CPHI Annual Expert: High Potency and Biologics Still Top Targets for CMOs Despite Difficult Borrowing Conditions 19th October 2023
By Adam Bradbury, Global Data
Ahead of CPHI Barcelona, the world’s largest pharmaceutical event, often referred to as ‘the heart of pharma,’ the industry collectively focuses its attention on biologics. In this context, CPHI expert Adam Bradbury from Global Data, sheds light on the evolving landscape of biologics and how outsourcing demand for large molecules will continue to grow significantly in the next few years. These topics also form the cornerstone of much of the content at this year’s event, with over 50 sessions dedicated to exploring how the industry is poised to evolve in preparation for 2024 with an additional three days of sessions under the Bioproduction agenda.
GlobalData’s recent analysis shows that large CMOs are continuing to invest in specialist dose manufacturing despite difficult economic circumstances. CMOs such as Pfizer CentreOne and Catalent are still willing to spend heavily on valuable commercial-scale dose capabilities in areas such as high-potency manufacture and biologics. The other notable trend is that, while most marketed drugs are still oral solid dosage form drugs, a shift is underway. In fact, small molecule new molecular entity (NME) approvals by the FDA declined substantially during 2020–22. The FDA approved significantly more biologic NMEs in 2022 than small molecule NMEs (24 compared to 17). Another change affecting CMOs is that the most innovative therapies, which are often delivered by injection, have an even greater need for outsourcing – in part because these drugs require facilities that maintain sterility and other higher-value technologies. Large contractors have been making high-profile moves in the M&A space to significantly add to their cell and gene therapy manufacturing capabilities during 2021–22. On February 17, 2021, Charles River Labs acquired Cognate BioServices and its gene therapy division Cobra Biologics for $875 million. The transaction allows Charles River to expand its scientific capabilities in the high-growth cell and gene therapy sector. CRL acquired Vigene Biosciences Inc, a gene therapy CDMO providing viral vector-based gene delivery solutions, for $350 million. We predict that biologics and specialized capabilities will continue to be acquired and/or constructed by innovative CMOs in 2024 and beyond, often for high values as marketed and pipeline drugs continue to become increasingly complex and as smaller sponsors struggle to develop and produce these drugs solely in-house.
Company acquisitions in 2022
In 2022, there were 17 acquisitions of CMOs with a commercial dose service offering. Large CMOs LTS Lohmann and Catalent continued to add to their commercial dose capabilities, with LTS Lohmann acquiring Tapemark[i] in August and Catalent acquiring Metrics Contract Services from Mayne Pharma in October for $475m[ii]. Tapemark, a US-based contract development and manufacturing organization (CDMO), specializes in transdermal drug delivery systems and oral thin film, while Metrics Contract Services is a full-service CDMO with high-potency capabilities for oral solids
All the tables and figures below have been extracted from an analysis included in GlobalData’s Contract Pharmaceutical Dose Manufacturing Industry: Composition, Size, Market Share, and Outlook – 2023 Edition report.
Delving deeper into the most popular acquisition targets, we see that specialized capabilities (containment and controlled drug manufacturing) and biologic production have been most sought after during 2018–22.
Facility acquisitions in 2022–23
From September 2022 through to September 2023, we observed that CMOs acquired three finished dose manufacturing facilities during, which is an annual rate similar to other years over the last decade, with the exception of peaks in 2017 and 2019. These sites had a diverse array of dose capabilities, with one European site.
- Astellas Pharma announced that it will sell a manufacturing plant in Meppel, Netherlands, to Delpharm Industrie SAS. Delpharm will continue to manufacture the products that are currently manufactured at the plant in Meppel, using the same staff, and will deliver these products to Astellas.
- Pfizer acquired Abzena’s manufacturing facility in Sanford, North Carolina, US. The site can produce biologics drug substances and provides additional manufacturing capacity for Pfizer.
- Unither Pharmaceuticals acquired Novartis’s plant in Sao Paulo, Brazil, allowing the expansion of the company’s ophthalmic multidose capabilities in Latin America.
The proportion of acquisitions involving European facilities or acquirers, compared to other regions, was relatively low in 2022, which was in stark contrast to the 2013–21 period, when most deals involved a European target or acquirer.
