global biopharmaceutical contract manufacturing market - qualitative and quantitative analysis
DESCRIPTION
This presentation which highlights the key market and technology trends in the global biopharmaceutical contract manufacturing market was delivered as a lecture at the In-Focus Seminar session at CPhI Worldwide 2013 held at Frankfurt, Germany.TRANSCRIPT
Global Biopharmaceutical Contract Manufacturing
Market – Qualitative and Quantitative Analysis
Aiswariya Chidambaram
Senior Research Analyst - Life Sciences
24-10-2013
2
Focus Points
Focus Points
The Rise of Biopharmaceuticals
Comparative Analysis: Generics, Biosimilars and Biologics
Global Biopharmaceutical Market Overview
Biopharmaceutical Contract Outsourcing – Benefit Analysis
Biopharmaceutical Contract Manufacturing Market Overview
Biopharmaceutical Contract Manufacturing Segment Life Cycle Analysis
Key Market Drivers and Restraints
Technology – The Powerful Tool
Key Competitive Factors in the Selection of a CMO
Anticipating Capacity Demand – A Tricky Speculation
What can be Expected in the Future?
Facing the Change – Strategic Recommendations
3
The Rise of Biopharmaceuticals
“Biopharmaceuticals – The Length and Breadth of
Healthcare in Future”
What are biopharmaceuticals? – Biopharmaceuticals are pharmaceutical
drugs based on protein, therapeutic serum, virus, vaccine, blood
components or derivatives or gene transfer products, directly administered
into the blood stream by injection. They are complex macromolecules with
very high molecular weights compared to small molecules.
Biopharmaceutical Manufacturing – Biopharmaceuticals are generally
expressed in mammalian cells (mice, rabbits, etc.) or micro-organisms
(yeast, bacteria, etc.). Manufacturing involves highly sterile, aseptic
conditions and highly sensitive to changes in environment. Formulations are
predominantly injectables – pre-filled syringes or cartridges.
Why Biopharmaceuticals?
Stronger focus on target diseases, more effective and potent
action, potential to cure diseases rather than just treating
symptoms, lesser side effects.
Technology
Monoclonal
Antibodies
Recombinant
Proteins
Protein
Therapeutics
Oligonucleotides
Gene Therapy
Applications
Research
Therapeutics
Diagnostics
4
Comparative Analysis:
Generics, Biosimilars and Biologics
Moderate (5075%) Low (~30%)
Biosimilars Generics Biologics
Mark
eti
ng
O
the
r D
yn
am
ics
Probability of success
Time
Cost
Pricing
Marketing investment
Point of differentiation
Barriers to entry
Product operational profit
margins
Decision makers
Competitors
Short (34 Yrs) Long (812)
Low (~$5 million) High
($350900 million)
Commodity pricing Premium (full pricing)
Low High
Group purchasing /
Medical professional
Organisations Prescribers, patients
High,
Less differentiated
Few,
well differentiated
Price,
breadth of portfolio Product profile,
marketing
Low
(Cost efficiency)
High
(development process)
Low (~20%) High (~40%)
High (~90%)
Moderate (78 Yrs)
$100200 million
Lower pricing value
Payers, prescribers
Moderate
Few,
Partially differentiated
Price, Product profile & technology
High (capital and development)
Mixed (2530%)
Pro
du
ct
Dev
elo
pm
en
t
5
Global Biopharmaceutical Market Overview
Recombinant Proteins
Monoclonal Antibodies
Vaccines Insulin
2009 and early 2010 characterized by financial crisis and poor performance of venture capital industry in Europe.
Monoclonal antibodies (mAbs) and recombinant proteins are the two largest segments, growing at rates of 11.8 and 8.2 per
cent in 2011.
The future of Biopharmaceutical industry is promising, with biotech companies focusing more on innovation and technological
advancements and increasing interest of pharmaceutical companies to enter into the biotech business.
Biopharmaceutical Market: Per cent Revenue Contribution by
Therapeutic Segment (Global)
The European Biopharmaceutical Industry grew by 11 per cent from 2009 to 2010.
45%
40%
10% 5%
U.S. Rest of World
Europe
Asia
Biopharmaceutical Market: Per cent Revenue
Contribution by Region (Global)
48.9%
34.3%
10.3%
6.5%
6
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012 2013 2014 2015 2016 2017
Pre
sc
rip
tio
n D
rug
Sa
les
Year
Small Molecules mAbs Therapeutic Proteins Vaccines
Pharmaceutical Contract Manufacturing Market: Percent of Combined Prescription Sales for Big
Pharmaceutical Companies by Molecule Type, Global, 2012–2017
Increasing Adoption of the “Large Molecules” Model by
Big Pharma
Key Takeaway: As large molecules are commercially attractive and less competitive, big pharma
companies will likely increase their focus on these segments in the future.
