From The Editor | May 22, 2023

A Decline In Cell And Gene Therapy Outsourcing?


By Louis Garguilo, Chief Editor, Outsourced Pharma


Less outsourcing in the cell and gene therapy space?

That would grab your attention, whether directly involved in CGT or not. It certainly did mine.

I unfurled this vignette within a comprehensive report from my colleagues at ISR Reports, Cell & Gene Therapies Manufacturing Market Outlook (2nd Edition).

I discerned an indication of a slight decline, signaled by survey respondents – biopharma professionals involved with outsourcing CGT services to CDMOs – within their projections on their future outsourcing activities.

So to be clear, a wholesale trend reversal this is not.

Tim Eggert
Nonetheless, even a sliver of decline in any forecasted outsourcing gets our attention – perhaps most particularly in the booming CGT sector.

After decades of a growing propensity to rely on outsourcing by emerging biotechs (of all kinds), might a change be on the horizon? Perhaps there's a diminishing need of traditional CDMOs, and/or more alternatives for development and supply – including internal buildout of labs and faculties.

Notice In Numbers

Over centuries, our drug industry has ebbed-and-flowed from its rather isolated scientific beginnings in labs to increasing commercial applications and expanding markets. (For those particularly interested in the history of cell and gene discovery, I suggest reading Gene, and The Song of the Cell, both by Siddhartha Mukherjee.)

So change is not new. We’ve witnessed an elongated scientific and technological continuum accompanied by both excitement and concerns; science systematically enabled by new technology (enabling more science and the need for more technology); and bursts of advancements then slowed by familiar supply-chain and technical challenges.  

Here’s the change I encountered in the ISR survey section Outsourced Activities and Services by Company Size:

“… More respondents from small biopharma indicated Process Development is something they currently outsource (65%) but fewer expect to outsource the activity (46%) five years from now.”

And while more midsize biopharma respondents expect to outsource Process Development in the future (48% currently and 66% 5 years from now), “[f]ewer respondents at midsize biopharma companies predict they will outsource Fill-finish in the future (52%) than at present (66%).”

I contacted report author Tim Eggert, Senior Market Research Manager at ISR, about those data points seemingly indicating a future reduction in some outsourcing.

He first mentioned the relatively small sample size when breaking down the survey's respondents into the three categories (small, mid-sized and big sponsors), but also graciously contributed the following hypothesis, and a few other indications of relative outsourcing-services decline.   

“The decrease in outsourcing is something that we find to be interesting as well,” Eggert says. “We hypothesize this shift illustrates that some sponsor organizations have manufacturing facilities under construction and plan to manufacture a proportion of their therapies in house once those facilities are up and running.” 

“This theory is supported by later findings in the Proportion of Work Outsourced: Current and Five Years from Now section of the report. According to our research participants, the average proportion of cell and gene manufacturing activities outsourced to CDMOs actually drops from 64% at present, to a predicted 49% five years from now.

“Another finding shows the average number of CDMOs used to meet sponsors’ cell and gene needs is expected to grow from 2.8 currently to 3.6 in the future, according to respondents. This potentially shows that sponsor organizations will continue to use more CDMOs on average to meet their cell and gene needs, but as their portfolio grows, they will no longer be outsourcing 100% of manufacturing for all of the therapies in their pipelines and portfolios.”

He then cautiously adds:

“In terms of CMC and Analytical Development, given the small differences between the topline numbers (Analytical Development drops from 46% to 45%, and CMC falls from 42% to 39%) we avoided drawing any conclusions there.”

As to Eggert’s ending caution regarding analytical development and CMC-related outsourcing, I’d suggest we do, however, keep a very watchful eye here. Indications of less outsourcing in these areas in future surveys could serve as a bellwether to a more widespread slowdown.

Why is that?

I’m told continuously by outsourcing executives the need for CMC assistance is more critical today than ever, as well as for CDMOs to hire more analytical specialists. Analytical particularly seems to habitually top the list of “needs at CDMOs” for bio/pharma professionals.

Still, Eggert’s warning to remain cautious in drawing strong conclusions from these slight changes – expected over five years – is well taken.

Maybe all we have here is something akin to … saturation.

Can’t Top 100%

One definition of saturation is the state or process that occurs when no more of something can be absorbed, combined with, or added.

Perhaps drug and therapy sponsors simply can’t outsource more than they do now.

From the report, in the section titled Proportion of Work Outsourced: Current and Five Years from Now:

“Two-fifths of respondents (40%) currently outsource 91-100% of their cell and/or gene manufacturing activities. That number is predicted to drop off substantially 5 years from now, with only 14% of respondents indicating they will outsource 91-100% of cell and/or gene manufacturing in the future.

That shift is also borne out in the averages. As reported, currently respondents outsource an average of 64% of their cell and gene activities, but anticipate that average dipping to 49% in 5 years.

"Given the growth in this space, this finding may show that companies are investing to expand their own internal manufacturing capabilities; potentially to support a therapy when/if it advances through clinical development and proceeds to commercialization.” (italic emphasis mine)

Thinking from the CDMO perspective, and the potential growth of our outsourcing infrastructure, this narrative suggests a need for some – as of yet undefined – adjustments.

Broadening our perspective, economic conditions in the U.S. and elsewhere (high inflation; an expected slowdown or worse this year; cautious investors) might not bode well for the bio/pharma industry as a whole.

But five years is a long time in forecasting economic conditions, or even one’s own corporate strategy.

Indicators of small movements might just be the natural and less consequential ebb-and-flow of business and markets, and science and technology.

Or they might inform us of the start of something more monumental.

As cautioned by ISR report author Eggert, let’s wait for a bit more data to tell us which.