If You Build It, Will They Come? The Promise and Perils of

Report
If You Build It, Will They Come?
The Promise and Perils of Investing in
Biomanufacturing Capacity
Thomas C. Ransohoff
BioProcess Technology Consultants, Inc.
2nd Annual Sanford C. Bernstein Biosimilars Conference
New York, NY
November 19, 2009
Outline
 Biopharma Overview
• Molecules and Processes
• Facilities
 Worldwide Capacity Situation
• Growth and Distribution
• Utilization
• Trends
 Manufacturing Strategy – Make v Buy
• Timeline and Cost for Construction
• Make v Buy Decisions
From Clone to Commercial®
Biopharmaceutical Manufacturing
Overview
Definition of Biopharmaceuticals
 Biologic Products are products that are made by or
composed of viable organisms or biopolymer analogs
• Recombinant Proteins
• Monoclonal Antibodies
• Natural Hormones and Enzymes
• Synthetic Peptides and Oligonucleotides
• Antibiotics, Plant & Animal Extracts, Allergens
• Vaccines
• Gene Therapy Products, Human & Xenogenic Cells &
Tissues
• Blood & Blood Derivatives, including polyclonal
antibodies
From Clone to Commercial®
Biopharmaceutical Blockbuster Products
Product
Enbrel
Generic
Company
etanercept
Amgen/ Pfizer (Wyeth)
J&J (Centocor Ortho Biotech)
Remicade
infliximab
/Schering-Plough
Rituxan
rituximab
Roche (Genentech)
Avastin
bevacizumab
Roche (Genentech)
Herceptin
trastuzumab
Roche (Genentech)
Humira
adalimumab
Abbott
Lantus
insulin glargine
Sanofi-Aventis
Neulasta
pegfilgrastim
Amgen
Aranesp
darbepoetin alfa
Amgen
Novolog
insulin aspart
Novo Nordisk
Procrit
epoetin alfa
J&J (Centocor Ortho Biotech)
Epogen
epoetin alfa
Amgen
Novo Human Insulin Products insulin, human
Novo Nordisk
Avonex
interferon beta-1a
Biogen Idec
Lucentis
ranibizumab
Roche (Genentech) /Novartis
Pegasys
peginterferon alfa-2a
Roche
Humalog
insulin lispro
Lilly
Betaseron
interferon beta-1b
Bayer HealthCare Pharmaceuticals
NeoRecormon*
epoetin beta
Roche (Chugai Pharmaceuticals)
Erbitux
cetuximab
Lilly (ImClone)/BMS/Merck
Advate
Factor VIII
Baxter
Rebif
interferon beta-1a
Merck Serono
Neupogen
filgrastim
NovoSeven/NovoSevenRT
Factor VIIa
Kogenate FS/Helixate FS
Cerezyme
Synagis
Humulin
Factor VIII
imiglucerase
palivizumab
insulin, human
Amgen
Novo Nordisk
Bayer HealthCare Pharmaceuticals
Genzyme
AstraZeneca (MedImmune)
Lilly
Indication(s)
Arthritis, Rheumatoid
Arthritis, Rheumatoid/
Crohn's Disease/Ulcerative Colitis
Lymphoma, Non-Hodgkin's/Arthritis, Rheumatoid
Cancer, Colon/Rectal/Lung, Non-Small Cell
Cancer, Breast
Arthritis, Rheumatoid/Crohn's Disease/Psoriasis
Diabetes
Neutropenia, Chemotherapy Induced
Anemia, Renal Failure/Chemotherapy Induced
Diabetes
Anemia, Renal failure induced
Anemia, Renal failure induced
Diabetes
Multiple sclerosis
Macular Degeneration
Hepatitis B/C
Diabetes
Multiple sclerosis
Anemia, Renal Failure/Chemotherapy Induced
Cancer, Head/Neck/Colorectal
Hemophilia A (Bleeding Episodes)
Multiple sclerosis
Neutropenia, Chemotherapy Induced/Leukemia,
Acute Myelogenous
Yr First 2008 Sales
Approved
($M)
1998
6,191
1998
5,866
1997
2004
1998
2002
2000
2002
2001
1999
1989
1989
1982
1996
2006
2002
1996
1993
1997
2004
2003
1998
5,487
4,824
4,717
4,500
3,605
3,300
3,137
2,644
2,460
2,456
2,329
2,203
1,775
1,737
1,736
1,683
1,644
1,580
1,500
1,330
1991
1,300
Hemophilia A (Bleeding Episodes)
1996
1,260
Hemophilia A (FVIII Deficiency)
Gaucher Disease, Type 1
Respiratory Syncytial Virus infection, prevention
Diabetes
1993
1994
1998
1982
1,248
1,239
1,230
1,063
There were 28 biopharmaceutical blockbuster products in 2008 [up from 27 in 2007]:
* 10 manufactured in microbial fermentation processes [9]
* 18 manufactured in mammalian cell culture processes [18]
* 9 monoclonal antibodies/Fc fusion proteins [9]
From Clone to Commercial®
Biopharmaceutical Industry Growth
Biopharmaceutical Commerical Product Sales Growth
40
Annual Sales ($B)
35
Mammalian Recombinant Products
109 Kg required for 2008
30
25
Mammalian MAb Products
6,918 Kg required for 2008
20
Microbial Recombinant Products
12,975 Kg required for 2008
15
Microbial MAb Products
4 Kg required for 2008
10
5
2002
2003
2004
2005
2006
2007
2008
 BPTC database covers 126 commercially
marketed biopharmaceuticals as of 2009
From Clone to Commercial®
General Scheme for Biopharmaceutical Bulk Drug
Substance Processes
Working Cell Bank
Intracellular
(microbial fermentation)
Bioreactor Conversion
“Upstream”
Process
Cell Harvesting
Extracellular
(microbial fermentation and
mammalian cell culture)
Cell Removal
Cell Disruption/Refold
“Downstream”
Process
Isolation/Recovery
Isolation/Recovery
Purification
Purification
