Post on 25-Dec-2015
If You Build It, Will They Come?The Promise and Perils of Investing in
Biomanufacturing Capacity
Thomas C. RansohoffBioProcess Technology Consultants, Inc.
2nd Annual Sanford C. Bernstein Biosimilars ConferenceNew York, NY
November 19, 2009
From Clone to Commercial®
Outline Biopharma Overview
• Molecules and Processes• Facilities
Worldwide Capacity Situation• Growth and Distribution• Utilization• Trends
Manufacturing Strategy – Make v Buy• Timeline and Cost for Construction• Make v Buy Decisions
Biopharmaceutical Manufacturing Overview
From Clone to Commercial®
Definition of Biopharmaceuticals Biologic Products are products that are made by or
composed of viable organisms or biopolymer analogs• Recombinant Proteins• Monoclonal Antibodies• Natural Hormones and Enzymes • Synthetic Peptides and Oligonucleotides• Antibiotics, Plant & Animal Extracts, Allergens• Vaccines• Gene Therapy Products, Human & Xenogenic Cells &
Tissues• Blood & Blood Derivatives, including polyclonal
antibodies
From Clone to Commercial®
Biopharmaceutical Blockbuster Products
There were 28 biopharmaceutical blockbuster products in 2008 [up from 27 in 2007]:* 10 manufactured in microbial fermentation processes [9]* 18 manufactured in mammalian cell culture processes [18]* 9 monoclonal antibodies/Fc fusion proteins [9]
Product Generic Company Indication(s)Yr First
Approved2008 Sales
($M)Enbrel etanercept Amgen/ Pfizer (Wyeth) Arthritis, Rheumatoid 1998 6,191
Remicade infliximabJ&J (Centocor Ortho Biotech)
/Schering-PloughArthritis, Rheumatoid/Crohn's Disease/Ulcerative Colitis
1998 5,866
Rituxan rituximab Roche (Genentech) Lymphoma, Non-Hodgkin's/Arthritis, Rheumatoid 1997 5,487Avastin bevacizumab Roche (Genentech) Cancer, Colon/Rectal/Lung, Non-Small Cell 2004 4,824Herceptin trastuzumab Roche (Genentech) Cancer, Breast 1998 4,717Humira adalimumab Abbott Arthritis, Rheumatoid/Crohn's Disease/Psoriasis 2002 4,500Lantus insulin glargine Sanofi-Aventis Diabetes 2000 3,605Neulasta pegfilgrastim Amgen Neutropenia, Chemotherapy Induced 2002 3,300Aranesp darbepoetin alfa Amgen Anemia, Renal Failure/Chemotherapy Induced 2001 3,137Novolog insulin aspart Novo Nordisk Diabetes 1999 2,644Procrit epoetin alfa J&J (Centocor Ortho Biotech) Anemia, Renal failure induced 1989 2,460Epogen epoetin alfa Amgen Anemia, Renal failure induced 1989 2,456Novo Human Insulin Products insulin, human Novo Nordisk Diabetes 1982 2,329Avonex interferon beta-1a Biogen Idec Multiple sclerosis 1996 2,203Lucentis ranibizumab Roche (Genentech) /Novartis Macular Degeneration 2006 1,775Pegasys peginterferon alfa-2a Roche Hepatitis B/C 2002 1,737Humalog insulin lispro Lilly Diabetes 1996 1,736Betaseron interferon beta-1b Bayer HealthCare Pharmaceuticals Multiple sclerosis 1993 1,683NeoRecormon* epoetin beta Roche (Chugai Pharmaceuticals) Anemia, Renal Failure/Chemotherapy Induced 1997 1,644Erbitux cetuximab Lilly (ImClone)/BMS/Merck Cancer, Head/Neck/Colorectal 2004 1,580Advate Factor VIII Baxter Hemophilia A (Bleeding Episodes) 2003 1,500Rebif interferon beta-1a Merck Serono Multiple sclerosis 1998 1,330
Neupogen filgrastim AmgenNeutropenia, Chemotherapy Induced/Leukemia, Acute Myelogenous
1991 1,300
NovoSeven/NovoSevenRT Factor VIIa Novo Nordisk Hemophilia A (Bleeding Episodes) 1996 1,260
Kogenate FS/Helixate FS Factor VIII Bayer HealthCare Pharmaceuticals Hemophilia A (FVIII Deficiency) 1993 1,248Cerezyme imiglucerase Genzyme Gaucher Disease, Type 1 1994 1,239Synagis palivizumab AstraZeneca (MedImmune) Respiratory Syncytial Virus infection, prevention 1998 1,230Humulin insulin, human Lilly Diabetes 1982 1,063
From Clone to Commercial®
Biopharmaceutical Industry Growth
BPTC database covers 126 commercially marketed biopharmaceuticals as of 2009
Biopharmaceutical Commerical Product Sales Growth
-
5
10
15
20
25
30
35
40
2002 2003 2004 2005 2006 2007 2008
An
nu
al S
ales
($B
)
Mammalian Recombinant Products109 Kg required for 2008
Mammalian MAb Products6,918 Kg required for 2008
Microbial Recombinant Products12,975 Kg required for 2008
