Editor’s Note: Educational sessions during DCAT Week, organized by the Drug, Chemical & Associated Technologies Association (DCAT), focused on critical issues facing both innovator and generic drug manufacturers and suppliers of ingredients, development and manufacturing services, and related technologies. In this round-up, Molly Bowman and colleagues from Clarivate Analytics share insights from several key sessions.
Biopharmaceuticals continue to be an area of interest and investment for many companies across the pharmaceutical industry. Where that investment is going currently and where it will go in the future are questions many companies face when evaluating pipelines and their role in the supply chain. In DCAT Week’s “Biomanufacturing 2027: Capacity, Investment, and Technology” presentation, speakers from the industry spoke about market trends, shifts in capacity, and how emerging technologies could reshape the space.
Susan Dexter, managing director of the Latham BioPharm Group, provided an overview of the market and drug targets. With growth expected to continue, the biopharmaceutical market is expected to reach $500 billion by 2025, with regenerative medicines and monoclonal antibodies making up 60% of the products. To facilitate this, companies are turning to strategic deals, and 2017 is off to a brisk start. Dexter said that 2017 has seen 332 deals for a net worth of $54.9 billion compared to 344 deals for 2016.
She noted that 53% of companies outsource 100% of their biologic manufacturing needs, while 22% manage their manufacturing completely in-house.
Anticipating the needs for future production includes many factors. Two pharma experts, Stephen Hill, vice president & general manager of AstraZeneca, and Roberto Silveira, vice president of the Biomanufacturing Sciences Group at Pfizer, offered insight into potential considerations.
Silveira emphasized the need to be flexible to adapt to more efficient processes and changing product lines. Evaluating processes to ensure they are optimized and using newer technologies to streamline production can help drive down costs. He also noted Pfizer’s plan to build three plants with the same lines, hoping that this continuity across the manufacturing base would ease regulatory burdens over technology transfers.
Hill presented some thoughts on what should be considered when evaluating options for capacity, including location and how quickly a facility can be rented or built, cost, and the use of manual vs. fully automated technology.
Production will need to continue to evolve as more specialized products and technologies emerge, added Tim Moore, executive vice president, technical operations at Kite Pharma.
The overarching theme echoed throughout the session was the ability to be flexible. As processes become more efficient and products more targeted, the need for large capacity production could be diminished. Employing multiple smaller reactors and single use technologies could bring greater flexibility to production lines, allowing for better use of space and greater adaptability.
A conversation with John LaMattina
Kenneth Kaitin, professor of medicine and director of the Tufts Center for the Study of Drug Development, led an executive forum with John LaMattina, former senior vice president at Pfizer and former president of Pfizer Global Research and Development, on the current regulatory and political environment affecting the pharma industry.
In the weeks prior to the March conference, LaMattina noted that much had changed in the U.S. The Trump Administration’s proposal to cut 18% of the NIH budget is significant, he said, as lots of programs in the biopharmaceutical industry started within the NIH. JAK inhibitors were discovered by NIH researchers trying to understand why people are born without an immune system, he pointed out. Eliminating more money from the NIH means that academic medicine will be hurt significantly.
As a final question, Kaitin asked what companies can do to bring down the attrition rates in R&D. LaMattina pointed out that high throughput screening and high throughput synthesis have driven the U.S. FDA to understand much more when evaluating drug applications. Companies are now seeing more hurdles in phase II and phase III. The other difficulty is financially supporting long-term studies. For example, previous obesity studies showed increased suicidal thoughts,and now companies have to do suicidality studies, which many never had to do before.
Pharma outsourcing: numbers, trends, partnering strategies
Jim Miller, president of PharmSource, opened the outsourcing session by presenting data illustrating the pharmaceutical industry’s rising reliance on contract manufacturing organizations (CMOs), particularly in the segment of small-molecule API manufacture. While most major CMOs specializing in finished dose product manufacture saw single-digit revenue growth during the past fiscal year, API-manufacturing CMOs saw revenue grow more than 35% over that same period, he said. The APIs being made in CMO facilities are being used to support both generic and innovator launches; Miller calculated that 64% of the small molecule new molecular entities (NMEs) launched in 2016 outsourced API production to a CMO.
Use of CMOs for large molecule API manufacturing for NMEs has trended down sharply since 2007, however. Miller speculated that the risk and financial outlay are so high with biologic products that most companies prefer to keep every aspect of those projects in-house. Only about 14% of large molecule NME projects were outsourced to CMOs in 2016 in both the finished dose and API business segments.
Bin Wang of Boehringer Ingelheim followed with insight on why it is a good time to partner with CMOs in China to take advantage of a growing market. Wang said that in many instances, the use of a local Chinese CMO and the associated local application pathway can shave up to two years off the time it takes to bring a product to market. CMO use has advantages over setting up a new operation in China, as it can be costly and difficult to purchase necessary equipment and to find and retain local manufacturing talent.
