BioManufacturers Increasing Budgets for New Technologies

Posted under Biomanufacturers, Blog, business, Business and Investments, Companies, Diagnostics, Funding, manufacturing, Medical Devices, Medical Supply, Pharmaceuticals, Startups, Universities, Videos by biotechnow@bio.org (Biotechnology Industry Organization)

By Eric Langer, Managing Partner, BioPlan Associates, Inc.

Two-thirds Spending more for Improved Productivity

Almost two-thirds (64.2 percent) of biomanufacturers will increase their budgets for new technologies to improve efficiencies and costs for downstream production this year. Data from our newly released 9th Annual Report and Survey of Biopharmaceutical Manufacturers, include responses from 302 global biomanufacturers, and an additional 185 vendors to the industry. We find that budget increases this year are not just incremental changes: almost 1 in 10 will be making large increases (of 20 percent or more) in these areas, while a further 1 in 5 plan an increase of 10-20 percent.

Budget increases are not limited to technologies that can improve efficiencies and cut costs, though. Biomanufacturers are increasing spending on big ticket items, as well. This year we found that 15 percent of respondents are planning an increase of more than 20 percent in new facility construction. In addition, a clear sign of industry segment growth is that ‘New capital equipment’ is a focus of 12.3 percent, who are planning large increases, with a further 46% planning small to moderate increases. Compared with the past few years, these increases are substantial.

It is also encouraging to see that biomanufacturers are planning to increase their budgets for staffing-related causes. Roughly half of the 302 biomanufacturers surveyed forecast an increase in funding to hire new operations staff and new scientific staff.

Source: 9th Annual Report and Survey, Biopharmaceutical Manufacturing and Capacity, www.BioPlanAsociates.com, April 2012

In a sign that outsourcing growth is slowing, just one-quarter of biotherapeutic developers and CMOs said they would be increasing their funding for outsourced biopharmaceutical manufacturing. This year we also find that biomanufacturers are reserving their largest budget increases for new technologies for downstream (6.4 percent) and upstream production (6.0 percent), much the same as they were last year.

Vendors’ Increasing Budgets for Big Ticket Items

We separately measured 11 areas of budget changes among the 185 global vendors surveyed this year. Industry suppliers are also increasing their budgets in a number of key areas this year, according to our study. And these increases won’t be limited to smaller items, either: nearly half (44 percent) of vendors are planning to up their budgets for new capital equipment, including 6 percent who will be making large increases of 20% or more. This contrasts with just 11 percent planning any decrease in spending in this area, the majority of which are small decreases. Similarly, a third (33.3 percent) of vendors are forecasting greater dollars spent on new facility construction, including 8 percent making large increases.

This is a significant advance from previous years, when the economic downturn forced many suppliers to this industry to retrench and reduce spending. The increased budgets define a systemic optimism among the vendors to this industry that is likely a leading indicator of their expectations for long-term growth of their customers’, the biopharma manufacturers’, budgets.

Other indications are also signaling growth. Nearly half (45 percent) are boosting their marketing budgets, and over half (54.5 percent) will up their sales budgets. This may indicate short-term expectations for more rapid growth.

When shown as cumulative over the past three years, the budget increases (aside from new facilities construction, which has shown sluggish growth the past 3 years) have generally far outpaced the budget slashing that occurred during the economic downturn in 2009.

With budgets up across the board among both biopharma companies, and their vendors, and with increases showing in most all areas over the past 3 years, the industry seems to be on an optimistic trajectory.