US dose manufacturing
The US has the most commercial-scale contract dose manufacturing facilities in the world at 214. About one-third of US dose sites offer either containment or controlled substance manufacture. The five major European markets (5EU) – France, Germany, Italy, Spain, and the UK –, Japan, and India form the next seven nations with the most commercial dose facilities.
In terms of which manufactures have the most sites, Pfizer and Catalent currently gave the largest number of commercial dose facilities in the US.
What is notable about manufacturers in the US is that approximately 35% of US commercial dose manufacturing facilities have containment capabilities and 36% have controlled substance manufacture, which is comparatively high globally, suggesting a high level of specialization. Other countries with a high percentage of facilities with containment are France, Germany, and Japan.
Although acquiring specialist capabilities in North America and Europe remains a high priority, CMOs value increasing the geographic reach of their production capabilities to markets in Asia and South America.
Geographic Distribution of Commercial Dose Facilities
The US also has 102 solid dose, 89 injectable, and 66 non-sterile semi-solid and liquid dose manufacturing facilities, giving it the largest number of sites for these individual dosage forms (a single facility may have multiple service types.) The fact that India still ranks among the top five countries for dose facilities shows the country’s appeal for commercial dose manufacturing [because there are also many other Indian CMOs that only supply domestic drug companies and do not have approvals to supply to the US, Canada, Europe, and Japan, which is a requirement for inclusion in this analysis]. CMOs headquartered in nine of the top 10 countries will, by default, have at least one of the regulatory approvals to supply their domestic markets.
What we also see is that India’s commercial dose production continues to see investment and to name just a few from the last 12-months:
- Adcock Ingram Holdings built a facility in Bengaluru, India, with annual production capacity of 750 million tablets, 75 million sachets, and 4 million bottles within 8,000m³.
- Hetero Drugs will invest INR10 billion ($120 million) to expand its manufacturing in the Indian state of Andhra Pradesh over the next two years, adding 3,000 jobs, said Managing Director Vamsi Krishna Bandi on March 2, 2023 at the Global Investors Summit 2023.
Globally, there are substantially more CMOs and facilities for solid doses than for injectables, because orally administered medicines remain far simpler and cheaper to manufacture. Injectables tend to be formulated for higher-value products and the delivery form is used for the majority of biologics. This means CMOs require a higher level of expertise and capital entry point for injectable drug manufacturing, as these products are more difficult to manufacture while retaining sterility, which requires techniques such as terminal sterilization, aseptic filtration, and aseptic formulation. Most injectable oncology drugs will also require containment for manufacture. High-containment capabilities are a specialist offering requiring special equipment and expertise, adding a further layer of cost and complexity. Contract injectable manufacture become increasingly important as the COVID-19 vaccines were approved, manufactured, and distributed globally, but their outlook due to falling COVID-19 demand has become less certain.
The US, India, and the 5EU feature heavily in the top 10 countries for commercial dose injectable facilities. The US has more than double the commercial injectable facilities of any other country, with Italy seeing the second highest facility count. A total of 42% of contract dose manufacturing facilities in the US offer injectable manufacture. What is notable is that investment into injectable facilities continued into 2023 and therefore beyond the height of the COVID-19 pandemic.
- DelSiTech opened a 100 square meter cleanroom facility in June 2023 for aseptic manufacturing including sterile injectables. The facility will be available for contract manufacturing in Q3 2023.
- PCI Pharma Services plans to open a second 200,000 square foot facility in Rockford, Illinois, US for injectable drug-device combination products, both biologics and small molecules. This facility will house 20 suites for the assembly and packaging of vials, pre-filled syringes, auto-injectors, and pen-cartridge combinations. Additional capabilities include on-site cold storage, high-speed vial labelling, assembly, and packaging of multiformat autoinjectors, serialization, testing, and drug product release. The $50 million investment will add 250 jobs in the next two years, the company claims, and the facility is expected to be operational in H2 2024.
- Carbogen Amcis AG opened a 9,500 square meter facility in Saint-Beauzire, France, for sterile injectables. The facility can handle highly potent compounds, antibody drug conjugates, and freeze-dried products. The site will manufacture for preclinical and clinical trials, as well as small-scale commercial use. It currently employs 100 people, and Carbogen expects to add another 50 employees by the end of the year.