BioPharmas That Favour Western CMOs May Soon Look to Asia say Experts
The suggestion was put forward at the GPCM (Global Pharmaceutical Contract Manufacturing) conference in London last month, where a panel of experts said that - for now - the economics of shipping biopharmaceuticals favour contract manufacturing organisations (CMOs) in the key European and North American markets.
“With biopharmaceuticals cold storage and transportation can cost up to $10,000 a shipment and thus by the time you put those prices in there is a good strong business case to return West,” said Eisai’s Associate Director, Richard Fazackerley.
Former Director of External Supply at GlaxoSmithKline, Jim Browne agreed. He said that while lower production costs in Asia may catch the eye initially - as it has done for small molecule drugmakers - “once you start adding the logistics, the complexities of all the timescales, the communications associated with biopharmaceuticals, it does not work out to be such an attractive offering.”
These opinions are supported by statistics in the 10th Annual Report and Survey of Biopharmaceutical Manufacturing, April 2013. Selected data from the report – produced by BioPlan Associates - shows the interest from US companies considering a third party manufacturer in different locations.
Out of the 30 countries identified by US respondents, the top five are represented in the graph above and though Singapore – currently offering a number of biomanufacturing incentives - is the top destination considered at some level by US firms surveyed, consideration of the UK and Germany have increased whilst interest in China and India fell by 25 and 20 percent respectively in the last year.
Further evidence for this trend was demonstrated further in a session earlier this year at Informex, California where a survey conducted by HighTech Business Decisions found only 29% of biopharma managers would consider outsourcing to low-cost regions.
Similarly to the GPCM delegates, issues of cost were found to be the top reason for driving companies away, though other reasons included time difference, communication/language barriers and regional experience.
Quality concerns
Quality was deemed to be the other key factor driving BioPharmas to favour Western CMOs by the GPCM panel. Browne, who in his former role as GSK sourcing chief assessed a huge amount of potential suppliers, said that at present in India and China there is a "huge diversity" in both the quality of manufacturing sites and CMO's 'risk-tolerance.'
However, things are starting to change according to Browne, particularly in China where he said that contractors are “very entrepreneurial and focused commercially.”
Such improvements - coupled with growing demand for biopharmaceuticals in the country - means is starting to attract the attention of Big Pharma, which may impact sourcing decisions he said.
Further evidence for this emerged in June, when a strategic alliance between Boehringer Ingelheim and local CMO Zhangjiang Biotech & Pharmaceutical Base Development Company led to plans to build a cGMP facility in Pudong, Shanghai utilising mammalian cell culture technology.
Speaking at the time, Steven Zhang told Outsourcing-Pharma.com “China is in its infancy” with regards to biological drugs and such a co-operation would help “elevate the domestic manufacturing standard.”
The joint venture follows AstraZeneca’s biologics’ unit MedImmune teaming up with Chinese firm WuXi App Tec – a subsidiary of WuXi Pharmatec – last September.
The following month Wuxi opened what it claimed to be the country’s first European and US GMP biologics manufacturing facility and the first globally to use fully disposable technology, supporting the JV.