References:
1. 9th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production: A Survey of Biotherapeutic Developers and Contract Manufacturing Organizations, BioPlan Associates, www.bioplanassociates.com

About the Author:
Eric S. Langer is president and managing partner at BioPlan Associates, Inc., a biotechnology and life sciences marketing research and publishing firm established in Rockville, MD in 1989. He is editor of numerous studies, including “Biopharmaceutical Technology in China,” “Advances in Large-scale Biopharmaceutical Manufacturing”, and many other industry reports. elanger@bioplanassociates.com 301-921-5979. www.bioplanassociates.com

Survey Methodology: The 2012 Ninth Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production in the series of annual evaluations by BioPlan Associates, Inc. yields a composite view and trend analysis from 302 responsible individuals at biopharmaceutical manufacturers and contract manufacturing organizations (CMOs) in 29 countries. The methodology also encompassed an additional 185 direct suppliers of materials, services and equipment to this industry. This year’s survey covers such issues as: new product needs, facility budget changes, current capacity, future capacity constraints, expansions, use of disposables, trends and budgets in disposables, trends in downstream purification, quality management and control, hiring issues, and employment. The quantitative trend analysis provides details and comparisons of production by biotherapeutic developers and CMOs. It also evaluates trends over time, and assesses differences in the world’s major markets in the U.S. and Europe.

UPDATED: Crucell and Royal DSM pull the plug on biosimilar JV

Posted under biobetters, biosimilars, Blog, Companies, Crucell, Diagnostics, Funding, manufacturing, Medical Devices, Medical Supply, Pharmaceuticals, Royal DSM, Startups, Universities, Videos by john

A Cambridge, MA-based joint venture marrying the protein and antibody development technology of Crucell with the manufacturing knowhow of Royal DSM for developing biosimilars has collapsed. A spokesperson for Crucell tells FierceBiotech that the "biosimilars product development business of Percivia will be terminated" after the two partners couldn't agree on further investments in the company.

"The shareholders and management of Percivia LLC have decided to restructure the Company, effective 13 April 2012, and as part of that restructuring will focus the company to the existing PER.C6 technology licensing business," the company said in its statement. "Percivia LLC will continue as a legal entity with this purpose."

There's still no official word on the fate of the staff. Asked about reports of layoffs, the Crucell spokesperson only added that "as a result of this restructuring there will be some redundancies." But BioSpace reports that sources close to the company confirmed that 30 employees have been terminated while a skeleton crew remains for 30 to 90 days to close up the office and wind down operations.

Back in the fall of 2010, the two companies announced ambitious plan to jointly develop biobetters as well as seek out licensing deals on Crucell's PER.C6 technology. Jim Mullen, the former CEO of Biogen Idec ($BIIB), was named chairman of the venture and a year ago Amit Munshi, the co-founder of Kythera, was brought in as CEO.

- see the BioSpace update

What Parallel Review Means for Manufacturers

Posted under Blog, CMS, Companies, Diagnostics, FDA, FDA approval, Food and Drug Administration, Funding, Health, manufacturing, Medical Devices, Medical Supply, Pharmaceuticals, Startups, Universities, Videos by biotechnow@bio.org (Biotechnology Industry Organization)

By Stephen Rothenberg, J.D. and Matt Levy, J.D., Numerof & Associates, Inc. (NAI)

Currently, the FDA and CMS consider new medical products in series; after FDA approval or clearance, CMS begins consideration of a National Coverage Determination (NCD), if requested by an interested stakeholder. Any party seeking drug approval (e.g., manufacturers, suppliers, providers, medical professional organizations, and Medicare beneficiaries) may initiate a request for an NCD. In addition, CMS may initiate a request for an NCD when there is debate over the benefit of a drug, or other controversy. CMS waits for the FDA to complete its process first, ostensibly because it doesn’t want to spend time on a product that ultimately doesn’t receive approval or clearance.

Serial review also ensures that CMS can meet its statutory requirement to complete the NCD within nine to twelve months of starting the process, even if a manufacturer should stumble upon a roadblock in obtaining FDA approval. As a result, serial review has the potential to delay a sponsor’s ability to receive Medicare coverage, which can, in turn, delay the public’s access to new medical products. Not only does this impact Medicare recipients, but commercial insurers often follow – and wait for – the lead of CMS in their own coverage decisions. The delay could potentially affect anyone who might benefit from the drug.