Eric Jayjock of Patheon then took to the podium to discuss continuous manufacturing. While the pharmaceutical industry has yet to formally define continuous manufacturing, Jaycock said it can best be described by its two most important attributes. Batch size is not bound by the scale of the equipment, and real-time control strategies can be developed across unit operations, using real-time data collected during the manufacturing process.
Despite the merits of continuous manufacturing, only two innovator medicines (Vertex’s Orkambi and Janssen’s Prezista) are currently approved to be produced via this process, he noted.
Next, Jim Bonner of Shire talked about key differences between batch and continuous manufacturing, describing batch as big and slow while continuous processes are more nimble and responsive. Bonner talked about performing a cost analysis before determining whether to use continuous manufacturing for production of a product; based on product quality, the cost of materials, and net present value, Bonner determined the process could save up to 60%.
Doug Hausner of Rutgers University talked about the challenges a company faces when looking to convert manufacturing to a continuous process. Hausner said most barriers to such a conversion are logistical rather than technical, as the equipment used does not differ greatly from traditional batch manufacturing. One hurdle is the regulatory uncertainty surrounding the acceptance of continuous manufacturing on a global scale, he said.
The final session speaker was Livius Cotarca, the CSO of Synchro Morph Solutions, a company that specializes in detection of polymorphic contamination in a drug substance. Conventional detection techniques are not sensitive enough to detect small contamination levels, Cotarca said; however, by using a synchrotron and a proprietary protocol Synchro Morph has been able to reduce line noise and decrease detection limits. The application for this technique is not only discovering crystal structure changes in products that render them less bioavailable, but also to develop polymorph-related patent claims that can significantly extend an API’s patent life.
Emerging pharma: market overview, project management, CMC readiness
Richard Harrison, chief scientific officer at Clarivate Analytics, presented a comprehensive overview of the industry’s financing and deal making trends in 2016. The audience was briefed on key developments and expectations for the market, venture capital funding, and initial public offerings (IPOs). Harrison also shared evidence of large pharma companies’ interest in early-stage versus late-stage drug assets.
Among the many metrics that he shared, Harrison noted that 2016 proved to be a good year for private companies as private investment deals in the U.S., Canada, the E.U., and Asia/Australia amounted to $8.62 billion in total. By contrast, he said, public financings were down. He used the example of U.S. exchanges where in 2016 30 companies initiated IPOs, down from the 54 that had gone public in 2015.
On the M&A front, Harrison said the therapeutic areas that seemed to interest big pharma and big biotech the most were oncology and cardiovascular, and the earlier the stage, the better.
Leonard Rozamus, director, chemical and process development at Ariad Pharmaceuticals, and Stephen Munk, CEO, of Ash Stevens, discussed overcoming challenges in the development of Inclusig. Rozamus explained the timeline from discovery in 2007 to FDA approval in 2012. The accelerated clinical development demanded close coordination among the various collaborators: third party CROs, consultants, and the CMO. The coordination was essential in surmounting various technical challenges such as high potency, high purity, and particle size, while keeping up with the rapidly evolving regulatory landscape. Munk stressed the importance of assigning “task owners” and following up on completion of all necessary action items.
Most emerging companies operate under a triangle of constraints: quality, speed, and cost, said Ben Yerxa, president of Envisia Therapeutics. Yerxa said most have cash resources to support operations for less than 12 months, have never manufactured before, and have immature processes and assays. Emerging pharmaceutical companies seeking to partner or raise public or private funding must ensure CMC readiness, he said. Reviewing CMC development timelines and possible issues facing the company and investors is critical, he added.
Loren Busby, managing member of Cresco Advisors, provided a venture capital point of view, noting that investors review early stage risk factors to determine a good opportunity. Busby agreed with Harrison’s assertion that global deal making in early phase II and III drugs is on the upswing, adding that oncology was the most invested in therapeutic area in 2015.
Pharma industry outlook: market overview and executive insights
In a wide-ranging look at macro issues, Graham Lewis, vice president of global pharma strategy at Quintiles IMS, discussed forecasts for global and regional growth, potential growth segments, biosimilars, and payer pressures.
Overall pharma profitability dropped from 23% in 2013 to 19% in 2016, he said. Innovation, aging, and broader access were identified as positive growth drivers while funding for innovation, R&D costs, and commercial complexity drove down profitability.
Lewis said he expects global market value to reach $1.4 trillion by 2020, with 4% to 7% growth in developed countries and 6% to 9% growth in emerging pharma markets. U.S. global sales will reach 45% of the world’s total in 2020. However, while the U.S. is critical for all players, pharma is losing influence in the U.S. for financial reasons and political uncertainty. Rising discounts and rebates are the main threat to growth in the U.S. in both biologics and small molecules, Lewis said. According to Lewis, generics in the U.S. looks brighter than it did a few years ago. A significant peak in the loss of data exclusivities in 2018 will drive growth.
Turkey is forecast to be the highest growing emerging market at 13%, with India at 12%, and China at 7%, he said. Lewis said he anticipates that more than 60% of global growth will come from five therapeutic areas: oncology, diabetes, autoimmune, anticoagulants, HIV and respiratory.
