Contract Manufacturing Strategies: Market developments, technology transfer and key success factors

Table of Contents

Executive Summary

• The contract manufacturing market
• CMO industry analysis
• Manufacturing strategies in the biopharmaceutical industry
• Managing contract manufacturing
• India and China - emerging outsourcing markets

Chapter 1 The contract manufacturing market

• Summary
• Introduction
• Overview of the global contract manufacturing market
• Current market drivers
• The expansion of the biopharmaceutical contract manufacturing market
• The reorganization of pharmaceutical production
  • Case Study - Pharma manufacturing site close-down
• Growth in Offshoring - Asian CMOs becoming a global force
• Current market restraints
• Fewer new drug approvals
• The threat of overcapacity
• Increased competiton - low barriers to entry
• Conclusions

Chapter 2 CMO industry analysis

• Summary
• Introduction to biopharmaceutical manufacturing
• The stages of pharmaceutical development
  • Primary manufacturing
  • Secondary manufacturing
• Structure of the CMO industry
• Size of contract manufacturing organizations
• Does size really matter?
• CMO business models - evolving over time
• The advent of biopharmaceutical contract manufacturing
• CMOs focusing on early drug development stages
• The emerging full-service CMO business model
• Examples of CMO service offerings
• Lonza Group Ltd.
• Patheon Inc.
• Siegfried Group
• CMO Industry Outlook

Chapter 3 Manufacturing strategies in the biopharmaceutical industry

• Summary
• Introduction
• Strategic options for manufacturing
• Vertical integration - The business model of the past
  • Drivers of vertical integration
  • Benefits of vertical integration
• The deconstruction into a fragmented industry structure
• The shift towards outsourcing
• The make vs. buy decision
  • Factors influencing the make vs. buy decision
• Mixed sourcing models
• The sale and leaseback model
  • Examples of recent sale and leaseback deals
• The potential downsides of outsourcing
• Transaction costs of outsourcing
• Drivers of hidden costs in outsourcing
  • Efficiency, effectiveness and flexibility, all in one outsourcing project?
  • Outsourcing manufacturing is like buying commodities
  • The need for a comprehensive contract
  • Contracts do not matter
  • CMOs are insurance companies
  • The project is not the client' s problem anymore
  • The first failure should be the last attempt
• Conclusions

Chapter 4 Managing contract manufacturing

• Summary
• Introduction
• Key factors in selecting and managing a CMO
• Sourcing CMO partners
• Defining the goals of outsourcing
• Writing a Request for Proposal
• The site visit - a critical step
• The Selection
• Managing the CMO relationship
• Technology transfer and scale-up
  • The Design of Experiments (DOE) used for the scale-up process
  • Challenges of the technology transfer process
  • The importance of engineering runs
• Ensuring regulatory compliance
  • The definition of responsibilities
  • The importance of change control in contract manufacturing
  • The Annual Product Review and other ways to ensure compliance
• Due Diligence - common pitfalls and how to mitigate the risks
• Avoiding faulty contracts and contractors
  • Case Study - Pharmaceutical companies caught out by Inyx collapse
  • Due diligence from a CMO perspective
• Risk management in the outsourced relationship
  • The business risk
  • The technical risk
• The CMO Relationship - A lifecycle model
• Stage 1 - Aligning relationship strategy with long-term business needs
• Stage 2 - Employing a structured evaluation and selection process
• Stage 3 - Building working relationships
• Stage 4 - Technology transfer and scale-up
• Stage 5 - Ongoing operations
• Stage 6 - Changes over time
• Awarding preferred provider status

Chapter 5 India and China - Emerging outsourcing markets

• Summary
• Introduction
• Contract Manufacturing in India
• Size of the Indian CMO market
• Patent situation and implications for foreign direct investment
  • Challenges in current patent law
• India as a preferred offshoring destination
• The new, integrated business model of Indian CMOs
  • Challenges facing the CRAMS business model
• Expansion strategies of India' s major contract manufacturing organizations
• Conclusions
• Contract manufacturing in China
• Drivers of the Chinese contract manufacturing market
• Challenges of the Chinese contract manufacturing market
• China' s regulatory framework
• Intellectual property protection
• Counterfeit drugs
• Case Study - China' s Heparin producers
• China' s major contract manufacturing organizations
  • CMOs offering finished drugs services
  • Biopharmaceutical contract manufacturing in China
• Conclusions

Chapter 6 Appendix

• Bibliography
• Index

List of Figures

• Figure 1.1: Size of the global contract manufacturing market, 2002-2011e
• Figure 1.2: Structure of the pharmaceutical API market, 2007
• Figure 1.3: Structure of the pharmaceutical API market, 2006
• Figure 1.4: Size of the contract biomanufacturing market, 2000-2008e
• Figure 1.5: Contract manufacturing providers across the service chain, India
• Figure 1.6: FDA approvals for NDAs and NBEs, 2000-2007
• Figure 1.7: Captial expenditures of top 15 pharma companies, 2004-2007
• Figure 2.8: Drug development and relevant milestones during the pharmaceutical manufacturing process
• Figure 2.9: Lonza' s life science platform
• Figure 2.10: Siegfried' s pipeline in 2006
• Figure 3.11: Change in pharmaceutical industry structure over time
• Figure 3.12: Categorization of varying degrees of integration
• Figure 3.13: Percentage of manufacturing output produced through CMOs, 2007 and 2010e
• Figure 3.14: Business objectives for moving to contract manufacturing
• Figure 3.15: Considerations influencing the make vs. buy decision
• Figure 4.16: Critical success factors for the manufacture of an early phase product
• Figure 4.17: Stages 1 - 6 of the CMO lifecycle
• Figure 4.18: Percentage of outsourcing dollars spent on preferred providers*(2007)
• Figure 4.19: How many preferred providers do you utilize?*(2007)
• Figure 5.20: Assessment of API manufacturing costs by region, 2005
• Figure 5.21: Size of India' s contract manufacturing market 2005-2010e
• Figure 5.22: Global outsourcing expenditure and segmentation of contracted services, 2005 and 2010e
• Figure 5.23: Size of China' s API Industry, 2005 and 2010e

List of Tables

• Table 1.1: Big pharma ongoing or recently completed manufacturing projects
• Table 1.2: New entrants in the pharmaceutical CMO market
• Table 2.3: Key characteristics of biotechnological and chemical API manufacturing (figures indicative only)
• Table 2.4: Summary of services offered by contract manufacturing organizations
• Table 2.5: Structure of the CMO industry
• Table 2.6: Mammalian cell culture capacity in the biopharmaceutical industry
• Table 2.7: Comparison of in-house production vs. outsourcing
• Table 2.8: Pros and cons of the ' one-stop shop' concept
• Table 3.9: Challenges for the pharmaceutical industry
• Table 3.10: The benefits of outsourcing
• Table 3.11: Examples of transaction costs
• Table 3.12: Drivers of hidden costs in outsourcing
• Table 4.13: Typical steps of an outsourced project
• Table 4.14: Definition of responsibilities for main quality areas
• Table 4.15: Risk-mitigation tactics for pharmaceutical companies
• Table 5.16: Selected contract manufacturing/ research deals in India as of July 2007
• Table 5.17: Strategic options for Indian pharmaceutical companies