- Biopharmaceutical manufacturing is undergoing a paradigm shift from unique, specialized production of individual products to more uniform, systematic production that can apply to multiple products. This increases manufacturing efficiency and the number of products that can be produced. - Contract manufacturing is increasing and promises to open the pipeline for new biopharmaceuticals by reducing costs for innovators and increasing availability of products. Using contract manufacturers reduces financial risks for originators. - Technological convergence has standardized cell culture and purification processes, allowing "one facility fits all" manufacturing that regulatory agencies now accept for contract manufacturing. This reduces costs and speeds development and availability of new products.

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Articles » 2008 » May 2008 » Feature
Paradigm Change in Bio-Manufacturing
Technology is transforming manufacturing options
By Donald F. Gerson
Biopharmaceutical manufacturing is undergoing a major paradigm change from unique, highly specialized
processing of individual products to uniform systematic processing that applies to a multitude of products. This
transformational technology increases the number of new biopharmaceutical entities that can be produced in a
single facility, increases the efficiency of capital and fixed asset utilization, and increases the utility of multi-
product, multi-user manufacturing facilities. In this environment, contract manufacturing of biopharmaceuticals
promises to open the pipeline for new biopharmaceuticals, reduce the cost of manufacturing to the innovator and
increase the availability of new and more varied products to health care providers and patients.
Traditional biologicals include vaccines and blood-derived
protein products such as albumin, Factor VIII and VIX, and
immunoglobulins. These products were hard to purify and
characterize by techniques available when they were
developed, susceptible to unknown contaminations from
source materials, and had relatively unusual and specific
processing technologies with uncertain effects on product
quality. Regulatory agencies relied on the documentation of
processing controls in addition to QC test outcomes for
assurance of the consistency of product quality, and
operated on the basis that the process defined the product.
In this paradigm, the manufacture of a given product was
precisely facility and process dependent. The concept that
"the product is the process," while unproven, was heavily
relied upon and virtually precluded changing processing
technologies or facilities, or using contract manufacturing in multi-use facilities.
Biologicals produced by biotechnology include recombinant proteins and monoclonal antibodies that are
understood at a high level of molecular detail. Current bioprocessing techniques include well-understood and
highly specific purification steps. Analytical techniques now give a full molecular characterization of the product
and show details of batch-to-batch variations allowing root-cause assignments to manufacturing variations. With
tested and released cell lines grown on highly characterized animal-byproduct-free growth media, manufacturing
lots of well characterized biologics are now highly reproducible. Methods are available that demonstrate the
bioequivalence of biopharmaceuticals before and after process improvements or site-to-site transfers. Analytical
characterization, combined with bioequivalency studies, have proven repeatedly that bioprocessing has reached
a stage of maturity dominated by scientific approaches to product consistency that prove the equivalency of
product made in different locations by slightly different processes, leading to regulatory acceptance of the use of
CMOs for biopharmaceutical manufacturing (Faden, 2005).
There are more than 125 biopharmaceuticals currently licensed, and in 2006 there were more than 400 in
development (PhRMA, 2006). While estimates vary, growth in new biopharmaceutical entities (NBEs) will be
approximately 20% annually during the next decade, with an estimated market value of $18 billion by 2010. With
this explosive growth comes the need for significantly increased manufacturing capacity. The number of products
is large and the total amount of protein API required is large, but the amount required for each product is neither
large nor easily predicted. There is uncertainty of outcome for each product until completion of clinical trials:
clinical success or failure is uncertain until completion of trials,
dose levels and target patient populations are uncertain until proof of efficacy, and
quantities required for market satisfaction cannot be estimated until the last stages of product
development.
It is therefore difficult for a company to accurately evaluate and decide on capital investments for manufacturing a
new unproven product in time to be ready for the projected launch date. This uncertainty opens opportunities for
contract manufacturing of biopharmaceuticals to reduce risk and increase supply flexibility for the product
originator.
