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European Pharmaceutical Contractor

Contract Capacity

Determining capacity for contract manufacturing of cytotoxic injectables is more complex than for standard potency drugs, for a variety of reasons. For one, most companies offering contract manufacturing of cytotoxic medicines also produce their own versions. Because of this, their participation in the market and the amount of capacity they can dedicate to contracted services can vary significantly over time. Drug shortages across the industry have caused some businesses to focus on their proprietary product opportunities and pull back from contract manufacturing.

A second consideration is regulatory and client expectations about worker protection and the prevention of cross-contamination. While the FDA is willing to take a risk-based approach – whereby cytotoxic products can be made on the same line as non-cytotoxics, if cleaning can be validated – European authorities are more conservative and, at this point, more likely to continue insisting on segregation.

Clients appear to be split with regard to their willingness to mingle products, but they have come down hard on worker protection concerns, and are increasingly likely to require facilities that manufacture cytotoxic drugs to have highly engineered containment. Many existing cytotoxic sites are somewhat dated, and may not incorporate the latest containment features.

Capacity Exits

Perhaps the most notable development in the cytotoxic injectable manufacturing arena in the past five years has been the net loss of both captive and contract capacity.

The most spectacular exit was that of Ben Venue Laboratories (BVL), which announced in 2012 that it would leave the contract manufacturing business. In late 2013, the firm was shut down altogether, when parent company Boehringer-Ingelheim decided not to make the $750 million investment necessary to bring the Bedford, Ohio facility up to Good Manufacturing Practice standard. BVL had incurred a number of quality and regulatory compliance challenges, which led to an FDA warning letter in November 2007 and a consent decree in January 2013.

BVL’s cytotoxic capabilities included three filling lines, feeding nine lyophilisers, with a total capacity of 210m2. Much of this was used to produce generic cytotoxic injectables under the firm’s Bedford Laboratories brand, but a large share was for contract manufacturing. Before its closure, BVL was contracted in the manufacture of several important cytotoxic products, including Doxil (Janssen), Eloxatin (Sanofi), Velcade (Millenium), and Vidaza and Istodax (Celgene).

The impact of this high-profile exit from the contract manufacturing sector was muted by the fact that many customers had already made arrangements to move their products, following the 2007 warning letter – and, in some cases, even before this date. Nevertheless, BVL’s departure has impacted the industry in several ways:
  • Direct loss of cytotoxic injectable manufacturing capacity
  • Absorption of capacity at other contract manufacturing organisations (CMOs) that took in the former BVL clients
  • Use of industry capacity to replace products made by the closed company and marketed under Bedford Laboratories
PharmSource reports estimate that BVL’s exit from the CMO business, and subsequent closure, may have reduced industry cytotoxic lyophilisation capacity by as much as 20%.

Two Tiers of Business

It is possible to think of the contract cytotoxic injectable manufacturing base as two separate tiers, reflecting both CMO capabilities and the likelihood that they would be awarded a contract to produce a high-value product, such as an antibody-drug conjugate (ADC).

Tier one firms are those with the most relevant capabilities, largest capacity and strongest track record for producing high-profile products. They have the following characteristics:
  • Broad capability for cytotoxics, including considerable fill and lyophilisation capacity
  • Have gained recent, or have pending, approvals for higher value products such as ADCs
  • Have invested in their capacity
  • Maintain cytotoxic injectables manufacturing facilities in North America or Europe, and produce primarily for Western markets
Tier two CMOs include those that have cytotoxic capability, but are limited in some significant way, including:
  • A lack of lyophilisation capacity for cytotoxics
  • No FDA approvals for injectable drugs
  • Excess capacity in facilities dedicated primarily to proprietary products
  • Not aggressively promoting or trying to grow their cytotoxic business
Manufacturing sites that are not FDA-approved can compete for local or regional supply deals – for example, only targeting certain European countries – but will not usually be considered for products with intended global markets. Non-FDA sites could become compliant with time and expense, but that is an added risk for sponsors hoping to get a product approved for the US market.