Bulk Formulation
From Clone to Commercial®
Bulk Formulation
20,000 L Fermentation Suite
From Clone to Commercial®
Source: Lonza Presentation, “US Operations Overview”
Purification – Large-Scale Chromatography
From Clone to Commercial® Source: Lonza Presentation, “US Operations Overview”
Timing of Plant Construction
Clinical Development Timeline
(6-7 years)
Phase I
(12 months)
• Safety
Product
Launch
Phase II
(24 months)
Phase III
(24 months)
• Dose Finding
• First Efficacy
• Pivotal Trials
Plant investment
decisions must be made
long before product
approval
Lead-Time for Building a Commercial Plant
(~4 years)
Design
(12 months)
Source: P. Seymour, IBC Bench to Clinic 2002
From Clone to Commercial®
Filing & Review
(18 months)
Construction
(24 months)
Validation
(12 months)
Mammalian Cell Culture Facility Costs
Capital Cost per Liter vs. Plant Capacity
$30,000
Cost per L (000)
$25,000
$20,000
$15,000
$10,000
$5,000
$2.50
3.00
3.50
4.00
Log Plant capacity (L)
From Clone to Commercial®
4.50
5.00
Industry-Wide Capacity Analysis
BPTC Approach to Biopharmaceutical
Capacity and Pipeline Analysis
 Bottom-up methodology
•
•
Plant-by-plant estimation of capacity “supply”
Product-by-product and dose-driven estimation of “demand”
 Market segmentation
•
•
Focus on recombinant protein and monoclonal antibody products manufactured
using
 Microbial fermentation
 Mammalian cell culture
Commercially marketed products and product candidates in clinical development
 Probability weighting factors
•
•
Accounting for multiple products targeting same indication
Assumptions for probability of success and time to market
 Apply sensitivity analyses (i.e., Monte-Carlo) to quantify
probability of predicted outcomes
From Clone to Commercial®
The State of Mammalian Cell Culture Capacity
 Sufficient capacity worldwide to meet
current annual production needs
 Adequate capacity forecast through
2013
• Increases in product titers and
Operational Excellence initiatives
improve productivity of existing
capacity
 Probability of sufficient capacity
through next decade is very high
•
BioProcess Technology Consultants report,
December 2008
From Clone to Commercial®
•
Relatively few new “volume-drivers”
forecasted to be approved
Growth of the existing commercial
products slowing
Existing and Forecast Cell Culture Capacity
Est. Installed Reactor Volume (KL)
4,500
4,000
Product Co.
CMO
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2006
2007
2008
2009
2010
2011
2012
2013
2014
Year
 Includes equivalent fed-batch capacity for companies using
perfusion technology (1 L perfusion ≈ 5 L fed-batch)
 Product companies control ~80% of installed capacity
From Clone to Commercial®
Current and Projected Distribution of Capacity
Percent of Total Capacity
25%
Top 10 companies control 80% of total worldwide
capacity in 2009 decreasing slightly to 79% in 2014
20%
• By 2014, Merck KgA & AstraZeneca/MedImmune (2014
included in “All Others”) replaced by Celltrion &
BMS/Medarex (2009 capacity included in “all others”)
in Top 10
15%
10%
5%
0%
A
B
C
D
E
2009
A. Roche/Genentech
E. Novartis/Sandoz
H. Biogen Idec
K. Celltrion
From Clone to Commercial®
F
G
H
I
J
2014
B. Pfizer/Wyeth C. Amgen
D. Lonza
F. Boehringer Ingelheim
G. Lilly/ImClone
I. Merck KgA
J. AstraZeneca/MedImmune
L. Bristol-Myers Squibb/Medarex
M. All Others
K
L
M
Distribution of Capacity Worldwide
Figures include
• 96 Companies
• 21 Countries
NOTE: Analysis does not
include perfusion
capacity.
 Capacity expected to increase from ~2.5 Million L in2008
to ~4 Million L in 2013
 In 2008, ~52% total installed capacity utilized; growing to
~73% by 2013
From Clone to Commercial®
Source: E. Reynolds, IBC BPI 2008
Manufacturing Capacity Demand –
Existing Mammalian Commercial Products
1,400
Bulk Requirements 2008 (Kg)
1,225
1,207
1,191
1,200
1,044
1,032
1,000
916
800
600
412
400
200
Rituxan
Remicade
Enbrel
Avastin
Herceptin
Erbitux
All Other
Products (60)
Mammalian cell culture demand:
• Monoclonal antibodies/Fc fusion proteins dominate mammalian
cell culture demand for bulk product on a kg/yr basis
• Growth of existing commercial products remains a driver for
capacity demand®growth
From Clone to Commercial
Pipeline Weighted Towards MAb Products
Monoclonal antibodies represent the fastest growing segment of
the pharmaceutical industry
 85 – 90% of the mammalian cell culture product pipeline
 Approximately 65% of all biopharmaceutical products in
development are produced in mammalian cell culture
140
120
100%
Mammalian
Microbial
Microbial
80%
Percent MAb-Based
Other (Plant, Insect, etc.)