Microbial MAb Products4 Kg required for 2008
From Clone to Commercial®
General Scheme for Biopharmaceutical Bulk Drug Substance Processes
Intracellular(microbial fermentation)
Bulk Formulation
PurificationPurification
Isolation/Recovery
Isolation/Recovery
Cell Disruption/Refold
Cell Harvesting Cell Removal
Bioreactor Conversion
Bulk Formulation
Working Cell BankExtracellular(microbial fermentation and mammalian cell culture)
“Downstream” Process
“Upstream” Process
From Clone to Commercial®
20,000 L Fermentation Suite
Source: Lonza Presentation, “US Operations Overview”
From Clone to Commercial®
Purification – Large-Scale Chromatography
Source: Lonza Presentation, “US Operations Overview”
From Clone to Commercial®
Phase I(12 months)
Phase II(24 months)
Phase III(24 months)
Filing & Review (18 months)
• Dose Finding • First Efficacy
• Safety
• Pivotal Trials
Lead-Time for Building a Commercial PlantLead-Time for Building a Commercial Plant(~4 years)(~4 years)
Design(12 months)
Construction(24 months)
Validation(12 months)
Clinical Development Timeline(6-7 years)
ProductLaunch
Plant investment decisions must be made long before product approval
Timing of Plant Construction
Source: P. Seymour, IBC Bench to Clinic 2002
From Clone to Commercial®
Mammalian Cell Culture Facility Costs
Capital Cost per Liter vs. Plant Capacity
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
2.50 3.00 3.50 4.00 4.50 5.00
Log Plant capacity (L)
Co
st
pe
r L
(0
00
)
Industry-Wide Capacity Analysis
From Clone to Commercial®
BPTC Approach to Biopharmaceutical Capacity and Pipeline Analysis
Bottom-up methodology• Plant-by-plant estimation of capacity “supply”• Product-by-product and dose-driven estimation of “demand”
Market segmentation• Focus on recombinant protein and monoclonal antibody products manufactured
using Microbial fermentation Mammalian cell culture
• Commercially marketed products and product candidates in clinical development
Probability weighting factors• Accounting for multiple products targeting same indication• Assumptions for probability of success and time to market
Apply sensitivity analyses (i.e., Monte-Carlo) to quantify probability of predicted outcomes
From Clone to Commercial®
The State of Mammalian Cell Culture CapacitySufficient capacity worldwide to meet
current annual production needsAdequate capacity forecast through
2013• Increases in product titers and
Operational Excellence initiatives improve productivity of existing capacity
Probability of sufficient capacity through next decade is very high
• Relatively few new “volume-drivers” forecasted to be approved
• Growth of the existing commercial products slowing
BioProcess Technology Consultants report,December 2008
From Clone to Commercial®
Existing and Forecast Cell Culture Capacity
Includes equivalent fed-batch capacity for companies using perfusion technology (1 L perfusion ≈ 5 L fed-batch)
Product companies control ~80% of installed capacity
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2006 2007 2008 2009 2010 2011 2012 2013 2014
Year
Est
. In
stal
led
Rea
cto
r V
olu
me
(KL
) Product Co.
CMO
From Clone to Commercial®
0%
5%
10%
15%
20%
25%
A B C D E F G H I J K L M
Per
cen
t o
f T
ota
l C
apac
ity
2009 2014
Current and Projected Distribution of CapacityTop 10 companies control 80% of total worldwide capacity in 2009 decreasing slightly to 79% in 2014
• By 2014, Merck KgA & AstraZeneca/MedImmune (2014 included in “All Others”) replaced by Celltrion & BMS/Medarex (2009 capacity included in “all others”) in Top 10
A. Roche/Genentech B. Pfizer/Wyeth C. Amgen D. LonzaE. Novartis/Sandoz F. Boehringer Ingelheim G. Lilly/ImClone H. Biogen Idec I. Merck KgA J. AstraZeneca/MedImmuneK. Celltrion L. Bristol-Myers Squibb/Medarex M. All Others
From Clone to Commercial®
Distribution of Capacity Worldwide
Capacity expected to increase from ~2.5 Million L in2008 to ~4 Million L in 2013
In 2008, ~52% total installed capacity utilized; growing to ~73% by 2013
Figures include• 96 Companies• 21 Countries
NOTE: Analysis does not include perfusion capacity.