To address this issue, the FDA and CMS jointly announced on September 17, 2010 their intent to institute a process for cooperation and concurrent review of medical products. The proposed approach would give CMS the go-ahead to begin considering a request for an NCD before the FDA has completed its review of the product’s safety and effectiveness.

The agencies expect that this overlapping review process and sharing of data and resources would reduce the time between FDA approval or clearance and the CMS NCD to ensure coverage and subsequent reimbursement for Medicare beneficiaries (the “approval-to-payment” time).

FDA and CMS believe that a parallel review process will also provide efficiencies in the creation and submission of clinical study data. In the current framework, the FDA and CMS frequently require different clinical data, so it’s not uncommon for sponsors to have to conduct different studies for each agency, adding to the cost of both development and review. CMS and the FDA believe that a cooperative and collaborative parallel review will allow sponsors to develop clinical study designs that could provide data to address both FDA and CMS questions (i.e. economic and clinical value).

While those in the biotech and pharmaceutical industries may want to reduce the time between FDA market approval and CMS approval for national payment, there are potential downsides. Critics are concerned that parallel review would be difficult to implement, especially given the respective mandates of the FDA and CMS. The FDA bases approval on safety and efficacy, relying on randomized placebo-controlled trials; whereas CMS pays for “reasonable and necessary” products, based on the totality of evidence within the Medicare population only. Is it appropriate to comingle these different mandates and considerations? What might manufacturers risk if their proprietary information is shared with CMS, an agency without a statutory requirement to safeguard third party proprietary information (or, arguably, a related cultural imperative to do so)? Would statutory duties be violated if CMS rulings influence FDA decisions?

Additionally, comments submitted to the Department of Health and Human Services (HHS) expressed concern that joint FDA and CMS requirements for clinical trials could be cumbersome and costly, and CMS does not have the resources needed to process NCDs at the rate the FDA approves new products. Others felt that collaborating only for NCDs limited the actual benefits, especially since local coverage determinations (“LCDs”) cover a substantial number of new medical products (possibly even more than NCDs).

Despite these concerns, there is a lot of well-deserved enthusiasm for the prospect of securing reimbursement more quickly. Initial interest in some type of process for seeking reimbursement in parallel with FDA review started after Johnson & Johnson was able to secure Medicare reimbursement for its Cordis Cypher drug-eluting stent immediately upon FDA approval in 2003, based on interactions with CMS during the PMA process. In this case, Johnson & Johnson worked with CMS proactively during the product approval process to secure reimbursement more quickly, but the potential to improve time-to-market resonated with stakeholders within both agencies as well as other manufacturers. In recent years, companies have begun to realize the need to put more emphasis on collecting economic and clinical data prior to FDA approval to support reimbursement.

Given that CMS’ reimbursement concerns will become an element in the FDA’s determination of the product’s safety and market clearance, and that implementation of the shared information activities undoubtedly will have unexpected and unintended consequences, industry leaders should prepare for the potential implications. Economic and clinical value data will be increasingly important for both regulatory approval and coverage.

While the agencies have not specifically responded to the very valid concerns expressed during the review period, the FDA and CMS did announce the start of a parallel review pilot for medical devices this week. In light of indicators like the proposed cooperative and collaborative review process and the fact that agencies in Europe are already dealing with these issues, there does seem to be a growing trend toward the FDA stepping outside of its traditional mandate, and considering factors like necessity of drugs — not just safety and efficacy — in their approval decisions. The value bar is being raised for drugs, and biotech companies should proactively prepare to demonstrate robust economic and clinical value propositions for their products, because regardless of what CMS and the FDA decide to do regarding the proposed concurrent review, their increasing collaboration has implications for biotech companies.

Stephen Rothenberg, J.D. is a Consultant, and Matt Levy, J.D., is a Business Analyst at Numerof & Associates, Inc. (NAI). NAI is a strategic management consulting firm focused on organizations in dynamic, rapidly changing industries. We bring a unique cross-disciplinary approach to a broad range of engagements designed to sharpen strategic focus, increase revenues, reduce costs, and enhance customer value. For more information, visit our website at www.nai-consulting.com. Mr. Rothenberg and Mr. Levy can be reached via email at info@nai-consulting.com or by phone 314-997-1587.

