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Contract development and manufacturing organizations (CDMOs) want to be more reliable business partners to pharma
FDA has organized its quality initiative around review, inspection, surveillance, policy and research
Two trends stand out
in the rapidly changing landscape of pharma and biotech manufacturing today: the whirlwind of mergers, acquisitions and buyouts will not let up anytime soon; and contract services, specifically contract development and manufacturing organizations (CDMOs) are becoming a more essential part of delivering quality products to the marketplace.
Contract manufacturing is nothing new, of course; the biopharma industry has been relying on these services for years. But as brand assets, manufacturing and research facilities get shuffled and reshuffled on a nearly continuous basis, the expertise to dependably supply semifinished or finished products begins to reside more with the CDMOs. This trend is also affecting CDMOs themselves: witness Pfizer’s acquisition of Hospira (which has a major CDMO division providing services to pharma companies); Hospira was a spinout from Abbott Labs in 2004. Moreover, the “virtualization” of pharma—also not a new trend—is getting elevated as more startup pharma companies, especially in biotech, win Wall Street’s favor with a public offering: now the companies have capital, and need to find business partners to realize their R&D goals.
The second trend is CDMOs acquiring or developing proprietary technologies for drug manufacturing or drug delivery; when the pharma company with a new molecular entity starts the process for an FDA New Drug Application (NDA), its CDMO is as much a participant in the review and approval process as the drug developer.
One recent market study, from Mordor Intelligence (Bangalore, India), puts the global contract manufacturing market at $58 billion in 2014, projected to grow at a 6.4% CAGR to $84 billion in 2020—a few percentage points higher than global pharma itself, and not even including the developmental aspects of contract manufacturing (the “D” in CDMO).
There is a mixed picture, though, when it comes to the range of services that today’s CDMOs offer. “Companies are looking for network simplification,” notes Elliott Berger, VP of global marketing at Catalent, the nearly $2-billion/yr CDMO based in Somerset, NJ, but with facilities and personnel around the world. The Big Pharma companies have been closing some sites and raising capacity at others, “but now they want the ability to flex capacity where it is needed, and we want to be in a position to provide that.” Berger says that Catalent is on pace to invest nearly $100 million per year in expansions and new capabilities—and “that’s larger than many leading pharma companies themselves.”
Catalent has grown in recent years in a range of biologics manufacturing technologies, and in specialized services like bioavailability of drug products. But while it has invested in clinical trial packaging in Singapore (announced in June), and an extensive
expansion of clinical trial packaging at several facilities in Europe, the company is shying away from offering commercial packaging broadly (it did, however, make an acquisition in Australia recently that offers commercial packaging). “Our strategy is to concentrate on early-stage development to clinical.”
By contrast, other major players in the CDMO space, such as Almac Group (Souderton, PA) or Patheon (Durham, NC) do offer commercial packaging. Coming from another direction, PCI (originally, Packaging Coordinators International) has expanded from its base in contract packaging to include clinical trial materials management, formulation and production of oral solids.
Another perspective comes from contract manufacturers who want to concentrate on what they’re best at: an example is Pharma Tech Industries (Athens, GA), which identifies itself as one of the largest powder processors in the world for drugs and healthcare products. “We’ve looked periodically at forward integrating into the manufacture of the compounds that we process, but for now we’re sticking with what we know best,” says Brian Cox, director of tech transfer at the company.
Tee Noland, chairman and CEO at the company, adds that, from Pharma Tech’s perspective, the specific technology offerings are secondary to the strategic relationships between a pharma company and its CDMOs: “We try to look at this holistically, being a partner to a client and fitting into its supply chain with an emphasis on the services and reliability that we can provide.”
So, consolidate suppliers into a one-stop shop, or go to each supplier for its expertise and bring the network together in some fashion? There is no unanimity on the subject. In a presentation recently on the subject, Jim Murphy, managing director of Almac Clinical Technologies, wrote that a “best-of-breed approach, when orchestrated properly, capitalizes on the focused core competencies and nimbleness of each contributor, yet results in an integrated solution. The challenge, of course, is in governing the relationships with all parties efficiently and effectively.”
Focus on quality
In early 2015, FDA opened its long-awaited Office of Pharmaceutical Quality, and while quality has traditionally been a focal point of FDA’s inspection and validation efforts, the new office is expected to bring a more organized, focused effort to the matter.
FDA called out a handful of current, troubling trends and gaps in its quality structure that justify the new focus:
On the face of it, OPQ brings a modern, 21st-century perspective to an area that has long been managed as a manual, nonintegrated approach. Not much has been issued from OPQ since its formation, but the work plan as outlined initially is ambitious and thorough.
All manufacturers have been required to perform some level of quality management, but some contract manufacturers are already upgrading their internal operations to manage the process on a par with FDA’s approach. For example, Catalent announced a newly formed Quality, Product Development and Regulatory Affairs group, which brings a higher level of focus on quality to its so-called New Product Introduction Excellence program. That program, in turn, is meant to better coordinate product and process development with customers, so that new products can be launched more quickly. Sharon Johnson, SVP, global quality and regulatory affairs, is heading the new group; she has been working at Catalent for the past five years to roll out a comprehensive quality management system across multiple Catalent sites.
In another example, Sharp Clinical Services UK, a unit of Sharp Packaging Services, announced the renewal of its ISO 9001 and ISO 13485 certifications early this year; these standards, broadly accepted across many manufacturing fields (although 13485 is for healthcare products specifically), are focused on the quality management systems that the company has in place.
Quality management has been a constant at Pharma Tech Industries, says Lester Rodriguez, quality manager there; the company has
announced a 55,000-sq. ft. expansion of its Union, MO, facility, in part to provide room for a new analytical and microbial lab.
Quality down the line
Contract manufacturers are being called on to provide more services beyond factory-floor production and, depending on the extent of their base of business and competitive stance in the market, are taking on more responsibilities in the pharma supply chain. One specific area is the drive for traceability in the supply chain, established in the US by the Drug Supply Chain Security Act (DSCSA) of 2013, but also through programs like the Falsified Medicines Directive in the European Union and similar programs elsewhere.
Darryl Brown, director of marketing at Systech (Cranbury, NJ), one the longstanding IT providers in this area, notes that CDMOs have a need to differentiate themselves from each other. “We’re engaging in a new level of conversation with some of them,” he says, “going beyond installing the serialization systems that drive a traceability project on the packaging line, to more strategic discussions of what the CDMOs will do with the data that they produce to enhance their position with their clients.”
One potential area of differentiation is to use the traceability technology to provide authentication in the field—a counter to the plague of counterfeit products that show up periodically in the US, and are a constant in other parts of the world. Systech is commercializing a new authentication technology, branded as UniSecure, to provide this capability.
One of Systech’s traceability customers, Sharp Packaging, is making a major push to be ready for the traceability mandates: the company announced in July that it has 25 serialization programs going on within its network of facilities and already has 16 packaging lines set up to provide the unit-level barcodes that are the basis for the traceability capability.
“Although the pharmaceutical industry is being mandated to embrace serialisation, the program will have a positive impact on patient safety and supply chain security,” said Gaurav Banerjee, director of technical services at Sharp Packaging, in a recent conference presentation. “Companies need to prepare for the upcoming directives and bear in mind the sale and cost of the task ahead.”