Worldwide capacity for the production of protein biopharmaceutical APIs from mammalian cell culture was

2. Figure 1: Monoclonal Products in Development 2006
estimated to be about 2 million liters in 2006, with approximately another 1 million liters in construction planning
and start-up phases (Seymour, et al., 2006). The split between product originators and CMOs is about 85% to
15%, but there are indications that the proportion of CMO-based manufacturing is increasing (Miller, 2008). The
physical requirement for biopharmaceutical therapeutics is expected to more than double over the next decade,
requiring a doubling of production capacity for the industry as a whole, and raising ‘make-vs-buy' decisions for all
product originators. Most of these originators are either involved in or are considering outsourcing of new
biopharmaceutical products to enhance profitability and to focus on core competencies (Contract Pharma, 2007).
Two seemingly opposing trends are driving the shift to CMO-based biopharmaceutical manufacturing: One is the
convergence of production technologies and the other is market fragmentation. The first therapeutic monoclonal
product to be produced was OKT3™, an anti-transplant-rejection mouse antibody produced as ascites, which
was licensed in 1986. Today more than 20 monoclonal-based biopharmaceuticals (MAbs) have been licensed,
the number is growing rapidly, and they are almost exclusively humanized antibodies that are manufactured by
mammalian cell cultivation in large-scale bioreactors (Jones, et al., 2007).
Fully humanized antibodies are now mass-produced in large cell-culture bioreactors in quantities of 5-10
kilograms per 10 - 20,000 liter batch, and some protein biopharmaceutical products are manufactured in
quantities in the range of 100 – 1000 kg/year. Since monoclonal technology was developed, there have been
major advances in cell line development, bioreactor construction and operation, purification strategies and
analytics. Manufacturing monoclonals now follows a regular sequence of unit operations, largely independent of
the epitope specificity of the monoclonal. Today, the technological convergence to a ‘one-plant-fits-all' approach
to biopharmaceutical manufacturing is a practical realization.
Manufacturing with recombinant CHO and other cells as a common platform for monoclonal antibody (mAb)
production has converged cell-culture processes and allowed cultivation at levels of approximately 10 million
cells/ml in total volumes as large as 20,000 liters, levels that few imagined would be possible 20 years ago. The
use of standardized purification schemes with Protein A capture, ion-exchange, hydrophobic interaction and
cross-flow concentration and diafiltration has made it possible to use one set of hardware, with adjustable
parameters and exchangeable resins or filters, for most monoclonal and related products. There have been
detailed analyses of this convergence of processing technology that indicate further convergence, uniformity and
cost reduction is possible (Sommerfeld, et al., 2005), especially if manufacturability in a uniform system is an
objective of process development (Gerson, et al., 2005).
Market fragmentation is driven by both the existence of large sales-volume products for many major indications,
and the identification of niche indications by increasingly sophisticated genetic and analytical techniques. Of 16
therapeutic categories, cancer represents 45% of the new products, infectious diseases represent about 15%,
and the remaining 14 categories each represent less than 10% of the potential products, as seen in Figure 1
(PhRMA, 2006). A few target indications with large numbers of patients -- rheumatoid arthritis for example -- have
already been dealt with by a number of biopharmaceuticals, and there is significant competition for market share.
To further expand product lines, companies are focusing on smaller markets and more specific indications, with
the clear implication that large manufacturing capacities for a single product will not be required and that contract
multi-product facilities will be increasingly used for biopharmaceutical API production, in much the same way as
contract sterile filling and packaging facilities are frequently used today.
To meet reasonable expectations of
financial return, the cost of
developing, licensing, manufacturing
and launching new
biopharmaceutical entities, NBEs,
must be trimmed to balance against
the lower expected financial returns
and higher uncertainties of lower
volume niche products. DiMasi et al.,
(2003) have analyzed the economics
of new drug development and
concluded that in 2003 the
capitalized cost of an NCE was
about $800 million, and that this cost
was growing at a rate of >7% above
inflation, or will be an estimated $1.1
billion for each new drug by 2008.
Little of the capitalized cost is
significantly related to potential
market size or therapeutic potential;
it costs the same to license and launch a biopharmaceutical with low or high market potential.