Source: E. Reynolds, IBC BPI 2008
From Clone to Commercial®
Manufacturing Capacity Demand – Existing Mammalian Commercial Products
Mammalian cell culture demand:• Monoclonal antibodies/Fc fusion proteins dominate mammalian cell culture demand for bulk product
on a kg/yr basis• Growth of existing commercial products remains a driver for capacity demand growth
1,225 1,191
1,044 1,032
916
412
1,207
-
200
400
600
800
1,000
1,200
1,400
Rituxan Remicade Enbrel Avastin Herceptin Erbitux All OtherProducts (60)
Bu
lk R
equ
irem
ents
200
8 (K
g)
From Clone to Commercial®
Pipeline Weighted Towards MAb ProductsMonoclonal antibodies represent the fastest growing segment of the pharmaceutical industry 85 – 90% of the mammalian cell culture product pipeline Approximately 65% of all biopharmaceutical products in
development are produced in mammalian cell culture
0
20
40
60
80
100
120
140
Market BLA/NDA Phase 3 Phase 2 Phase 1**
No
. o
f P
rod
uct
s
Mammalian
Microbial
Other (Plant, Insect, etc.)
0%
20%
40%
60%
80%
100%
Market BLA/NDA Phase 3 Phase 2 Phase 1**
Per
cen
t M
Ab
-Bas
ed
Mammalian
Microbial
From Clone to Commercial®
Do We Need 10 Ton Capacity? Demand for all existing commercial products will approximately
double from the current 5.8 metric tons to approximately 11.8 metric tons by 2013• Current annual product requirements for each of the top five
monoclonal antibody products is 800 – 1,200 Kg each At 5 g/L titer a single large “six pack” facility can make 10 tons of
monoclonal antibody (Kelley, 2009) Demand for products currently in development will increase the
future demand for cell culture manufacturing capacity The anticipated demand for virtually all products currently in
development is expected to be less than 5 metric tons per year
Kelley B, “Industrialization of MAb Production Technologies,” MAbs 1:5, Sep/Oct 2009
From Clone to Commercial®
Trends That Will Impact Future Capacity Utilization Fewer “blockbuster” drugs with greater focus on smaller markets
and niche products• Less difference in scale between pilot and commercial
facilities• Use of multipurpose plants; potential for continuous
production Mergers and acquisitions, resulting in:
• “Volume driver” product candidates moving to product companies with significant capacity -> free up CMO capacity
• Redundant facilities in larger organizations (the rich get richer)
From Clone to Commercial®
Trends That Will Impact Future Capacity Utilization Product company strategic initiatives to offer existing captive
capacity on the CMO market Continued improvement in throughput and utilization of existing
facilities, driven by:• Continuing increases in process yields• “Continuous improvement” initiatives, enabled by QbD and
other regulatory trends Increased availability and use of disposable/single-use
technologies
From Clone to Commercial®
Driving Forces for Single-Use Technologies
Improved return on capital
• Reduced and deferred capital investment
• Increased speed of deployment
Process control and portability
Process and product flexibility
Improved ability to manage and implement change
From Clone to Commercial®
The Biopharmaceutical Facility of the Future Facility design will incorporate high titer (>10 g/L) processes Facilities of the future will require greater DSP space and
capabilities to better handle the high titer bioreactor output• Ratio of bioreactor space to DSP space will decrease
Use of disposable technologies can reduce capital investment by over 50% and operating costs of manufacturing facilities (Roebers, 2009)
Smaller bioreactors will produce similar quantities to today’s larger bioreactors
Smaller facility requirements may enable smaller companies to construct and manage their own facilities more cost effectively
Roebers J, “Future trends in biopharmaceutical operations and facilities,” presented at BPI 2009, Raleigh NC
From Clone to Commercial®
The Biopharmaceutical Facility of the Future Plant has 6 x 2,000 L bioreactors (possibly single use bioreactors) 12 day fed-batch CHO culture for MAb Production
• 2,000 L volume, 10 g/L = 20 Kg MAb in harvest
• 80% purification yield = 16 Kg per batch Harvest every 4 days
• 85 harvests/year (340 days) = 1,360 Kg/year Capital investment < $100M Overall COGS < $70 per gram
From Clone to Commercial®
Cost-Capacity Chart: Selected Biologics
1
10
100
1000
10000
100000
1000000
10000000
100000000
0.1 1 10 100 1000 10000 1E+05 1E+06
Volume Requirements (kg/yr)
Pri
ce
($
/g)
