Parenteral Sector Watch - Will the Bio-Shield keep demand high?
Parenteral Sector Watch
Will the Bio-Shield keep demand high?
NovDec03
By Gil Y. Roth
Contract Pharma
Depending on one?s metrics, the annual market for parenteral dose manufacturing services is anywhere from $500 million to $2 billion. Even with this wide a range, the consensus is that the market is on the rise, with a variety of factors?an impending wave of biologics approvals foremost among them?spurring growth. The parenteral CMO market is going strong, and expansion?particularly of lyophilization capacity?is on the rise, fueled by several factors. But are fears of a long-term capacity glut warranted?
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.
Homeland
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.?
Depending on one?s metrics, the annual market for parenteral dose manufacturing services is anywhere from $500 million to $2 billion. Even with this wide a range, the consensus is that the market is on the rise, with a variety of factors?an impending wave of biologics approvals foremost among them?spurring growth. The parenteral CMO market is going strong, and expansion?particularly of lyophilization capacity?is on the rise, fueled by several factors. But are fears of a long-term capacity glut warranted?
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.
Homeland
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.?
Attrition
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.?
Caution
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??
Expansion
There?s plenty riding on that question,
Votes:26