What Underpins the Success of European Biopharmaceutical CMOs ?

What underpins the success of Biopharmaceutical CMOs in Europe?

Aiswariya Chidambaram, Research AnalystHealthcare16-09-2011

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Functional Expertise Particular expertise in: - Analyzing regional sales performance, identifying performance gaps and providing relevant solutions to stakeholders for

the growth and development of regional business. - Designing and roll out of appropriate training modules, conducting workshops on selling skills excellence and working on

development of Business executives at professional and personal levels. - Conducting induction training to new recruits and field coaching on marketing projects to ensure smooth implementation. - Recruiting candidates and identifying talents at regional level by appropriate means of performance analysis and

competency mapping. Special projects implementation on a regional scale Industry Expertise• Expertise in diverse therapeutic segments and product portfolios which include - Diabetology – Oral Anti Diabetics - Cardiovascular Diseases – Anti-hypertensives. - General Medicine – Antibiotics, Anti-fungals, and Health supplements. - Women’s Healthcare – Oral Contraceptives

What I bring to the Team• In depth knowledge of four specific Therapeutic segments. • Expertise in tracking Industry trends and events as part of Market Vigilance. • Reasoning based recommendation for improved efficiency. • Excellent communication and presentation skills.

Career Highlights• Have successfully completed a NIH project on Filariasis at the Tuberculosis Research Centre (Chennai).• Completed internship projects on Industrial Microbiology, Cytogenetics and Karyotyping, and a course on “Tools in Bio-

informatics and Vector Designing.”• Worked as a Performance Consultant for South India (covering four states – Tamil Nadu, Andhra Pradesh, Kerala and

Karnataka) with a leading Multinational firm, Bayer Healthcare.• Worked on market research projects such as the “Global Generics Pharmaceutical Market” with Frost & Sullivan. Education• Bachelors in Technology, specialization in Biotechnology, from Anna University, Chennai, India.

Aiswariya Chidambaram

Aiswariya Chidambaram

Research Analyst, Healthcare Practice,Frost & SullivanGlobal,Chennai,India

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Focus Points

Focus Points

Biopharmaceutical Industry in Europe

Summary of Key Market Drivers and Restraints and Challenges

European Biopharmaceutical Contract Manufacturing Market – A snapshot

Biopharmaceutical R&D – What’s in the pipeline?

The rise of Biopharmaceuticals

Anticipating Capacity Demand – A Tricky Speculation

Technology – “The Powerful Tool”

Key Biopharmaceutical CMOs in Europe – An Outlook

Market Potential and Business Opportunities

Potential Threats to Biopharmaceuticals

What can be expected in the future?

Facing the Change / Conclusions

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The Rise of Biopharmaceuticals

“Biopharmaceuticals – The Length and Breadth of

Healthcare in Future”

What are biopharmaceuticals? – Biopharmaceuticals are pharmaceutical drugs based on protein, therapeutic serum, virus, vaccine, blood components or derivatives or gene transfer products, directly administered into the blood stream by injection. They are complex macromolecules with

very high molecular weights compared to small molecules.

Biopharmaceutical Manufacturing – Biopharmaceuticals are generally expressed in mammalian cells (mice, rabbits, etc.) or micro-organisms (yeast, bacteria, etc.). Manufacturing involves highly sterile, aseptic conditions and highly sensitive to changes in environment. Formulations are

predominantly injectables – pre-filled syringes or cartridges.

Source: Frost and Sullivan Why Biopharmaceuticals?

Stronger focus on target diseases, more effective and potent action, potential to cure diseases rather than just treating symptoms, lesser side effects.

Technology

Monoclonal Antibodies

Recombinant Proteins

Protein Therapeutics

Oligonucleotides

Gene Therapy

Applications

Research

Therapeutics

Diagnostics

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The Biopharmaceutical Industry in Europe

Public Biotech Company Data

Sales Revenues $18.465 B

R&D Expenditure $4.828 B

Net income (loss) $.651 B

Market Capitalization $84.394 B

Number of Companies

Public companies 182

Private companies 1,665

Total 1,847

10.33%6.52%

48.9%

34.25%

Monoclonal antibodies

Recombinant Proteins

VaccinesInsulin

Overview of the European Biopharmaceutical Industry

2009 and early 2010 characterized by financial crisis and poor performance of venture capital industry in Europe.

Monoclonal antibodies (mAbs) and recombinant proteins are the two largest segments, growing at rates of 11.8 and 8.2 per cent in 2011.

The future of Biopharmaceutical industry is promising, with biotech companies focusing more on innovation and technological advancements and increasing interest of pharmaceutical companies to enter into the biotech business.

Biopharmaceutical Market: Per cent Contribution of Therapeutic Segments (Europe), 2011

The European Biopharmaceutical Industry grew by 11 per cent from 2009 to 2010.