Biopharma Industry Enthusiastic About 2012

Posted under biopharma companies, biopharmceutical, Blog, Business and Investments, Business of Biotech, Companies, Diagnostics, economic growth, economy, Funding, industry trends, manufacturing, Medical Devices, Medical Supply, Pharmaceuticals, Startups, Universities, Videos by biotechnow@bio.org (Biotechnology Industry Organization)

By Eric S. Langer, president and managing partner, BioPlan Associates, Inc.

2012 Annual Study shows budgets, optimism taking a big jump

It looks like the biopharma industry is actually weathering the economic downturn quite comfortably. This year we’ve surveyed hundreds of biomanufacturers and suppliers, and the industry is expressing more raw optimism and confidence than at any time in the past 9 years we’ve been surveying this industry.

More Spending

What this means is that wallets are more open, and investments are being made for the future:

• The firings and hiring freezes that have taken place since 2007, at least within areas that affect productivity, are reversing, and hiring budgets are back up,
• Vendors are spending more on developing new and better technologies,
• Pent-up demand for skilled scientists, and operations staff among biomanufacturers is resulting in more hiring,
• Outsourcing, and off-shoring are being done more rationally, and are no longer a synonym for ‘you’ve just been laid off.’

Our 9th Annual Report and Survey of Biomanufacturing¹ surveys 400 biomanufacturers in 31 countries ever year. And along with the 180 vendors surveyed, we get a good picture of industry trends, problems, and opportunities. This year, we found that both biologics manufacturers and their vendors are spending more, demanding better technologies, and expressing greater optimism for the future than we would expect, given some of the recent gloomy economic trends, and “end-of-world” catastrophe predictions.

Below are just a few of the trends associated with the industry’s buoyant atmosphere. We will continue this discussion during the coming year, and share some of the data from our studies. With a whopping 37.3 percent of suppliers to this industry indicating that their company did either “better” or “much better” than expected in 2011, and with 49.4 percent expecting they will do even better in 2012, I expect this broad optimism will be translating into increased spending, stronger R&D budgets, more capital expenditures, and more hiring.

Short Answer: If you haven’t invested in this industry in some way, now’s probably a good time.  Here’s why:

Industry Growth Rate—Sales growth among vendors is a leading indicator of how the overall bio/pharma industry is doing. On average, sales growth to this industry is currently at around 14 percent annually. This compares to 13.0 percent in 2010, and 14.1 percent in 2007.  Most IRAs don’t return growth rates like that.

Budget Trends—Budgets are also a good indicator of industry strength. And budget estimates for 2012 are, once again, up strongly for areas such as acquisition of new technologies, capital equipment, and training. In fact, early returns from respondents to our 9th Annual Report are projecting increases in all 12 areas measured in 2012, except for outsourcing. Spending this year, in particular, is occurring in:

• New technology;
• Capital equipment;
• Process development and optimization; and
• Personnel training and development.

Other Positive Trends:

• Biopharmaceutical markets—The world market for biopharmaceuticals is now about >$140 billion²;  growing at 15-18 percent annually, definitely a very healthy rate.

• Approval-related Innovation and Progress—Good news: In 2011 FDA biopharmaceutical approvals involved genuine innovation and advances, with nearly all products being approved for new indications or for which the last product approval was granted well over a decade ago.

• Biopharmaceutical Approvals—Despite increasing sales, the rate of biopharmaceutical approvals in the U.S. is flat (12 biopharmaceuticals in 2011). (see www.bioplanassociates.com/biopharma).

• Company and country approval trends—A record number, four (33 percent), of newly-approved U.S. biopharmaceuticals are manufactured outside the U.S. — in the United Kingdom, Germany, Mexico and Italy.

