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Taking on the breadth of challenges in contract development and manufacturing, globally
In April, Catalent, Inc., celebrated its 10th anniversary of its inception, having been spun out of Cardinal Health in 2007 and acquired by Blackstone Group, a private-equity firm. Later, in 2014, the company went public, traded on the NYSE. Both while a collection of business units at Cardinal, and in subsequent years, Catalent has acquired or developed a wide array of drug-delivery technologies, as well as methods for producing biomolecules and other commercialization steps. These include:
With 10,000 employees and 35 manufacturing sites around the world, the company is a global player in contract manufacturing. Additionally, a significant portion of its business base is in clinical research, including consultative work, trial drug manufacturing and clinical supply chain management. It is one of the biggest contract development and manufacturing organizations (CDMOs) in the world.
John Chiminski, CEO, joined the company in that role in 2009, coming from a 20-year stint at GE Healthcare, including various engineering, operations and leadership roles. Recently, he sat down with Pharmaceutical Commerce to discuss Catalent’s role in the industry and global biopharma’s challenges in meeting future needs. Here’s what he had to say.
1) Let’s talk about the outsourcing business generally first. As Catalent has noted, only about one-third of today’s global pharma finished dose form production is outsourced, even after many years of contract manufacturing advances. Why isn’t more of the industry doing outsourcing? Is there an inherent limit to how much can be outsourced?
We believe that the trend toward pharmaceutical innovators partnering more with outside experts is strong and continues to grow, with a majority of recent FDA NDA approvals outsourced. Based on this, plus increases in legacy product outsourcing, we anticipate that finished dose form outsourcing will grow to around 40% by 2020. This growth will be driven by several key factors: new drug and biologic treatments are increasingly complex to formulate and deliver, and to reach targeted clinical outcomes in patients, often requiring enabling advanced formulation, dose form or device technologies from companies like Catalent will be required. Venture capital-backed and small cap companies, which outsource most of their production, are driving much of today’s pipeline, and their products are growing faster than the overall market. Even large companies, that have substantial in-house development competencies, are experiencing budgetary and bandwidth constraints in development resources and in access to commercial-scale manufacturing equipment that is suitable for the small-batch, small-volume products increasingly prevalent.
To successfully implement sophisticated formulation and delivery strategies, with increasingly accelerated timelines, requires a great deal of experience, which we’ve earned across hundreds of molecules.
Also, many of these partnerships cannot properly be called ‘outsourcing’. A lot of what Catalent does isn’t routinely done ‘inside’ our pharma and biopharma partners. Most of them don’t have in-house capabilities for specialized technologies, such as softgel or fast-dissolve, specialized analytical or bioanalytical expertise, or at times whole functions, such as clinical product supply and logistics.
We have really focused over the last few years on expanding our ability to provide such solutions for our customers to solve our customers challenging pipeline and manufacturing challenges, with the right technology and expertise, in the right location. Our joint focus on developing better, patient-centric treatments using our combined skills and expertise is what helps improve real-world outcomes and makes for successful partnerships.
2) Catalent has an amazingly balanced portfolio, with both clinical and commercial work, with reasonable proportions in the US, Europe and ROW, and with a mix of branded, generic and OTC products that it manages. On the one hand, this offers clients a wealth of resources and expertise; on the other, it trends toward being “all things for all people,” and perhaps not as deep in each area of expertise as the leading innovators in that area. How do you counter that claim?
While we do produce a well-diversified range of products for our customers, our offering portfolio is focused across about a dozen core technology and service platforms. In nearly every one of these, we have a market leadership position, which we believe brings important advantages to our customers—and to us. We do not subscribe to the “one-stop shop” model for pharma outsourcing, as it most often doesn’t represent what our customers want, or how they buy.