Note: Sales from generic drugs have been excluded.
7
Benefit Analysis
Cost-efficiency
Rationalization of assets
Focus on core competencies
Life-cycle management
Operational efficiency
Regulatory Expertise
Biopharmaceutical Contract Outsourcing – Benefit
Analysis
8
65%
35%
Mammalian-based manufacturing Microbial-based manufacturing
Biopharmaceutical Contract Manufacturing Market: Per cent
Revenue Contribution by Segments (Global)
Biopharmaceutical Contract Manufacturing Market -
Segment Analysis
Mammalian-based manufacturing currently represents the largest segment, accounting for two-
thirds of the Biopharmaceutical Contract Manufacturing Market and is likely to be the major growth
driver over the next five years.
Segment
Revenue
(%)
Revenue
Growth Rate
(%)
Mammalian-
based
manufacturing
65 5-6
Microbial-
based
manufacturing
35 2-3
Biopharmaceutical Contract Manufacturing Market:
Per cent Revenue Contribution by Segments
(Global)
9
Biopharmaceutical Contract Manufacturing Market -
Segment Life Cycle Analysis
Time
Maturity Development Growth Decline
Mark
et
Valu
e
Microbial Contract Manufacturing Market is
mature and stable, and experiencing minimal
growth rates. It is a very old technology and
not suitable for complex, glycosylated
molecules. Hence, most CMOs do not plan for
capacity expansions in this segment.
Microbial
Mammalian
Key:
The current period being the decade of
monoclonal antibodies, significant growth is
expected in this segment. The cutting-edge
technologies and remarkable success of mAbs in
oncology presents a promising future for this
segment. Capacity additions are expected to
increase by 66 per cent in the next five years
globally. The profit margins are also relatively
higher in this segment.
10
Drivers
Cost and
time
saving
benefits
CMOs have
made huge
investments in
infrastructure,
technology
and personnel
Patent Cliff
Biologics
worth $110
billion to
lose patent
protection
between
2010 and
2020
Strong
Biologics
Pipeline
New product
launches and
novel drug
delivery
mechanisms to
drive
outsourcing
Integrated/
Risk-sharing
Business
Model
End-to-end
service
providers
offering
value-
added
services
Increasingly
stringent
regulations
Increased
over head
costs and
reduces
time-to-
market
Lack of VC
Funding for
early-stage
companies
Greater
preference for
companies
with promising
late-stage
candidates
Restraints
Biopharmaceutical Contract Manufacturing Market – Key
Drivers and Restraints
11
Biopharmaceutical Manufacturing Costs Breakdown
30%
20% 40%
10%
Process Development Upstream Processing
Downstream Processing Others
Biopharmaceutical Contract Manufacturing Market:
Manufacturing Cost Breakdown by Process (Global)
34.5%
16% 28.5%
21%
Capital Labour Materials, Utilities & Wastes Overhead
Key Takeaway: The cost to build, equip, and validate a bio manufacturing facility ranges between
$350 and $900 million, depending upon the product manufactured
Biopharmaceutical Contract Manufacturing Market:
Manufacturing Cost Breakdown by Component (Global)
12
2012 2014 2016 2018 2010 2020
Patent Expirations
BeneFIX
(Pfizer)
2011
Total Biologics Market: Patent Expirations, (Global), 2010–2020
Source: Frost & Sullivan Year
Pro
du
ct
Enbrel (Amgen/
Pfizer)
2012
Neupogen (Pfizer)
2013
Humalog (Eli Lilly)
2013
Avonex (Biogen
Idec)
2013
Cerezyme
(Genzyme)
2013
Rebif (Merck
KGaA)
2013
Epogen (Amgen)
2013
Procrit/ Eprex
(J&J)
2013
Prevnar (Pfizer)
2015
Lantus (Sanofi-
aventis)
2015
Actemra (Roche)
2015
Gonal-F (Merck
KGaA)
2015
Neulasta (Amgen)
2015