• Biosimilars (biobetters / biogenerics)—Patents are expiring and biosimilars are accelerating worldwide. Expect the entrance of many new manufacturers, and multiple biosimilars for each currently successful biopharmaceutical.  Our global facilities analysis³, indicates that biosimilar/biobetter companies are present in virtually every biotechnology-capable region.

• Internationalization—The biopharma industry continues to expand its presence worldwide, particularly in developing countries.

• Internationalization of Manufacturing—Much of the industry growth involves new capacity being added at existing foreign facilities. This is illustrated by BioPlan’s Top 1000 Global Biopharmaceutical Facilities Index, which ranks facilities in terms of capacity, employment, and production.

• Internationalization of R&D—Large international (Big Pharma) companies continue their expansion and off-shoring of R&D.

• Demand for Local Production of Biologics—Companies are developing manufacturing strategies that include local manufacture of vaccines, for example. This contributes to developing countries’ scientific/technical infrastructure and provides continued availability and price stability.

• World Standardization of Manufacturing—As more biopharmaceutical manufacturing is performed worldwide, product developers are working to standardize their products and manufacturing processes.

• Internationalization of Single-use Manufacturing—The increasing adoption of single-use/disposable bioprocessing equipment allows products to be developed, standardized and the same manufacturing systems shipped and installed at multiple facilities; benefitting emerging markets.

• Single-use Bioprocessing Technologies—In 2011, single-use/disposable bioprocessing systems further increased their dominance for the manufacture of biopharmaceuticals for pre-clinical R&D and clinical testing. In 10 years about half of new commercial biopharmaceutical manufacturing systems can be expected to single-use based.

• Microbial manufacturing—Most industry attention in recent years has concentrated on mammalian cell culture-produced recombinant proteins. A confluence of trends is contributing to increased use of microbial (bacteria, yeasts, other fungi, etc.) host cells for recombinant proteins manufacture.

• Outsourcing—Companies of all sizes worldwide continue to increase their outsourcing, particularly R&D, and increase use of CROs, particularly for screening, and clinical research. Based our global survey of biomanufacturing, among 24 areas of outsourcing, the primary outsourced activities included product characterization testing, with 70 percent of biopharmaceutical companies outsourcing at least some activity.

• The Economy—The worldwide economic downturn continues to impact biopharma. Yet, with its underlying sales revenue, the industry has remain insulated.  Financial issues affect most companies; however, demand for new, profitable products, ensures R&D will continue;  ≥$70 billion is being invested by the pharmaceutical industry in R&D.

• Mergers/Acquisitions—The trend for industry mergers, acquisitions will continue.  However, some companies are recognizing that gutting their core competencies such as R&D and manufacturing is counterproductive.

Summary

Most of the fundamental indications are pointing to a positive, healthy industry; and bio/pharma is emerging from the current global economic situation by spending more, becoming more efficient, and, perhaps most importantly, showing great optimism.

I welcome comments on these trends and their impact on the industry.

References:

1. 8th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production:  A Survey of Biotherapeutic Developers and Contract Manufacturing Organizations, BioPlan Associates, April 2011, 490 pages.
2. Rader, R.A., Biopharmaceutical Products in the U.S. and European Markets (database), BioPlan Associates, www.bioplanassociates.com/publications/pub_bpuseu.htm
3. See BioPlan’s Top 1000 Global Biopharmaceutical Facilities Index™, http://www.top1000bio.com/index.asp Accessed June 20, 2011
4. Biopharmaceutical Expression Systems and Genetic Engineering Technology: Current and Future Manufacturing Platforms, BioPlan Associates, Inc. 2008]

Eric S. Langer is president and managing partner at BioPlan Associates, Inc., a biotechnology and life sciences marketing research and publishing firm established in Rockville, MD in 1989. He is editor of numerous studies, including “Biopharmaceutical Technology in China,” “Advances in Large-scale Biopharmaceutical Manufacturing”, and many other industry reports. You can contact him at: elanger@bioplanassociates.com or 301-921-5979.