To your point, we enjoy leadership positions in many key offerings areas, such as in liquid-filled capsules, Zydis orally disintegrating tablets, and our blow-fill-seal technology for complex unit-dosed sterile liquid filling. In biologics, GPEx cell line engineering and SMARTag antibody-drug conjugate (ADC) platforms are the best in their class. These leadership positions have been earned through hundreds of product launches, across the 7,000 stock keeping units (SKUs) and the 70 billion doses we produce annually. We deal with approximately 500 regulatory and customer audits annually, and we produce several hundred thousand clinical kits for clinical investigators and patients. Ultimately, our value is demonstrated in the 1-in-20 doses of Rx and consumer health products we provide to the patients around the world each year.
There is a strong theme among these offerings that is very far from ‘all things to all people.’ Our solutions are focused on the needs of our customers to help develop and supply the most sophisticated and challenging treatments, overcome pipeline or life cycle/line extension challenges, and provide global supply solutions. We don’t focus on pounding out the simplest, internally formulated white tablets at the lowest cost per thousand. We focus on delivering value for patients, by accelerating, rescuing and improving products at all stages of development, globally.
3) Today, Catalent’s desire to “follow the molecule”—with a business strategy from preclinical, to clinical, to manufacturing and the end-of-patent environment—is a well-established tenet in contract manufacturing. Most bigger contract manufacturers want to be known as contract development and manufacturing organizations (CDMOs). What’s special about how Catalent handles the clinical-to-commercial handoff? How is tech transfer carried out?
The CDMO space has evolved over the 10 years since Catalent split out from Cardinal Health, with a few emerging business models. Pure-play contract manufacturers, or CMOs, make up a majority of the market participants, offering tech-transfer driven commercial manufacturing but no development. Traditional CDMOs add product development services, tending to participate in more product launches, while still also focused on tech transfers, typically for a limited range of non-proprietary dose forms.
Companies like Catalent, while participating in the CDMO space, bring something extra—in our case, a range of advanced formulation and dose form technologies, supplemented and sustained by extensive intellectual property—1,100 patents; trade secrets; extensive scientific, operational, quality and regulatory know-how; and optimized manufacturing assets. Using these, we can produce differentiated outcomes for our customers, their products and ultimately for patients.
A lot of CMOs/CDMOs like to talk about partnering with their customers from development to supply, but few can actually deliver the variety of sophisticated solutions that a vast majority of today’s complex molecules require. At Catalent, we’ve focused on making sure we have such technology and capabilities available from development to commercial scale. We actively reinvest in our business to meet future customer and industry needs, in new capabilities, expanded capacity, in technologies, and in our expertise—more than $1 billion in the last five years. This includes our recent acquisitions of Pharmatek, adding to our preclinical, early development and supply capabilities, plus spray-drying expertise; Micron Technology’s particle-size engineering; the SMARTag technology and substantial expertise from Redwood Biosciences, and our recent Accucaps softgel addition. We have also actively reinvested in capabilities and capacities across our 35 global sites—reinvesting more than $600 million in capital expenditures over the last five fiscal years.
Finally, we have developed strong tech-transfer protocols across our sites that provide world-class expertise in their respective fields of expertise. For example, our San Diego, CA facility (formerly Pharmatek) that I mentioned is a world-class early development and clinical manufacturing facility. Our Winchester, KY facility was just upgraded and expanded at a cost of more than $50 million, and is now an even stronger center for oral dose form commercial supply, especially in specialty and controlled release products. Our eight clinical supply facilities can work seamlessly with all our other sites to coordinate development and trials globally. So, as you can see, we have thought through and implemented the concept of helping our customers navigate their path to patient faster with access to the world’s best expertise and capacity where they need it.
4) Another clinically oriented question: Catalent has invested substantially in being a clinical trial materials provider, with logistics and related services in addition to manufacturing finished clinical products. Last year, you introduced the FastChain™ brand to capitalize on this investment. How does FastChainTM work, and what benefits does it provide to pharma R&D?
Our customers’ plans are increasingly global, and this extends to clinical trials which are also becoming more complex, and are an ever-more expensive part of the overall cost of drug development. Add to that the cost pressure and increasingly expensive drugs, including biologics, and we see an imbalance between sponsors’ demands for speed, flexibility and efficiency, and traditional clinical supply models that are reliant on accurate forecasts, stable demand, and that assume little will change once a trial commences.
