Advances in biopharmaceutical manufacturing technology, combined with current economic, healthcare and industry trends are shaping the future of healthcare delivery, and opening the door for more and better options for industry and consumers.
The sheer complexity and cost of biomanufacturing clearly affect the cost of healthcare. Today’s economic environment is contributing to the changes in the way critical manufacturing decisions are being made. Our study, “Advances in Large-scale Biopharmaceutical Manufacturing” [1] compares trends over the past 15 years and show that, until recently, cost reductions were not the primary drivers to the strategic manufacturing decision process. Much of this can be attributed to the early industry’s urgent need to get products to market quickly, given the enormous investments and R&D expenditures.
Today, as biomanufacturing technology continues to advance [2], most companies are finding it vital to address manufacturing costs at multiple levels. Examples include novel expression systems, genetic engineering, cell lines, bioreactors, culture media and other upstream technologies [3]. Less than a decade ago, typical yields from large-scale manufacture of recombinant proteins were less than 1 gram/Liter; today, the average yield is nearly 3 grams/Liter [2], and yields in the 10 gram/Liter range are increasingly common.
In addition, small volumes, and flexible factories are increasingly common, as a result of changes to a bioreactor and associated equipment design. Now, small manufacturing suites can often match the capacity of massive, earlier-generation facilities. While advances in purification processing technologies have not yet matched these advances, these areas, too, are moving forward rapidly. The adoption of disposable equipment throughout biomanufacturing processes are also simplifying and decreasing the costs of biomanufacturing.
Lowering Costs to Consumers
These trends are lowering the costs of manufacturing, increasing the speed of scale-up and manufacture of products for clinical testing, and decreasing the cost of product development and all-important time-to-market. Biomanufacturing facilities, many using modular and disposable equipment, are increasingly able to manufacture biopharmaceuticals at world class scale, with these facilities requiring less infrastructure, supplies, land and labor, less costly to operate and capable of rapidly shifting to manufacture of different products. This contrasts greatly with much of the industry’s established (legacy) manufacturing capacity which often involves large, stainless steel and other fixed, single product-dedicated equipment, with most of this capacity devoted to established products, particularly blockbusters.
The evolution of biomanufacturing cost-control is taking place and complementing the trend of biopharmaceuticals displacing small molecule drugs. Biopharmaceuticals now account for an ever-growing portion of the pharmaceuticals in development, and represent expanding industry sales and profits. There are currently about 400 biopharmaceuticals approved in the U.S. or European Union (EU) [4], including over 150 recombinant proteins, with many more in development, including over 50 biopharmaceuticals with applications currently pending in the U.S. or EU [1]. Large international pharmaceutical companies, most with ailing R&D pipelines, are increasingly licensing in and further developing biopharmaceuticals. These traditionally, ‘small molecule’ companies are also acquiring biopharmaceutical companies and manufacturing capacity. Major (e.g., multi-$10 billion) mergers, such as Pfizer acquiring Wyeth, and Merck acquiring Schering-Plough, primarily involve acquisition of biopharmaceutical products and pipelines. Many of these large international companies even now describe themselves as biopharmaceutical rather than pharmaceutical or drug companies.
As the biopharmaceutical industry matures, decreasing costs and improved biomanufacturing technologies will follow. There will be an increasing variety of products, ranging from fully innovative biopharmaceuticals, including whole new classes, such as gene therapies and cancer vaccines, to hundreds of biosimilars and biogenerics worldwide. With improvements in biomanufacturing, and increasing affluence in developing countries (especially China and India), an ever-increasing number of products, initially mostly biosimilars/biogenerics, will be manufactured outside of the major market countries. Most of these products will be distributed domestically, but many will make their way into markets without stringent regulatory oversight. Eventually, as developing countries establish the necessary regulatory and quality administration, even the U.S. and European markets will be opened to new competition.
Biosimilars
As advances such as disposable manufacturing lower costs for entry, the manufacture of biopharmaceuticals will see increasing numbers of competitors, resulting in more rapid growth in the number and diversity of products and companies worldwide. If nothing else, improvements in biomanufacturing are enabling development of a whole new industry of biosimilars and biogenerics worldwide. Now, the question emerging is not whether biosimilars will be introduced, but whether these producers will be able to reduce costs of manufacturing these complex molecules enough that they can actually result in significantly lower costs to patients and third-party payers. Clearly, the massive R&D costs associated with biologics won’t likely go away, nor will the costs of regulatory or clinical management for drugs. So, even a substantial reduction in manufacturing costs may have only incremental effects on overall costs.