Human serum albuminIVIGInsulinEnbrelRemicadeRituxanAvastinErbituxHumiraXolairrFactor VIIIsESAsInnovator hGHsGeneric hGHsAlpha InterferonPEG-IFN-AlphaFSHFit Data
Log-log linear relationship between 2007 price and volume requirements
r2=0.96
Manufacturing Strategy:Make v. Buy Decisions
From Clone to Commercial®
Managing Risk
“The essence of risk management lies in maximizing the areas where we have some control over the outcome while minimizing the areas where we have absolutely no control over the outcome…”
- Bernstein, PL, Against the Gods: The Remarkable Story of Risk, 1998Risk management tactics
Estimate the range of probable outcomes; not just the “base” case Develop an organization that can manage change Utilize options (back-up strategies) Understand the cost of being wrong Evaluate parallel paths
From Clone to Commercial®
Developing a Manufacturing Strategy
“We will not get this perfectly right”- Art Levinson, Genentech, SF Chronicle 12/21/03
Inadequate Capacity Cost of Lost Sales
• Estimated loss of operating profit (50% shortage): >>$10 M/mon
• Does not include other costs (reputation, competition, etc.)
Excess Capacity Carrying Cost of Facility and
Organization:• Estimated carrying cost of a
facility operating at 50% capacity: <<$10 M/mon
What’s the cost of being wrong?
Estimating the range of probable outcomes is important
See also: Mallik, A. et al, The McKinsey Quarterly, 2002 Special Edition: Risk & Resilience
From Clone to Commercial®
RIS
K
Product Launch
Development Uncertainty
MarketUncertainty
Maturity
Manufacturing costsset at decision point
Make
Make or Buy
Product Life Cycle
Make vs. Buy Decision (Risk minimization)Primary Driver:
Maximizing Control
“Make” strategy during highest risk period to maximize control of supply
“Buy” strategy may make sense once product lifecycle stabilizes, risk decreases, and control less important
Example: Genentech outsourced Rituxan to prepare for Avastin approval• Easier to transfer mature process• Minimize impact of “know-how leaks”• Retain control of less mature processes
From Clone to Commercial®
Product Launch
Development Uncertainty
MarketUncertainty
Maturity
Manufacturing costsset at decision point
Buy
Buy or Make
Product Life Cycle
Primary Driver:Conserving Capital
“Buy” strategy during highest risk period to conserve capital
“Make” strategy may be attractive once product lifecycle stabilizes, capital becomes more available, and risk reduced
RIS
K
Example: Imclone outsourced through clinical supply and launch then switched to in-house production
• Outsourcing minimizes capatial expense during risky development phase• Following successful product launch capital is more available to build its own
facility and reduce operating costs
Make vs. Buy Decision (Capital conservation)
From Clone to Commercial®
An Emerging Alternative: Acquiring Existing Capacity As the biopharmaceutical industry matures, older
manufacturing facilities may become available for acquisition.• Advantages: rapid and reduced capital access to needed capacity• Disadvantages: need for renovation likely; facility not optimized for
requirement; often available in most expensive locations Examples:
• Genentech acquisition of NIMO from Biogen Idec• Alexion acquisition of Dow facility in Rhode Island• Centocor acquires plant from Wyeth
Plant history: Invitron Centocor Chiron Wyeth Centocor• Lonza acquires Porrino plant from Genentech
Plant history: Glaxo Wellcome Genentech Lonza• Merck acquires Insmed facility in Boulder Colorado
Plant history: Somatogen Baxter Insmed Merck
From Clone to Commercial®
Conclusions Capacity likely to be available industry-wide, but:
• Closely held• Geographical distribution shifting
Product and process innovations resulting in higher yields per batch and lower demand for bioreactor capacity implies:• Investments in manufacturing facilities will continue to slow• Disposable/single-use technologies possible for some commercial supply
Significant price reductions possible with biosimilar products Make v buy decisions becoming more complex
• Acquisition is increasingly an option for capacity• Regulatory, market and technical uncertainties -> poor ability to forecast
biopharma capacity requirements accurately • Risk assessment is critical
From Clone to Commercial®
Thank you!
BioProcess Technology Consultants, Inc.
289 Great Road, Suite 303
Acton, MA 01720
978.266.9154 (phone)
978.266.9152 (fax)
transohoff@bioprocessconsultants.com
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