A lack of lyophilisation capacity will prevent a manufacturer from competing for a sizeable piece of the cytotoxic injectable business. Nearly half of all cytotoxics are lyophilised, and 80% of the recent new active substance approvals – including the two marketed ADCs – undergo the process.

Tier two manufacturers also lack conjugation capabilities for ADCs. While these services are available from suppliers without fill-finish capability, their competitiveness will be limited by the fact that most tier one suppliers offer conjugation along with filling and lyophilisation.

PharmSource places just five CMOs in the tier one category – four of which are located in Europe, and one in North America.

Potential Entrants

With growing numbers of ADCs and other oncology drugs in the pipeline, the CMO industry could easily find itself without sufficient capability in the next few years. In addition to capacity being brought on by current injectables CMOs, new abilities could come from other directions.

Several CMOs offer services for the manufacturing of the active pharmaceutical ingredient (API) components of ADCs, including the production of monoclonal antibodies and cytotoxic APIs. It is possible that one or more of these companies could decide to add fill-finish to their services, providing a more complete offering that promises to reduce the complexity of the ADC supply chain.

Few API suppliers currently have the ability to handle cytotoxic fill-finish and, even when they do, it is usually only at clinical scale. But, there are some firms in this category that can manufacture both the antibody and potent small molecule component of an ADC – and, for those that have conjugation capabilities, investing in fill-finish would allow them to take the final step. Many of these businesses have the financial resources available to make such an investment.

Nevertheless, it is unlikely that these companies would undertake the risk of investing in a dedicated cytotoxic injectables facility, for two reasons. Firstly, few of them actually have experience in manufacturing injectables. And secondly, a high-containment injectables facility, built solely for the purpose of manu facturing ADCs, would probably be insufficiently utilised for many years and, therefore, would not be financially viable.

Alliances among CMOs represent another avenue for new entrants into the ADC space. Several CMOs have teamed up with other like-minded firms or technology providers to broaden their ADC-related offerings. However, none of these alliances appear to offer a serious stepping stone into commercial ADC manufacturing. Such CMO alliances are often announced, but seldom seem to generate significant opportunities for participating parties, and tend to wither quickly.

Likely Outcomes

It is improbable that a manufacturer not already producing cytotoxic drugs will build a new facility. First-time entrants into this market will find it very risky because:

1. They face an expensive two- to three-year facility development programme, followed by a long business expansion cycle
2. They lack the proven safety and product approval records of established cytotoxic manufacturers, which will be a hurdle in gaining new clients
3. Contract-only manufacturers will not have the proprietary products that provide guaranteed utilisation, or a buffer against normal product failures in the clinic and market

Thanks to these issues, the capacity currently existing, or planned for, at tier one CMOs is likely to be all that is available for new, high-value cytotoxic injectables for the next five years. Tier one companies possess many advantages that can be barriers to entry for competitors, including existing capacity to take on new products, at least for requirements in the initial years; properly designed and equipped facilities; track records of product approval and worker safety; and inside knowledge and long experience, enabling them to make better judgments regarding market opportunities.

For any tier two CMO to play a serious role in the sector, it must significantly improve its capabilities and/or dedicate itself to the contract business. This is possible, but most second tier firms face challenges that make this route unlikely.

Note

This article is based on PharmSource research which evaluates the supply and demand of the contract manufacture of cytotoxic injectable drugs, up to 2019. To read the full report, visit: http://bit.ly/1B7kWIJ



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Jim Miller is the founder and President of PharmSource. He chairs the advisory committee of the Pharma and Biopharma Outsourcing Association, and serves on the board of the American Type Culture Collection. Jim is also an editor and publisher of the Bio/Pharmaceutical Outsourcing Report and Emerging Markets Outsourcing Report. He holds an MBA from the Stanford University Graduate School of Business, US.

Saul Richmond
is Director of Market Intelligence at PharmSource. He has more than 15 years of experience in market analysis, having worked in business intelligence roles at Evaluate Pharma, Cardinal Health (now Catalent) and Abbott Laboratories. Saul holds an MSc in Neuroscience from the Institute of Psychiatry at King’s College London, and a DPhil in Neuropharmacology from the University of Oxford, UK.
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