Lewis pointed out that the gap between rising healthcare costs and GDP growth is ever-widening and unsustainable for all major European countries. Payers will continue to seek more intensive cost containment measures and small step innovations used to drive down prices. In Europe, collaborative pricing and/or sales caps are gaining momentum. President Trump’s impact in the U.S. is hard to read with conflicting pros and cons.
Biologics innovation should thwart some biosimilar market entry, particularly in developed countries. Lewis said. Biosimilar penetration rates vary widely across E.U. countries and therapeutic areas but biosimilars are gradually becoming a fact of life with companies taking varying tactics around discounting price for consumers. Lewis said that in Europe, $10 billion of biologics sales are under threat as biosimilar uptake increases.
The future of sourcing and procurement
Cecilia Luz Cariaga, director, sourcing excellence, R&D at Bristol-Myers Squibb, started out a session on the future of sourcing and procurement by underscoring the importance of the different characteristics that leaders in procurement roles need to have in order to thrive. Sourcing experts need to be able to recognize external forces that push for well-tailored strategies that tune into competition, scrutiny of value versus cost, and evolving global regulations. Important supply chain strategies have to include optimization of networks, partnerships that spur innovation, constant cost management, and more value-linked metrics like yield, scheduling and cycle times, she said.
As the necessary attributes of procurement professionals become more complex so do the sourcing strategies themselves for complex products. Large molecules called ADCs, or antibody drug conjugate products, can be the most difficult, said Pfizer’s Firelli Alonso. Alonso outlined the best outcome for an ADC supply chain where one supplier, whether internal or external, is the supplier of the monoclonal, conjugation, formulation and fill, while a separate CMO or some other entity supplies the linker and payload.
The cost to manufacture ADCs is sizeable so bottlenecks need to be avoided at all cost. Alonso noted.
Advanced formulations and next-generation drug delivery
Another DCAT panel looked at new drug delivery and formulation technologies, which can add value to current products including generics, as well as bolster IP for branded company’s flagship products. They are a critical component more importantly to patients and physicians to deliver better health outcomes and help aid in drug delivery and dosing adherence. In a review of recent developments in the past year, Josef Bossart, executive director of PharmaCircle, said drug deliveries that have some formulation technology usually seek to alter the performance by measures that include enteric coating, abuse deterrents, sustained release, or repurposing for new indications. Many top-selling pharmaceuticals like Humira, Enbrel and Advair Diskus are drug delivery enhanced products, Bossart pointed out.
Drug delivery can also be fundamental to product enablement, noted Keith Horspool, VP, MAS at Boehringer-Ingelheim. A number of considerations should be accounted for when investing in a particular drug delivery system, he said, such as urgency, novelty of technological differentiation, and demand requirements. GMP and scalability should already be in place, along with a need to maintain freedom to operate with regard to intellectual property.
Ronald Smith explained some of the considerations that Merck Research Laboratories looks at when assessing these technologies. Any technology that increases efficacy and decreases side effects, bolsters patient adherence, or seeks new routes that can aide in better therapeutic benefits can help extend and enhance a drug’s value, he said.
Drug delivery is an area where adaptive and disruptive technologies will be evident more rapidly. This is especially true with the advances in 3D printing as well as digital medicine, as noted by Jeremy Frank, vice president of Proteus Digital Health, in an interesting case study he presented at DCAT. Frank described how Proteus came up with an FDA-cleared ingestible sensor approved as a medical device that records and tracks when patients are taking their prescribed medication. The ingestible sensor communicates with a wearable patch that then transmits to a mobile device. The data can be stored in a secured cloud environment and passed to an accessible web portal, which can be viewed by health professionals.
Opportunities and challenges in the autoimmune drug market
Christina Vasiliou of Datamonitor Healthcare examined future market dynamics in rheumatoid arthritis and psoriasis. Currently both markets are dominated by brand companies, but this has the potential to change due to biosimilar entrants with a rich pipeline of emerging treatments.
Both markets are expected to peak in 2020, before sales decline as anti-TNF biosimilars increasingly capture patient share and cause progressive price erosion for the anti-TNF class. An increasingly fragmented market with multiple entrants with the same mechanism of action will allow payers to demand lower net prices, due to competition and the presence of biosimilars.
Shannon Bennett, Mike Chace-Ortiz, Joshua Gilpatrick, Michael Glessner and Emily Kimball also contributed to this report.
For further insight into the global generics and API manufacturing market, read a new whitepaper examining challenges, industry responses, and future outlook: “The Changing Dynamics of Global API Manufacturing.”
Attending DCAT Sharp Sourcing June 27 in New Brunswick? Don’t miss “API Market Outlook (Supply & Demand)” with Kate Kuhrt, Head of Go To Market – Life Sciences at Clarivate Analytics, examining the latest global market data and trends on demand supply for active pharmaceutical ingredients (small molecules and biologics) for innovator and generic drugs for developed and emerging markets. Learn more.