It is obviously vital that the right drug reaches the right place on time, and with traditional models, it is often the budget that’s stretched to make sure that happens with overstocking and intermediate stock-holding used to mitigate the risk of a stock-out, and ultimately, that a patient will be lost through not having their medication available to comply with the study protocol. We’ve made significant investments, especially over the last two years, in the infrastructure and facilities to make FastChain a reality. It differs from traditional models in that it is demand-led, and so is more dynamic. It combines the benefits of primary packaging at a central location, and delayed secondary packaging and customization, which is conducted regionally, and for specific countries and groups. Sponsors benefit from the efficiency of volume primary packaging of their Investigational Medicinal Products, and the flexibility of finishing and distribution from regional GMP secondary packaging facilities, which are strategically located where more trials are taking place, hence our investment in clinical supply facilities in China, Singapore and Japan, as well as ongoing strengthening of capabilities in other parts of the world.
Demand-led supply isn’t a perfect fit for every study, but FastChain offers strategic benefits when sponsors need to deploy a more flexible supply chain, and it removes many of the costly, intermediate stock-holding buffers that can run to 200% of actual demand within the so-called ‘just-in-time’ models. For example with FastChain, applying country-specific labeling is possible at the point of secondary labeling, eliminating the need for multilingual booklet labels that have, by necessity, been produced in large numbers and according to the trial protocols at the start of the study. The flexibility of having decentralized bright stock is that it is not committed until there is an actual clinical site or patient need, and that can reduce clinical waste to less than 20%. And single-language labels are also a significant benefit to the patient, allowing them to see only relevant, clear trial instructions.
5) In commercial biologics production, it looks as if Catalent has positioned itself for smaller volume biologic production in combination with its variety of proprietary biologic-development technologies such as GPEx. Lots of industry experts are offering opinions on how a new era of genetically driven, cellular-therapy-based, personalized medicine is going to become a reality. What path does Catalent see the industry taking?
We see a continued growth in biologics too, with a rapidly growing share of molecules in the pipeline. That’s why we are continuing to invest in the development of truly differentiating technologies such as SMARTag, and why we are expanding our Madison, WI biomanufacturing facility for the third time.
Biologics make up about 40% of the compounds in research and development, with innovator products making up the vast majority. We’re forecasting that the increased focus on specialty indications and targeted subpopulations, continuing improvements in titers, and single-use bioreactor efficiency will drive demand toward small-scale manufacturing, so that more than two-thirds of today’s pipeline will require less than 5,000 liters of capacity annually.
I’d add that we’ve accrued a lot of expertise in difficult-to-express proteins, and we continue to leverage our GPEx cell-line technology and analytical experience from Madison, WI, as well as other sites with specialist large molecule analytics capabilities in Kansas City, MO and Research Triangle Park, NC, to develop, optimize and manufacture proteins and antibodies for diverse treatments, from personalized cancer therapies to malaria vaccines.
The value of our SMARTag technology, and specifically its unique linker chemistry, which allows for more precision in conjugating toxins, is in helping our partners to develop novel antibody-drug conjugates (ADCs) with the potential for better tolerability and an expanded therapeutic index.
6) How is Catalent approaching biosimilar production? There’s been lots of discussion about FDA’s approach to biosimilarity and interchangeability, but relatively little about developing manufacturing techniques to produce biosimilar products. Is this an area of development for Catalent?
We don’t have a separate business unit for biosimilars as, in our view, the development and production of biosimilars are, well, very similar to innovator biologics! To facilitate biosimilars’ speed to market, we did develop some cell line banks and documentation packages for about a dozen key products to give our customers a head start. In fact, some of these have already been first-to-market in different countries. We also provide the sophisticated analytical services required to progress a biosimilar development program successfully, especially bio-assays and characterization expertise. And finally, we provide fill-finish services for biosimilar injectables.