A comparison of the hypothetical pre-launch build-vs-buy costs to the product originator is given in Table 1,
exploring whether the originator builds, starts-up and validates a new biopharmaceutical facility or goes with an
existing CMO for the same product. Costs for a new facility include new staff, training, qualification, validation,
and related costs to the time of beneficial occupation. Case-by-case differences in the actual numbers will
depend on the location and complexity of the facility, however, the major effect is determined by the cost
difference between building a single-user facility for the product originator compared to the fee-for-service use of
a multi-user facility. Offshore CMOs offer additional benefits related to reduced personnel costs, contributing to
the need for manufacturing cost and cost-to-consumer reduction (Finnegan, et al., 2006).
Significant reductions in the overall capitalized cost can come from the use of a CMO for manufacturing both

3. Table 1: Pre-Launch Cost Comparison for Manufacturing
by Originator or CMO
Costs
($ Millions)
For Product
Originator
Product Originator
Manufacturing
CMO
Manufacturing
Facility 400 0
Product +
Operational
400 400
Total 800 400
Capital Retention
by Originator
400
Table 1. Hypothetical Pre-Launch Costs if the Product
Originator builds, starts-up and validates a new
biopharmaceutical facility compared to the use of an existing
CMO for the same product. Costs for a new facility include
new staff, training, qualification, validation, and related costs
to the time of beneficial occupation. Case-by-case
differences in the actual numbers will exist depending on the
location and complexity of the facility, however, the major
effect is determined by the cost difference between building
a single-user facility vs. using a multi-user facility on a fee-
for-service basis.
clinical and licensed commercial materials; the use of an existing and fully operational CMO facility reduces both
direct capital expenditures and the time from project inception to launch. Reduced capitalization and shorter times
to market improve the rates of return on investments and, most importantly, improve the flow of new
biopharmaceutical products to the patients who need them. Once the capital cost is paid down, however, the
originator must also be able to realize benefits and cost reductions in the form of reduced operational costs and
complexities. The CMO must therefore provide more cost-effective operations than the originator could
reasonably provide at their own facilities, and must also provide a level of service that significantly reduces
operational complexity for the originator. For example, the CMO must provide high operational effectiveness, a full
spectrum of laboratory testing capabilities, and a very high level of regulatory compliance in order to relieve the
originator of all concerns related to product supply. The concentration of manufacturing expertise in the CMO
should allow this level of service, allowing the originator to focus on product development and marketing.
Investing in new drug development is highly risky as a result of uncertainties in drug target determination and
side-effect prediction, both biological factors that are very difficult to overcome. In addition to the uncertainties of
biology, the development process contributes additional risk by the uncertainties of scale-up, facility design and
construction, quality system implementation and the regulatory evaluation and inspection process.
In the traditional scenario, a company is involved in taking
the NBE though Phase II and III clinical trials while it is also
designing, building, validating and starting-up a new facility,
and preparing for and going through a pre-approval
inspection. Taken together, these activities can stress
organizations to their financial and personnel limits, often
with negative outcomes in one area or another. By utilizing a
CMO for the production of both clinical materials and final
marketed product, the originator of a NBE can greatly
reduce its risk level, capital expenditure and organizational
stress.
The most direct risk reduction is capital savings of nominally
$400 million that is not spent on facilities, plus the
operational savings that would have been spent on either
engineering and construction support or personnel costs for
facility validation and start-up. By using a facility already
owned and operated by a CMO, only those costs directly
associated with product manufacturing are borne by the
originator. Secondary risk reductions involve simply reducing
the number of things that can go wrong: start-up failures
resulting from new and relatively inexperienced staff, technology transfer failures due to scale-up or equipment or
facility-related difficulties, assay validation or implementation failures, and pre-approval inspection issues causing
delays in licensure, all combining to exacerbate uncertainty. At an experienced CMO and a facility already
licensed for manufacturing other biological products, the staff have performed many tech transfers into the same
facility and know what works and what does not. Equipment and facilities tend to have been tuned to perfection,
and quality and regulatory teams are experienced in showing their facility to regulators, all combining to make a
picture of success.