No. of Products
Mammalian
100
80
60
40
60%
40%
20%
20
0%
0
Market
BLA/NDA
Phase 3
From Clone to Commercial®
Phase 2
Phase 1**
Market
BLA/NDA
Phase 3
Phase 2
Phase 1**
Do We Need 10 Ton Capacity?
 Demand for all existing commercial products will approximately
double from the current 5.8 metric tons to approximately 11.8
metric tons by 2013
• Current annual product requirements for each of the top five
monoclonal antibody products is 800 – 1,200 Kg each
 At 5 g/L titer a single large “six pack” facility can make 10 tons of
monoclonal antibody (Kelley, 2009)
 Demand for products currently in development will increase the
future demand for cell culture manufacturing capacity
 The anticipated demand for virtually all products currently in
development is expected to be less than 5 metric tons per year
Kelley B, “Industrialization of MAb Production Technologies,” MAbs 1:5, Sep/Oct 2009
From Clone to Commercial®
Trends That Will Impact Future Capacity Utilization
 Fewer “blockbuster” drugs with greater focus on smaller markets
and niche products
• Less difference in scale between pilot and commercial
facilities
• Use of multipurpose plants; potential for continuous
production
 Mergers and acquisitions, resulting in:
• “Volume driver” product candidates moving to product
companies with significant capacity -> free up CMO capacity
• Redundant facilities in larger organizations (the rich get
richer)
From Clone to Commercial®
Trends That Will Impact Future Capacity Utilization
 Product company strategic initiatives to offer existing captive
capacity on the CMO market
 Continued improvement in throughput and utilization of existing
facilities, driven by:
• Continuing increases in process yields
• “Continuous improvement” initiatives, enabled by QbD and
other regulatory trends
 Increased availability and use of disposable/single-use
technologies
From Clone to Commercial®
Driving Forces for Single-Use Technologies
 Improved return on capital
• Reduced and deferred capital investment
• Increased speed of deployment
 Process control and portability
 Process and product flexibility
 Improved ability to manage and implement change
From Clone to Commercial®
The Biopharmaceutical Facility of the Future
 Facility design will incorporate high titer (>10 g/L) processes
 Facilities of the future will require greater DSP space and
capabilities to better handle the high titer bioreactor output
• Ratio of bioreactor space to DSP space will decrease
 Use of disposable technologies can reduce capital investment by
over 50% and operating costs of manufacturing facilities
(Roebers, 2009)
 Smaller bioreactors will produce similar quantities to today’s
larger bioreactors
 Smaller facility requirements may enable smaller companies to
construct and manage their own facilities more cost effectively
Roebers J, “Future trends in biopharmaceutical operations and facilities,” presented at BPI 2009,
Raleigh NC
From Clone to Commercial®
The Biopharmaceutical Facility of the Future
 Plant has 6 x 2,000 L bioreactors (possibly single use bioreactors)
 12 day fed-batch CHO culture for MAb Production
• 2,000 L volume, 10 g/L = 20 Kg MAb in harvest
• 80% purification yield = 16 Kg per batch
 Harvest every 4 days
• 85 harvests/year (340 days) = 1,360 Kg/year
 Capital investment < $100M
 Overall COGS < $70 per gram
From Clone to Commercial®
Cost-Capacity Chart: Selected Biologics
100000000
10000000
1000000
Price ($/g)
r2=0.96
100000
10000
1000
100
10
1
0.1
1
10
100
1000 10000 1E+05 1E+06
Volume Requirements (kg/yr)
Human serum albumin
IVIG
Insulin
Enbrel
Remicade
Rituxan
Avastin
Erbitux
Humira
Xolair
rFactor VIIIs
ESAs
Innovator hGHs
Generic hGHs
Alpha Interferon
PEG-IFN-Alpha
FSH
Fit Data
Log-log linear relationship between 2007 price and volume requirements
From Clone to Commercial®
Manufacturing Strategy:
Make v. Buy Decisions
Managing Risk
“The essence of risk management lies in maximizing the areas where
we have some control over the outcome while minimizing the areas
where we have absolutely no control over the outcome…”
- Bernstein, PL, Against the Gods: The Remarkable Story of Risk, 1998
Risk management tactics
 Estimate the range of probable outcomes; not just the “base” case
 Develop an organization that can manage change
 Utilize options (back-up strategies)
 Understand the cost of being wrong
 Evaluate parallel paths
From Clone to Commercial®
Developing a Manufacturing Strategy
“We will not get this perfectly right”
- Art Levinson, Genentech, SF Chronicle 12/21/03
What’s the cost of being wrong?
Excess Capacity

