenteral dose manufacturers. Injectable bio-drugs such as Humira, Enbrel and Remicade have been approved for a growing number of autoimmune indications, including multiple sclerosis, rheumatoid arthritis, psoriasis and rarer diseases like ankylosing spondylitis. Most of the major players are working on similar products, as well as trying to find more targets for the existing drugs to treat.
Alisa Wright, vice president of business affairs for Baxter Pharmaceutical Solutions, commented, “There are so many bio-molecules out there in the pipeline, it’s really helping the parenteral market increase in size. In addition, Pharma companies are developing more products that treat ongoing diseases.”
In October, Baxter signed an agreement with Althea Technologies, a provider of gene-based manufacturing and testing services, to co-promote Althea’s plasmid DNA manufacturing services and each company’s contract Fill/Finish services. The goal of the agreement is to provide manufacturing and clinical packaging solutions to companies that are developing plasmid DNA vaccines and other biologics. Under the agreement, Althea will provide small batch production and filling capabilities to customers in preclinical through Phase III clinical trials. Baxter Pharmaceutical Solutions will provide large batch production, packaging and filling services as customers commercialize their products and launch into the market.
Such agreements may become more commonplace in the next few years. One industry source noted that his parenteral CMO has been approached by several bio-API manufacturers about building partnerships or alliances. “The idea with agreements like that would be to bring customers all the way through the manufacturing process,” said the source. “Synergies could develop from these sorts of relationships, but some providers are wary.” He also noted that API manufacturers may see be tempted to acquire some of the smaller players in parenteral manufacturing, with the intent of becoming ‘one-stop shops’ for smaller biotech companies. Some major players, including Baxter and DSM Pharmaceuticals, already offer such broad-based manufacturing services.
Biotechnology is a key driver for the parenteral market, but there’s another player that looms large over the industry: the federal government. Said one CMO, “I have two words for you: Homeland Security. There’s a huge amount of business coming in from the Bio-Shield initiative; it’s having a big impact on the availability of Fill/Finish capacity in the U.S.”
Most of the Bio-Shield activities thus far have involved preparing vaccines to protect U.S. armed forces from the chemical, biological and radiological weapons they could be exposed to on the battlefield. Another CMO representative commented, “Bio-Shield is creating a demand for millions and millions of units of Fill/Finish capacity. We’ve heard about one RFP [request for proposal] for 50 million doses. There are only two manufacturers that could handle that, and they’d have to give up a lot of other business to do it. So it makes what all of us do that much more valuable.”
“In our estimation, there’s another business driver, besides BLAs/NCEs and defense: demographics,” said Peter Hansbury, Ben Venue’s general manager, contract manufacturing services. “Demographics can be interpreted several ways. For one thing, the population in the first world is aging, and an older population is using more drug products, many of which are injectables.
“For another,” he added, “there is a serious movement to provide adequate and affordable drugs and healthcare in the third world. As we start to look at the numbers of patients in that part of the world, it’s clear that there’s not enough parenteral capacity to handle these new markets. So demographics, combined with the new drugs in the pipeline, lead to a general lack of capacity.”
Increased demand puts strains on all points in the production chain. “Much has been written in the business press about the lack of manufacturing capacity for biologics, but what about Fill/Finish?” asked Nick A. DiPietro, Patheon’s president and chief operating officer. “There are definite gaps in capacity throughout the industry. It’s very capital intensive, and regulatory bodies are raising the bar in sterile manufacture.” With steep entry costs, boosted by the necessities of regulatory compliance, new CMOs aren’t exactly popping up left and right.
One industry source contends that smaller parenteral CMOs are a dying breed. “Eighteen months ago, there seemed to be plenty of small players,” the source remarked. “I’m not seeing as many around now, and I’m seeing a number of the bigger players acquiring more sites and developing more capacity.”
Consolidation among sponsors also plays a significant role. Some providers contend that their business from smaller Pharma companies is driven by abandoned Big Pharma projects. “With the shareholder pressure at the big companies,” said one insider, “there’s a real blockbuster-or-nothing mentality. A lot of interesting products that might not garner $1+ billion in sales are being cast off. Smaller companies are picking them up, and many are coming to us for help, both in parenteral manufacturing and other stages of development.”
Most representatives from parenteral CMOs believe that the pending wave of biologics will boost the industry as a whole, but some are preaching caution. Said one industry source, “First, we have to see these drugs get approved. Even if they face a worse-than-historic rate of attrition, there should be plenty of them on the market. But then we face the questions of insurance reimbursement, limits on API manufacturing capacity, and similar drugs competing for the same indications.”
The source added, “There’s another aspect of relying on biologics that’s troubling. Sure, those products are all going to be injectables, so Fill/Finish services will be required. But in a study we conducted, we found that, while most bio-drugs were lyophilized in the clinical stage, many had liquid stable formulations by the time they reached commercialization. So do we really need all the capacity that’s being built?”
There’s plenty riding on that question, and it seems that most players are betting on a sustained rise on demand: quite a lot of capacity is coming online or being added. In June 2003, Baxter Pharmaceutical Solutions announced plans to enhance its parenteral contract manufacturing services by expanding its Bloomington, IN manufacturing facility. The 120,000-sq.-ft. expansion will support additional syringe filling and vial filling lines, a lyophilization suite, a new research lab and additional laboratories and administrative offices.