Additional benefits and opportunities arise from the capital-sparing effects of CMO-based manufacturing. The
usual approach of product originators is to license a product in one's home country first, and with often a delay of
several years, license it in similar markets -- the EU or the U.S. as the case may be -- then obtain licenses some
years later in other countries further from the corporate base. Generic companies, on the other hand, usually
attempt to obtain as many licenses in as many countries as possible, as quickly as possible, in an attempt to
cover the global market and obtain effective market dominance by rapid global market penetration. The current
pharmaceutical market is characterized by short product lifetimes due to the combined effects of long product
development periods and rapid technological advancement (Pisano, 1997 and Grabowski, et al., 2002). It is
therefore very important to generate as much profit as possible in the early years of the product's lifecycle,
because later profits may not be realized either as a result of competitive product introductions or unforeseen
product side-effects that may reduce indications or marketability. Investment of a portion of the funds that were
not used for the construction of a manufacturing facility into product development activities such as expanded
clinical studies or other support for additional indications or international filings would provide greater benefit to
the originator than would a product-specific manufacturing facility.
From the perspective of long-term planning, there are multiple opportunities for directed investment into aspects
of product and process development that would optimize the gains over the shortened product lifecycles
prevalent in today's pharmaceutical market. Long-term arrangements between originators and CMOs allow
targeting process development for a particular facility, reducing uncertainties and increasing the speed of the
development process. Early-stage planning for increased indications or multiple registrations utilizes some of the
funds spared by CMO-based manufacturing, but increases revenues early in the product lifecycle. Use of
experienced manufacturing teams with long-term experience in biopharmaceutical production, and in locations
with lower labor costs, can significantly reduce the cost of goods from the beginning, increasing initial revenues
and prolonging profitability as price pressures mount late in the product lifecycle. Integrated over the entire
product lifetime, these effects can result in extra profits of a magnitude that could support the development of
another new product.
Biopharmaceuticals are contributing increasingly to the pharmaceutical industry, and can contribute substantially
to the improvement of human health worldwide, but at present they are very costly. The maturation and relative
saturation of the pharmaceutical market, the need for price competitiveness, and more rapid new product

4. introductions, has led to need for speed in product development and efficient manufacturing. The paradigm
change in the manufacturing of biologicals and biopharmaceuticals, from unique to generally applicable
processes, and from ill-defined to highly characterized products, has in turn allowed regulatory agencies to
accept the use of multi-product, CMO-based manufacturers.
The combined effect of this paradigm change is to present the industry with an opportunity to increase product
revenues and the speed of new product introductions while decreasing healthcare costs. The new paradigm
benefits the originator, the producer, the regulator, the health care system, and
the patient.
References
Faden, M., "Biogenerics hang at the starting gate", Pharmaceutical Business Strategies, March 2005.
PhRMA, "Medicines in Development: Biotechnology", 2006.
Seymour, P.M., Levine, H. L., and Jones, S. D., "Successful CMO Selection", BioProcess International, p. 26,
Sept., 2006.
Contract Pharma, "Contract Pharma Outsourcing Survey", May (2007).
Miller, J., "Old Model in New Clothes", PharmTech, 8 Feb 2008.
Sommerfeld, S., and Strube, J., "Challenges in Biotechnology Production", Chem. Eng. Proc. 44: 1123-1137
(2005).
DiMasi, J. A., Hansen, R. W., and Grabowski, H. G., "The Price of Innovation", J. Health Econ. 22: 151-185
(2003).
Jones, S. D., Castillo, F. J. and Levine, H. L., "Advances In The Development Of Therapeutic Monoclonal
Antibodies", BioPharm International, 96-114, October (2007).
Gerson, D. F. and Mukherjee, B., "Manufacturing Process Development for High-Volume, Low-Cost Vaccines",
BioProcess International (4):42-48 (2005).
Finnegan, S. and Pinto, K., "Offshoring: The Globalization of Outsourced Bioprocessing", Bioprocess
International, Sept. (2006).
Pisano, G. P., "The Development Factory", Harvard Business School Press, Boston (1997).
Grabowski, H., Vernon, J., and DiMasi, J., "Returns on Research and Development for 1990s New Drug
Introductions," Pharmacoeconomics 20: suppl. 3, 11-29 (December, 2002).
Donald F. Gerson is president, CMO Division, Celltrion, Inc., an Incheon, South Korea-based bio-
contract manufacturer. The assistance of Euna Shin in the preparation of this manuscript is
gratefully acknowledged.
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