Nimotuzumab (YM
Biosciences)
2015
Norditropin
SimpleXx (Novo
Nordisk)
2015
Tysabri (Elan/
Biogen Idec)
2017
Provenge
(Dendreon)
2017
Victoza (Novo
Nordisk)
2017
Cervarix (GSK)
2017
Avastin (Roche)
2018
Apidra (Sanofi-
aventis)
2018
Gardasil (Merck &
Co)
2019
Rota Teq (Merck &
Co)
2019
Erbitux (Merck
KGaA/ Bristol
Myers Squibb)
2019
Levemir (Novo
Nordisk)
2019
Elaprase (Shire)
2019
Orencia (Bristol
Myers Squibb)
2019
Herceptin (Roche)
2019
13
2012 2014 2016 2018 2010 2020
Patent Expirations (continued)
Total Biologics Market: Patent Expirations, (Global), 2010–2020
Source: Frost & Sullivan Year
Pro
du
ct
NovoMix (Novo
Nordik)
2014
NovoRapid (Novo
Nordisk)
2014
Rituxan (Roche)
2014
Kogenate (Bayer)
2014
Helixate (CSL
Biotherapies)
2015
Humira (Abbott
Laboratories)
2016
Zostavax (Merck &
Co)
2016
Forteo/ Forsteo
(Eli Lilly)
2018
Remicade (J&J/
Merck & Co)
2018
Xolair (Roche/
Novartis)
2018
Pegasys (Roche)
2019
PEGIntron (Merck
& Co)
2019
Vectibix (Amgen)
2020
Lucentis (Roche/
Novartis)
2020
Botox (Allergan)
2020
Synflorix (GSK)
2020
Replagal (Shire)
2020
14
Biopharmaceutical R&D in Europe – What’s in the
Pipeline?
0
50
100
150
200
250
Spain Italy France Germany United
Kingdom
Number of drug
candidates
Phase I Phase II Phase III
The biopharmaceutical R&D expenditure in Europe, grew by 5 per cent from 2010 to 2011.
As venture capital firms in Europe are interested to invest only in late stage biopharmaceutical companies, start-up
biotech companies gain access to funding, predominantly through venture capital firms based at the U.S.
More than 50.0 per cent of the products in the European pipeline account for therapeutic monoclonal antibodies.
More than 1,200 biopharmaceuticals in the
pipeline.
More than 50% drugs represented by the five
major countries.
UK (over 230) and Germany (150
approximately) have the maximum number of
drug candidates in the pipeline.
Spain has shown a significant increase of
30% in 2010 from its 2009 pipeline.
Biopharmaceutical Market: Number of Drugs in Various Stages
of Clinical Pipeline, by Country (Europe)
15
Venture Capitalist (VC) Funding Analysis
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
First Time VC Follow-on VC
Year
VC
In
ve
stm
en
t (m
illi
on
)
Overall greater interest from VC firms in the biopharmaceutical sector than small molecules.
Greater capital allocation to the U.S. than Europe.
Biopharmaceutical Contract Manufacturing Market: VC Investment in Biopharmaceutical Companies and
CMOs, (Global), 2000 - 2011
16
Technology – “The Powerful Tool”
• Customizable
design
• Enhanced
Productivity
• Significant
operational
benefits
• Optimized expression
systems
• Enhanced cell
productivity & viability
• Simplified purification
process
• Improved selectivity
• Minimizing human
errors
• Maximizing
productivity
• Improvised
product quality
Single Use Technologies are specially
designed for
• Muti-product contract manufacturing.
• Easy transfer of operations
• Busy facilities and lean operations.
Upstream technologies
• cell productivity - 2-4 g/L in established
production processes
• 4-6 g/L in pre-clinical and clinical
manufacturing processes,.
Downstream technologies
• mAbs – filtration & purification resins
• Recombinant proteins - higher selectivity and
flow-through mode purification steps.
• Lyophilisation - protein based drugs,
preservation and packaging.
• Process Analytical Technologies
(PAT) - product driven approach to
process based one.
• Standardization of processes.
• Reduced degree of variation.
