Alarms have rung persistently in biopharma quarters, most consistently here in the U.S. Were they so many false alarms? Or, more positively, have the dire warnings staved off the actual emergency?
Whichever, some executives from Big Pharma are whispering that the anticipated “capacity crunch” related to the contracting for bioprocessing services has not nor appears to be materializing.
With those sweet “nothings” lingering, I read through a recent survey from Industry Standard Research (ISR): “BIOPROCESSING MARKET TRENDS AND OUTSOURCING DYNAMICS: 2018-2023 (2ND EDITION). I suppose I couldn’t help myself from connecting some capacity dots.
While not the focus of the report, some survey data seemed to point to a lack of dark clouds for bioprocessing capacity. But to check on my extrapolations, I spoke directly with the report’s author, Kate Hammeke, Vice President, Market Research, ISR.
Hammeke was, shall we say, a tad bit skeptical.
“I have concerns about connecting these data points to an absence of a capacity crunch,” she began, “particularly because it’s not the focus of the report. There weren’t any specific questions about capacity challenges.”
Fair enough. And important for readers to get that input.
Yet, I still sense the ghost of capacity within these pages, adding to those recent whispers I’ve heard. So let’s go ahead and put this out there for Outsourced Pharma readers to consider, and so you can add this to your experiential analysis on the capacity question floating through the biologics outsourcing market. Let’s see if there are indeed conclusions to draw.
The good news is Hammeke will add some specific questions on capacity to her next industry report on biologic API contract manufacturing, coming out in January. “I think it’s a great topic, this question of if or when the capacity crunch will manifest,” she said.
That we agree on. In the meantime, let’s see what you readers think.
3 Points For Capacity Consideration
To participate in this bioprocessing-outsourcing market research from ISR, responding companies are required to be “active outsourcers of bioprocessing for the manufacture of biologic API.” The main purpose of the collected data is to provide “insight into the market dynamics from companies that outsource, how these companies select and perceive providers of bioprocessing services and their insight into current and upcoming trends.”
Drawing first attention to the subject of capacity was a question regarding areas for excellence that drug sponsors considered important for selecting their bioprocessing contract manufacturers.
The unprompted question (meaning there were no predetermined selections) was: “If you were in charge of establishing a bioprocessing contract manufacturing business, which service provider attributes would you ensure your company excelled at? Provide up to 3 responses.”
Half of the respondents mentioned Quality, and 41% Price/Cost/Affordability. One-fifth mentioned Regulatory Compliance. But surprisingly – given all the chatter we’ve heard about related concerns – only 8% of respondents mentioned Capacity.
I don’t think you’ll consider me off kilter to believe that if a concern for a lack of capacity was top of mind and pressing, more respondents would have mentioned capacity. But I’m assuming it wasn’t, and so they didn’t.
(Hammeke’s caution: It’s not surprising that a focus on having the “most available capacity” is low on the list, as “biggest” doesn’t mean “best.” And having available capacity means you’re short on customers.)
Similarly, regarding the top reasons for “service provider preference,” when drug sponsors were asked to provide some additional detail on why they prefer a specific CMO, the most common response was Quality. Makes perfect sense.
What seems to me to make less sense, though, was once again only 8% of responders mentioned capacity. When I was doing business development for a CDMO, one of the first questions I received from prospective customers was whether we had the requisite capacity …
(Hammeke’s caution: CMOs tend not to make the shortlist at all for “service provider preference” if they do not meet the basic capacity criteria for the project, and if the CMO is not even up for consideration, they can’t be the preferred CMO.)
When drug sponsors were asked the top five reasons service providers lost their bids for business, 42% responded “Regulatory violations / FDA form 483 warnings are the main reason ... Receiving one-third as many mentions and coming in second as the main reason for losing a bid is High cost.”
Eleven percent of respondents selected Unable to meet sponsor’s required timeline. I feel safe to say a significant portion of why sponsors’ timelines can’t be met – along with unreal expectations and other factors – is a lack of capacity. Again, just not showing up as a problem.
However, Hammeke specifically pointed out the report actually does surface capacity concerns here, with the raw data for this section showing 30% of respondents including “lack of capacity/inability to scale up” in their top three reasons providers lost bids; another 5% said it’s the number one reason.
(Hammeke’s (further) caution: A CMO without the capacity needed by the drug innovator usually does not make the consideration set.)
One thing is certain: When considering overall outsourcing capacity, there are mitigating factors at work in the marketplace. The most important is that the bigger drug sponsors have in fact built out (and continue to do so) their own internal capacity.
And biomanufacturing is complicated: The business-model of choice – keeping bioprocesses and manufacturing internal – may be winning the day. The ISR report certainly points to a major drug-sponsor concern about quality when outsourcing bioprocessing. (Although I think to some degree this will be said about all outsourcing, no matter big or small molecule.)
A third factor could be that the multitude of initial estimates – those alarms – of how much material the biopharma industry would need were too generous. It certainly wouldn’t be the first time our industry – or individual companies – have gotten volumes wrong.
Or it could be I’ve gotten my analysis of a valuable report wrong. I’ll leave that up to readers by asking: What are you seeing for bioprocessing capacity out there?