The rise of the embedded model
Tom Wilson, Custom Business Leader, Pfizer CentreOne
There are thought to be approximately 300 pharmaceutical contract development and manufacturing organisations (CDMOs) supporting the pharmaceutical industry. Despite increasing merger and acquisition (M&A) activity, the market remains highly fragmented; the top five CDMOs collectively account for just 15% of the market.1
Drug developers looking to find manufacturers for their drugs then have hundreds of potential routes open to them as they try to navigate their precious molecule or product pipelines towards commercialisation. Selecting a CDMO partner is made more complex when developers consider the burgeoning nature of diverse global markets, a regulatory environment in flux and the development and manufacturing trends shaping the industry.
Here, Tom Wilson, Custom Business Leader at Pfizer CentreOne, discusses the pharma market dynamics that are driving increased interest in embedded CDMOs.
North America and Western Europe still account for half of the global pharmaceuticals market. However, Asia-Pacific has overtaken Western Europe as the second largest region — led by a strong Japanese and booming Indian and Chinese markets.2 The latter now being the second largest national market in the world behind the US.
Growth in the Asia-Pacific region is largely being fuelled by the increased affordability of drugs, resulting from the rise of low-priced generics. This is twinned with a rise in GDP per capita, government programmes to support healthcare and rapid urbanisation, which have increased access to both doctors and pharmacies for large portions of the population.
It is important that drug developers understand the dynamics playing out across global and regional markets. Although essential when planning to access new or emerging markets around the world, it’s also important to be aware of what’s pushing and pulling the industry … even when the focus is entirely on developing drugs for North America or Europe. The challenge for executives and business development leaders is to relate current market dynamics and drivers to business and product plans — and use the insights and data effectively to guide critical business decision making.
This is an area in which partnerships with an embedded CDMO can add real value. When a CDMO is embedded within a larger organisation, it manufactures its partners’ drugs in the same facilities with the same engineering and technical resources as the larger company.
Regardless of who owns the intellectual property, products and patients win because these drugs are manufactured to high quality standards within the context of an established, successful organisation’s proven manufacturing operations.
The model ensures that drug developers can access and leverage the insight and general knowledge inherent to the larger organisation. The insight provided can be far ranging and effective, supporting a given compound’s product and go-to-market strategies: from direct experience of navigating the regional quality and regulatory requirements in major markets or having manufacturing assets to serving new patient groups and geographies. In the context of a healthy larger organisation, there are many instances when an embedded CDMO can guide and simplify market access for its clients.
Differing regulatory demands can also place a significant pressure on developers, especially if they’re in a start-up organisation or looking to establish a position in new markets. A global embedded CDMO can help clients to navigate regulatory nuances, thanks to the experience it has and the access to expertise within its broader organisation.
It can also be incredibly expensive to comply with certain regulations; meeting containment and segregation requirements for highly potent APIs and controlled substances are good examples of areas wherein an embedded CDMO can provide support.
Commercial-scale manufacturing is evolving rapidly with the growth and advancement of large molecule biopharmaceuticals. One difference is that many high-value biologics don’t have the same volumes or batch sizes as small-molecule drugs. The same could be said for the rise of small molecule inhibitors and antibody-drug conjugates (ADCs) that are creating a more targeted approach to cancer therapy.
The biologics segment in particular is also strongly represented by innovative start-ups and smaller companies that don’t have the capital to invest in manufacturing capabilities or access to the expertise required to navigate their product from development through to commercialisation. Trial supply, tech transfer and scale-up could be an entirely new territory for some businesses.
This trend towards more targeted therapies requires businesses to rethink their capabilities and invest in new equipment, lines, processes and operational approaches. For standalone CDMOs, there is considerable risk here. Although they will have to focus their energy on creating the same efficiencies — saving APIs, minimising loss and maximising yield — they will need to adjust to more flexible and dynamic ways of working to meet small-scale production demands.
The high-potency API market is also creating challenges for contract manufacturers. Significant growth, driven by demand for oncology drugs, hormone products and compounds to treat organ rejection, is being paired with increased regulatory scrutiny. High potency manufacturing requires effective containment strategies to protect the health of both workers and patients.
As it stands, there are no clear, harmonised standards from regulators, leaving manufacturers with the responsibility to develop their own methods to ensure the safe handling of high-potency APIs and meet regulatory expectations — often at significant cost.
For embedded CDMOs, investment in development capabilities, advanced processing concepts and manufacturing technologies is managed as the broader organisation invests to manufacture its own products. Their pedigree and access to a significant pool of expertise is also a great benefit to new businesses trying to get their product to market as efficiently as possible.
An embedded CDMO offers an interesting proposition within the wider context of the pharma and biopharma outsourcing space. For instance, an embedded CDMO can offer a legacy of successful drug development and regulatory support, the ability to leverage state-of-the-art facilities around the world and access to a multidisciplinary team of experts experienced in working with complex compounds.
At a practical level, embedded CDMOs can simplify and derisk access to global markets, ease the process of regulatory compliance for their partners and respond to emerging manufacturing trends. It’s a compelling offer that is likely to become even more attractive as regulatory pressures increase, new global markets strengthen and drug development pipelines fill and diversify.
This article will appear in the April issue of Manufacturing Chemist. A recent digital edition is available here.