Note: All figures are rounded; the base year is 2011. Source: Frost & Sullivan

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Biopharmaceutical R&D in Europe – What’s in the Pipeline?

0

50

100

150

200

250

Spain Italy France Germany UnitedKingdom

Number of drug candidates

Phase I Phase II Phase III

The Biopharmaceutical R&D expenditure in Europe, grew by 5 per cent from 2009 to 2010.

. As venture capital firms in Europe are interested to invest only in late stage biopharmaceutical companies, start-up biotech companies gain access to funding, predominantly through venture capital firms based at the U.S.

More than 50.0 per cent of the products in the European pipeline account for therapeutic monoclonal antibodies.

More than 1,200 biopharmaceuticals in the pipeline.

More than 50 per cent of the drugs represented by the five major countries.

UK (234) and Germany (150) have the maximum number of drug candidates in the pipeline.

Spain has shown a significant increase of 30 per cent in 2010 from its 2009 pipeline.

Biopharmaceutical Market: Number of Drugs in Various Stages of Clinical Pipeline, by Country (Europe), 2011

Source: Frost and Sullivan


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European Biopharmaceutical Contract Manufacturing Market – A Snapshot

35%

65%

73%

27%

Multipurpose CMOs only MAb & PAb CMOs

mammalianmicrobial

Biopharmaceutical Contract Manufacturing Market: Per cent Sales Contribution of Segments (Europe), 2011

Biopharmaceutical Contract Manufacturing Market: Distribution of CMOs by Products Manufactured (Europe), 2011

Biopharmaceutical Contract Manufacturing Market: Distribution of CMOs by Manufacturing Services Offered (Europe), 2011



56

10

44

49

39

10

40

46

0 10 20 30 40 50 60

Total Contractors

Clinical supply

Clinical only withcommercial

Commercialsupply

No. of CMOsRecombinant proteins Monoclonal Antibodies

The European Biopharmaceutical contract Manufacturing Market is estimated to be over $1.2 billion in 2011, growing at nearly 11 per cent.

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Key Market Drivers and Restraints Summary

Key Drivers

Key Restraints/Challenges

Biopharmaceutical Contract Manufacturing Market: Key Drivers and Restraints Summary (Europe), 2012-2018

Source: Frost & Sullivan

Increasing competition from low

cost Asian CMOs

Increasing competition from low

cost Asian CMOs

Increasing interest of Big pharma companies to

expand into the biotech sector

Increasing interest of Big pharma companies to

expand into the biotech sector

Increasing stringency in regulatory

standards

Increasing stringency in regulatory

standards

Breach of patent and IP related information

Breach of patent and IP related information

Financial crisis and poor performance of the venture capital industry in Europe

Financial crisis and poor performance of the venture capital industry in Europe

Enormous cost and time saving benefits offered by CMOs Blockbuster

biologics worth $30 billion set to

lose patent protection by 2018

Highly capital intensive and risky

sector

Highly capital intensive and risky

sector

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Technology – “The Powerful Tool”

• Customizable design• Enhanced Productivity• Significant operational benefits

• Optimized expression systems• Enhanced cell productivity & viability• Simplified purification process• Improved selectivity

• Minimizing human errors• Maximizing productivity• Improvised product quality

Single Use Technologies are specially designed for

• Muti-product contract manufacturing.

•Easy transfer of operations

•Busy facilities and lean operations.

Upstream technologies

• cell productivity - 2-4 g/L in established production processes

• 4-6 g/L in pre-clinical and clinical manufacturing processes,.

Downstream technologies

•mAbs – filtration & purification resins

•Recombinant proteins - higher selectivity and flow-through mode purification steps.

• Lyophilisation - protein based drugs, preservation and packaging.

• Process Analytical Technologies (PAT) - product driven approach to process based one.

• Standardization of processes.

• Reduced degree of variation.

Upstream & Downstream Lyophilisation & PATDisposables/ SUBs

Innovation

Funding

Expertise

Regulatory compliance

“Any sufficiently advanced technology is indistinguishable from magic” – Arthur C. Clarke

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Anticipating Capacity Demand – A Tricky Speculation

Biopharmaceuticals Market: Demand for Outsourcing of Biopharmaceutical Manufacturing to CMOs (Europe),

2011 - 2018


Note: All figures are rounded; the base year is 2011. Source: Frost & SullivanNote: All figures are rounded; the base year is 2011. Source: Frost & Sullivan

It is highly essential that CMOs make cautious decisions regarding capacity expansions and choice of contract deals, lest they be hit by over capacity and witness a subsequent erosion of profit margins.

