Life Science - Summit for the Future Special Report

by Evalueserve - Knowledge Partner of the Summit for the Future, May 3-5, 2006

Biopharmaceutical Outsourcing – Moving to Centerstage

Biopharmaceuticals is the most upcoming segment of the pharmaceutical industry due to the evolution of biotechnology. This has resulted in highly efficacious products that aim at providing cures for life-threatening, difficult ailments, which have been difficult (well nigh impossible!) to treat. This industry is keeping its nose to the grindstone to reach the pinnacle. Certain factors, like increasing costs, complex regulatory issues, high prices, tremendous competition, etc., are forcing companies to improve their operational efficiency and productivity. Outsourcing has become a strategic imperative for companies in their quest to improve their efficiency and productivity.

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What’s in Pipeline?

The increase in biotechnology products may result in an increasingly outsourced manufacturing market. Many new biotechnology products are in the pipeline at different stages of development and is estimated that approximately 240 new biotechnology medicines would reach the market by 2007. Out of these, some blockbusters are also expected. This could see demand for bio manufacturing outpacing the supply, resulting in companies preferring to outsource their manufacturing processes.

The proliferation in patent expirations may lead to increase in outsourcing. It is estimated that by 2006, biologics patents worth USD 10 billion will expire. The companies will be under pressure to focus more on their core competencies to develop newer products and also to outsource the manufacturing of the generic products to reduce costs. Moreover, a company would strategically view the outsourcing as a viable option, so as to manufacture the patented products also in a cost efficient manner.

Also, the biogeneric products require more trials compared to their counter part in the non-biotech sector to meet the safety issues and address the problems of bioequivalence. A slight variation in manufacturing process such as change in the culture media or growth conditions, can significantly impact the safety or the immunogenecity concerns of the product. This may lead to a requirement of new clinical trials to validate the process, which will be associated with high costs. With limited R&D facilities the generics firm may either seek partnerships or turn to outsourcing.

The process of developing guidelines in the field of bio generics will be slow since it is subjected to considerable legal interpretations on safety and technical concerns. In the US, there has been mounting pressure on regulators from the US Biotechnology Industry Organization (BIO), insisting that safety concerns to be addressed and debated before any guidelines for generic biologics were issued. Biopharmaceutical and biotech companies seem to be uniquely positioned to adopt outsourcing, both at home and offshore but to some extent the potential benefits will be overshadowed until the safety and technical concerns are satisfied. However, for the present, prepare to take a ‘wait and see’ approach, awaiting further developments in the industry in the years to come.

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