Upstream & Downstream Lyophilisation & PAT Disposables/ SUBs
Innovation
Funding
Expertise
Regulatory
compliance
“Any sufficiently advanced technology is indistinguishable from magic” – Arthur C. Clarke
17
Competitive Landscape
Tier 1
• Lonza Group Ltd
• Boehringer Ingelheim
Tier 2
• Sandoz
• Fujifilm Diosynth Biotechnology
• Royal DSM
• Rentschler Biotechnologie
Tier 3
• Celonic GmbH
• BIOMEVA GmbH
• ProBioGen AG
• Others
Biopharmaceutical Contract Manufacturing Market: Key CMOs by Tiers of Competition
18
Capacity
Reputation/
Credibility
Technical
expertise
Quality
Low
Low High
Low High
2 10 5 6 8
2 10 4 6 8
2 10 4 6 8
Low High
2 10 4 6 8
High
Personal
relationship
Communication
Timely delivery/
Speed
Approved facilities/
Regulatory support
Low
Low High
Low High
2 10 4 6 8
2 10 4 6 8
2 10 4 6 8
Low High
2 10 4 6 8
High
Cost Location Low High
2 10 4 6 8 Low High
2 10 4 6 8
Note: Above are the key competitive factors in the selection of a CMO by Pharmaceutical/Biotech companies for contract manufacturing
services. The factors are rated on a scale of 1 to 10 with 1 = Low importance and 10 = High importance based on the end-user’s input.
Key Competitive Factors in the selection of a CMO
19
Anticipating Capacity Demand – A Tricky Speculation
2011
2015
2018
2020
Demand <
Supply
Demand <
Supply
Demand =
Supply
Demand
>Supply
Biopharmaceutical Contract Manufacturing Market:
Capacity Supply-Demand Gap Analysis (Global)
15
15.5
16
16.5
17
17.5
2011 2012 2013 2014 2015 2016 2017 2018
15.9%
16.1% 16.2%
16.5%
16.8%
17.0%
17.4% 17.5%
Demand for Outsourcing (%)
Year
Biopharmaceutical Contract Manufacturing Market:
Demand Rate for Outsourcing to CMOs (Global)
“It is highly essential that CMOs make cautious decisions regarding capacity expansions and choice of contract
deals, lest they be hit by over capacity and witness a subsequent erosion of profit margins”.
The global biopharmaceutical industry has been alternating between cycles of excess and inadequate manufacturing
capacity (including captive and contract).
Current scenario conforms to slightly surplus capacity supply than the actual demand. Captive manufacturers are
increasingly shutting down plants or selling excess capacities.
20
What Can Be Expected in the Future?
Technology
Development of Transgenic technologies
Stem cell technologies
Cloning technologies
Therapeutics
Development of RNA-i based therapeutics
Development of anti-sense based therapeutics
Recombinant protein therapeutics
Monoclonal antibodies
Government
Regulatory bodies like EMEA to drive new
product and technology introduction
Increase in approval rates of new
biopharmaceuticals and biosimilars.
Globalization
Consolidations, mergers, acquisitions
Opening and expansion of Asian markets
Global capital markets
Transition from “small molecule
blockbuster” model to
“biopharmaceutical” model.
Increase in public awareness,
acceptance and approval of
biopharmaceuticals.
Increase in outsourcing of
biopharmaceutical manufacturing by Big
Pharma companies.
Development of “Virtual Pharma”
Differentiation and consolidation
strategies adopted by Biotech
companies and CMOs.
“A-one-stop-shop” offered by CMOs,
promoting a complete portfolio of
products and comprehensive range of
services.
Large CMOs moving into niche areas of
biopharmaceutical manufacturing.
Further development and
implementation of transgenic
technologies.
Establishment of regulatory pathways
for biosimilars and transgenics.
“ The best way to predict the future is to create it” – Peter Drucker
21
Facing the Change – Strategic Recommendations
Reacting to
Change
Anticipating
Change
Leading
the
Change
• Develop biopharmaceuticals for key indications.
• Customize according to customer needs and
preferences.
• Comply with new government policies.
• Analyze prospects for market globalization.
• Research customer needs, preferences and expectations.
• Monitor new technological developments to predict future.
• Foresee capacity requirements.
• Pioneer new and better technologies.
• Introduce innovative products, that open new
market opportunities and spur creation of whole
new industries.
• Seek to set industry standards.
• React and respond as needed.
• Defend and protect company’s
position in the market.
• Plan ahead for future changes.
• Invest in R&D.
• Instill competitive capabilities.
• Improve product line.
• Strengthen distribution.
• Seize the offensive.
• Be the agent of industry
change.
• Influence rules of the game.
• Force rivals to follow.
Strategic
Posture Actions Strategy
“ Change is the law of life. And those who look only to the past or present are certain to miss the future.” – John F.
Kennedy
22
Related Market Research Reports
Global Pharmaceutical Contract Manufacturing Market
Global Next Generation Biosimilars Market
Global Contract Research Outsourcing Market
Questions
24
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AISWARIYA CHIDAMBARAM
Senior Research Analyst – Life Sciences
Your Growth Partner
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