Carrying Cost of Facility and
Organization:
• Estimated carrying cost of a
facility operating at 50%
capacity: <<$10 M/mon
Inadequate Capacity

Cost of Lost Sales
• Estimated loss of operating profit
(50% shortage): >>$10 M/mon
• Does not include other costs
(reputation, competition, etc.)
 Estimating the range of probable outcomes is important
See also: Mallik, A. et al, The McKinsey Quarterly, 2002 Special Edition: Risk & Resilience
From Clone to Commercial®
Make vs. Buy Decision (Risk minimization)
Make
Primary Driver:
Maximizing Control
Make or Buy
Product Launch

“Make” strategy during
highest risk period to
maximize control of supply
“Buy” strategy may make
sense once product lifecycle
stabilizes, risk decreases,
and control less important
Manufacturing costs
set at decision point
RISK

Development
Uncertainty
Market
Uncertainty
Maturity
Product Life Cycle
Example: Genentech outsourced Rituxan to prepare for Avastin approval
• Easier to transfer mature process
• Minimize impact of “know-how leaks”
• Retain control of less mature processes
From Clone to Commercial®
Make vs. Buy Decision (Capital conservation)
Buy
Primary Driver:
Conserving Capital
Buy or Make
Product Launch

“Buy” strategy during highest
risk period to conserve capital
“Make” strategy may be
attractive once product
lifecycle stabilizes, capital
becomes more available, and
risk reduced
Manufacturing costs
set at decision point
RISK

Development
Uncertainty
Market
Uncertainty
Maturity
Product Life Cycle
Example: Imclone outsourced through clinical supply and launch then switched to inhouse production
• Outsourcing minimizes capatial expense during risky development phase
• Following successful product launch capital is more available to build its own
facility and reduce operating costs
From Clone to Commercial®
An Emerging Alternative: Acquiring Existing
Capacity
 As the biopharmaceutical industry matures, older
manufacturing facilities may become available for acquisition.
• Advantages: rapid and reduced capital access to needed capacity
• Disadvantages: need for renovation likely; facility not optimized for
requirement; often available in most expensive locations
 Examples:
• Genentech acquisition of NIMO from Biogen Idec
• Alexion acquisition of Dow facility in Rhode Island
• Centocor acquires plant from Wyeth
 Plant history: Invitron  Centocor  Chiron  Wyeth  Centocor
• Lonza acquires Porrino plant from Genentech
 Plant history: Glaxo Wellcome  Genentech  Lonza
• Merck acquires Insmed facility in Boulder Colorado
 Plant history: Somatogen  Baxter  Insmed  Merck
From Clone to Commercial®
Conclusions
 Capacity likely to be available industry-wide, but:
• Closely held
• Geographical distribution shifting
 Product and process innovations resulting in higher yields per
batch and lower demand for bioreactor capacity implies:
• Investments in manufacturing facilities will continue to slow
• Disposable/single-use technologies possible for some commercial supply
 Significant price reductions possible with biosimilar products
 Make v buy decisions becoming more complex
• Acquisition is increasingly an option for capacity
• Regulatory, market and technical uncertainties -> poor ability to forecast
biopharma capacity requirements accurately
• Risk assessment is critical
From Clone to Commercial®
Thank you!
BioProcess Technology Consultants, Inc.
289 Great Road, Suite 303
Acton, MA 01720
978.266.9154 (phone)
978.266.9152 (fax)
[email protected]
www.bioprocessconsultants.com
From Clone to Commercial®

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