15.9%

16.1%16.2%

16.5%

16.8%

17.0%

17.4%

17.5%

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15.5

16

16.5

17

17.5

Demand for Outsourcing (%)

2011 2012 2013 2014 2015 2016 2017 2018

Year

Biopharmaceuticals Contract Manufacturing Market: Industry Capacity Utilization Rates Forecasts (Europe),

2011 - 2018

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Key Biopharmaceutical CMOs in Europe – An Outlook

Market Share: 20 - 40 per cent • Lonza • Boehringer Ingelheim

Market Share: 5 - 10 per cent

• Rentschler Biotechnologie• Sandoz• Fujifilm Diosynth Biotechnology• Royal DSM

Market Share: < 5 per cent

• Celonic GmbH• BIOMEVA GmbH• ProBioGen AG• Others

Tier 1

Tier 2

Tier 3

Biotech Contract Manufacturing Market: CMO Market Share by Tiers of Competition (Europe), 2011


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Market Potential and Business Opportunities

Strategic and highly competitive market.

Mammalian Contract Manufacturing - future of CMOs,.

Biosimilars are likely to have a great impact on the market growth.

Potential drug candidates in pipeline.

Increasing interest of Big Pharma companies and multinational generic companies.

Increasing number of newly reported diseases.

Remarkable success of existing biopharmaceuticals.

Advent of newer, innovative technologies.

Strategic alliances between technology providers and CMOs.


“There is untapped potential for CMOs which are properly positioned, as it is a market, where high growth and rapid rise in profits are anticipated.”

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Potential Threats to Biopharmaceuticals

Transgenic plants

Transgenic animals

Stem cells

CloningOther ThreatsOther Threats

Product failures – pre-clinical and clinical

Capital investment

Financial crisis in Europe

Negative perception of Industry

Regulatory barriers

Intellectual property and patent laws

Careful outweighing of benefits and risks is essential

for CMOs in order to grow and sustain in the

Biopharmaceutical Contract Manufacturing Market.


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What Can Be Expected in the Future?

TechnologyDevelopment of Transgenic technologies

Stem cell technologies

Cloning technologies

TherapeuticsDevelopment of RNA-i based therapeutics

Development of anti-sense based therapeutics Recombinant protein therapeutics

Monoclonal antibodies

GovernmentRegulatory bodies like EMEA to drive new

product and technology introduction

Increase in approval rates of new biopharmaceuticals and biosimilars.

GlobalizationConsolidations, mergers, acquisitions

Opening and expansion of Asian marketsGlobal capital markets

Transition from “small molecule blockbuster” model to “biopharmaceutical model.

Increase in public awareness, acceptance and approval of biopharmaceuticals.

Increase in outsourcing of biopharmaceutical manufacturing by Big Pharma companies.

Development of “Virtual Pharma”

Differentiation and consolidation strategies adopted by Biotech companies and CMOs.

“A-one-stop-shop” offered by CMOs, promoting a complete portfolio of products and comprehensive range of services.

Large CMOs moving into niche areas of biopharmaceutical manufacturing.

Further development and implementation of transgenic technologies.

Establishment of regulatory pathways for biosimilars and transgenics.

“ The best way to predict the future is to create it” – Peter Drucker


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Facing the Change

Reacting to Change

Anticipating Change

Leading the

Change

• Develop biopharmaceuticals for key indications.

• Customize according to customer needs and preferences.

• Comply with new government policies.

• Analyze prospects for market globalization.

• Research customer needs, preferences and expectations.

• Monitor new technological developments to predict future.

• Foresee capacity requirements.

• Pioneer new and better technologies.

• Introduce innovative products, that open new market opportunities and spur creation of whole new industries.

• Seek to set industry standards.

• React and respond as needed.

• Defend and protect company’s position in the market.

• Plan ahead for future changes.

• Invest in R&D.

• Instill competitive capabilities.

• Improve product line.

• Strengthen distribution.

• Seize the offensive.

• Be the agent of industry change.

• Influence rules of the game.

• Force rivals to follow.

Strategic Posture Actions Strategy

“ Change is the law of life. And those who look only to the past or present are certain to miss the future.” – John F. Kennedy


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Conclusions

The future of contract manufacturing in Europe is controlled by mammalian cell manufacturing.

Demand for contract manufacturing and capacity additions is strongly driven by biosimilars and pipeline of biologics.

Interest of Big Pharma companies in the Biopharmaceutical sector is likely to set the consolidation wave high in the industry.

Manufacturing capacity demand – supply gap is likely to shift towards excess demand by 2018.

Given the immense potential and growth opportunities in the Biopharmaceutical Contract Manufacturing Market, particularly mammalian contract manufacturing, the CMOs which are properly aligned are sure to emerge as bread winners.


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For Additional Information

NameCorporate CommunicationsIndustry(210) [email protected]

Siddharth SahaDirector of Research Healthcare0044 (0) 207 343 [email protected]

Ranjith GopinathanProgram ManagerHealthcare0091 (0) 44 [email protected]

Aiswariya ChidambaramResearch AnalystHealthcare0091 (0) 44 [email protected]

What Underpins the Success of European Biopharmaceutical CMOs ?

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