7) Catalent has been very big in softgel capsules, and with the recent acquisition of Accucaps, is even more deeply invested. Does the pharma industry make the best use of this drug-delivery technology today, or are there lots of products that could be more commercially successful if they were in capsule versions? What guidance can you give to drug developers contemplating capsule formulations?
Softgels are well established and familiar to most people who’ve taken a vitamin, mineral or supplement (VMS). Catalent is well established as the largest provider overall, and the largest prescription softgel provider too—approximately 90% of softgel NDAs over the last 25 years have been made at Catalent. So our ability to keep our customers happy by resolving their technical formulation challenges, providing novel consumer health formulations, and reliably supplying end patient/consumer demand is obviously important. The addition of Accucaps brings us a new range of Canadian customers, and a tenured group of softgel experts; it also expands our capacity and capabilities to meet consumer health demand in North America and Canada.
Established doesn’t mean complacent however, and we are developing technologies that will keep softgels at the forefront of consumer health and pharmaceutical markets, and applicable to the treatment of more conditions. We know that softgels are preferred by patients because they are familiar, are often easier to swallow than hard tablets and capsules, and because patients perceive a faster onset of action. Partly driven by this acceptance and softgels’ proven status, our pharmaceutical and biopharmaceutical customers are working with us to solve some long-standing formulation and delivery challenges. The most exciting applications perhaps are in the ability to orally deliver macromolecules in lipid-based formulations, offering a non-invasive alternative to injections.
Continuing innovations in plant-based shells, the marketing benefits of which were perhaps more immediately obvious to VMS businesses looking to avoid animal-based products and serve customers with products perceived as healthier or that overcome religious or dietary restrictions, gave us the genesis of our OptiShell technology that we are now applying to prescription medicines to formulate at higher temperatures, and to fill solid and semi-solid formulations. Last year, we were gratified that FDA had approved the first treatment to employ this plant-based technology, which had been developed and now being produced at Catalent’s premier prescription manufacturing site in St. Petersburg, Fl. This ground-breaking product also employs the first-ever extended-release formulation in softgel form.
Lipid formulation is one of the technologies we incorporate into OptiForm® Solution Suite, a service that’s resonating with pharma partners who are struggling with the challenge of progressing the huge proportion, as many as nine out of ten, poorly soluble new chemical entities coming out of discovery. The service employs a parallel, science-based screening process to characterize development candidates, and recommend formulation approaches that are best suited to the molecule and delivery target. We can take a technology-neutral approach that considers particle-size reduction, spray drying, hot melt extrusion, salt screening, and lipid-based formulation, and, in 12 weeks, deliver materials for ongoing development, and present a thorough technical report. Our customers have used it to rescue molecules that have hit apparently insurmountable development barriers at later stages.
8) Given the breadth of Catalent’s involvement with leading small-molecule, biologic and generic manufacturers, as well as working with many biopharma startups, the company has a powerful perspective on the industry overall. What, in your opinion, is the industry doing right, and what is it doing wrong today? Are there recurring problems among Catalent clients that you wish could go away?
The industry faces a great many challenges today. Returns on investment from R&D in the largest companies are, on average, below their cost of capital, largely due to the cost of drug failures in research and development. Products that do secure regulatory approval face strong challenges to market access and reimbursement, which works best when their drugs are designed to offer clearly differentiated patient outcomes versus current treatments. And manufacturing operations are often configured for yesterday’s products instead of tomorrow’s pipelines.
These factors bring unique opportunities to Catalent to help resolve at least a portion of these challenges, if the customer is willing to partner strategically with us. We’ve been investing in predictive molecule and formulation design technologies since 2007, and market-leading expertise in development services, both of which can improve the potential for success of individual R&D programs. The concepts of patient-focused drug design, which we’ve been actively pioneering, combined with our range of advanced delivery technologies, can help extend clinical differentiation of new drugs. And—as 70 billion doses produced each year proves—manufacturing products reliably is what we do, every hour of every day. And we actively invest to meet the future needs of the industry, from flexible and continuous manufacturing options, to “right-sized” biomanufacturing capacity.