The total investment is expected to be approximately $100 million spread over seven years. The initial phase of the facility is expected to open for registration batch production in 2005, leading to new client product launches in 2006. “This expansion will provide greater capacity for our existing clients, as well as help us meet their future needs,” explained Joel Tune, general manager of Baxter’s Global Drug Delivery business.
Early in 2004, Spokane, WA-based Hollister-Stier will bring its 200-sq.-ft. commercial scale lyophilizer online, complimenting the company’s 30-sq.-ft. clinical scale lyophilizer. Having built a reputation on its clinical production, the company expects significant growth from its commercial services in 2004. Also, the company is adding a presterilized syringe filler for clinical trial requirements.
In February 2003, Abbott One 2 One Global Pharmaceutical Services announced plans to expand Fill/Finish, lyo and lab space in its McPherson, KS facility. The site specializes in Fill/Finish of biologics. The $50 million expansion will add approximately 80,000 sq. ft. of manufacturing, lab and office space to the facility, and will be online in 2005.
In November 2002, Patheon received regulatory approval from the Italian Ministry of Health for its new lyo-facilities in Monza and Ferentino, Italy. The approval for the Monza facility grants allows Patheon to manufacture sterile and lyophilized products and small-volume parenterals in both the newly constructed and existing sterile areas of the site and renews the ability to manufacture non-sterile liquid and solid dosage forms at the facility. The company acquired the Ferentino facility in February 2002, and has expanded and upgraded its capabilities, doubling the capacity and providing for the manufacture of sterile lyophilized products, as well as sterile large- and small-volume parenterals.
The Monza site recently entered into a new manufacturing services agreement with Roche to supply solid, liquid and sterile products for the European market. The $100 million agreement will commence on January 1, 2004 and continue for
at least three years. The site was acquired from Roche in 1998. “The acquisition of the Monza facility represented Patheon’s first in Europe,” said Robert Tedford, Patheon’s chief executive officer. “At the time, the existing manufacturing
and supply agreement with Roche represented virtually all of the revenues for our Italian operations. Today, Patheon Italia serves more than 16 clients at its two Italian facilities in Monza and Ferentino.”
The company has tripled its lyo-capacity in recent years, and has plans to expand its capacities in the UK, which specialize in prefilled syringes/cartridges. The EU is an important market, but Patheon isn’t focusing solely on Europe for parenteral growth. The company is also in the midst of establishing its first sterile services site in North America.
While Patheon builds its global manufacturing base, another player in the parenteral CMO market believes home is where the heart is. Ben Venue, a subsidiary of Boehringer Ingelheim, is expanding its facility in Bedford, OH, but has no plans for geographic expansion. “It’s important to us to have a solid base here in Bedford, globally approved. We find it more efficient to use a central site,” said Ben Venue’s Mr. Hansbury.
“It’s an expensive business to be in,” he remarked. “Along with the lack of capacity, capital is a huge factor in this industry.” Mr. Hansbury should know; Ben Venue recently brought its total investment in its Bedford site to more than $150 million in the last three years. In July, the company dedicated the newest expansion of its manufacturing facility, adding 162,000 sq. ft., at a cost of $82 million. The site now contains 500,000 sq. ft. (including the operations of the Bedford Laboratories division, a supplier of generic injectable products to the hospital market).
The new facility includes two new continuous filling lines with robotic traying that can accommodate liquids or lyo-products. It also contains six new 400-sq.-ft. lyophilizers with clean-in-place/ steam-in-place capability, new sterilization equipment and a 10,000 unit per hour packaging line. The company is considering further expansion.
DSM Pharmaceuticals will bring 900 sq. ft. of lyophilization space online in 2004, taking its Greenville, NC site to 4,000 sq. ft. of capacity with continuous filling operations, following an investment of $62 million. The company is considering further expansion, but plans are tentative. With the validation timeframes and other building requirements, new capacity construction would come online around 2010. At that point, will the market demand exist?
When planning expansion that far in the future, a company has to consider a wide range of factors. Terry Novak, DSM Pharmaceuticals’ senior vice president, marketing, sales and business development, commented, “At the same time that you’re working on expanding physical capacity, you also have to enhance your technological offerings.”
To that end, DSM Pharma has developed Lyo-Advantage, a proprietary lyophilization cycle control system for use on the company’s production lyo-philizers. “Lyo-Advantage marks an investment in technology,” said Mr. Novak. “We custom designed all the controls for the system, to improve our
While new technologies can improve the yields for parenteral manufacturers and reduce the need for physical expansion, there’s also the fear that some new technologies will lead to obsolescence.
“One long-term threat to our business,” said one industry insider, “is the development of buccal and nasal delivery systems. We’re looking at a minimum 10-year timeframe for these systems to really take off, but if they do, it could cause some real problems for parenteral CMOs.”
The source pointed out that, at present, mouth and nasal sprays don’t need to be sterile, unless used for deep lung therapy. “Spray or needle? It’s an easy decision for the patient.”