More and Better Biologics
Spurred largely by these improvements in biomanufacturing, biologics that were previously thought to be too costly or difficult to produce may be considered viable drug candidates. There will likely be an increasing flow of biopharmaceuticals of all types in the marketplace, including new biosimilar products. There will also be a significant increase in innovative biopharmaceutical development and manufacture, as more funding and more companies get involved, worldwide. This may include countries currently not involved in pharmaceutical R&D. There will be more biopharmaceuticals of all classes coming to market in coming years for different, currently untreatable, diseases. This will include a large number of recombinant monoclonal antibodies, many for treatment of various types of cancer and chronic diseases.
Will Improved Biomanufacturing Affect Health Care Delivery?
These trends will increase treatment choices and competition, which can only be good for consumers. With increased competition, there will be increased pressure for reductions in end-user prices, irrespective of government and payer cost-containment efforts. However, prices for biopharmaceuticals may not decrease significantly. As illustrated by biosimilars in Europe, with increased competition, prices for biopharmaceuticals decrease, by 25-30%--nowhere near the sometimes 90% reduction seen with generic drugs (small molecule branded drugs can lose as much as 90% of their business to generics in just 2 months, because of automated generic substitution, and the industry’s willingness to sell at or near cost [5]). But with most biopharmaceuticals being quite costly, even $50,000-$100,000+ per year, a small price reduction can provide significant savings. The U.S. and other major markets still have a clear bias for innovative (new, better standard-of-care) products, and biopharmaceutical pricing will remain primarily based on maximizing profitability models, with there being no imperative to abandon this. Thus, biopharmaceuticals will remain high profit margin products, which should facilitate further development of more products, and more drug innovator companies.
It’s likely, then, that biopharmaceutical costs may not decrease as much as many would like. In fact, in some cases, the direct costs for therapeutic treatments may even increase, although overall patient care may decrease. For example, as biopharmaceuticals replace less effective small molecule drugs, or where therapeutics were previously unavailable, new and improved biologics will decrease hospitalization and other costs (if this does not occur, these products will not find a market or be developed). The overall cost-effectiveness and savings from biopharmaceuticals will help contain overall health care costs, while improving treatment and quality-of-life for an ever-increasing number of patients.
Trends in Acquisitions
Large international companies will continue their trend of licensing in or acquiring more biopharmaceutical products and companies, and will likely further consolidate their dominance in biopharmaceutical and overall pharmaceutical marketing. In the process, they will be supporting an ever-larger number of smaller and start-up companies conducting discovery and early R&D. However, the decreased costs and easier entry into the market afforded by improvements in biomanufacturing will also enable a growing number of start-ups, many with just one product, to establish themselves. This will also provide a larger pool of new products. In addition, biopharmaceutical contract manufacturing organizations (CMOs) will also experience growth in number and volume of products they manufacture.
Summary
In the long-term, improvements in biomanufacturing will lead to improvements in most everything that matters to industry and consumers: more products, more variety, more diseases being treated, more effective therapies, improved cost-benefit ratios, more companies conducting R&D and manufacturing, decreased manufacturing costs, more competition (both single-product companies, and major, multi-product players), and more choices for patients. This will improve the health and quality-of-life of those affluent enough to afford biopharmaceuticals, which includes growing numbers in lesser-developed countries. Payers will be more willing to cover new and improved biopharmaceuticals as they provide improved cost-benefit ratios and reduce their overall costs. Improved biomanufacturing technology will benefit and improve the quality-of-life of growing numbers worldwide. There will also likely be more funding of biopharmaceutical R&D and marketing by international pharmaceutical companies, with increasing demand for new products among Big Pharma companies. This will result in increased revenues for the smaller biopharma innovator companies, which will continue to be the source for many new biopharmaceutical products.
About the Author
Eric S. Langer is president and managing partner at BioPlan Associates, Inc., a biotechnology and life sciences marketing research and publishing firm established in 1989, and located in Rockville, MD. 301-921-5979. www.bioplanassociates.com.
References
1) Langer, E. Advances in Large Scale BioManufacturing and Scale-Up Production, 2nd Edition, BioPlan Associates, Nov. 2007
2) Langer, E., Report and Survey of Biopharmaceutical Manufacturing Capacity and Production, 6th edition, BioPlan Associates, April 2009.
3) Rader, R.A., Biopharmaceutical Expression Systems and Genetic Engineering Technologies: Current and Future Manufacturing Platforms, BioPlan Associates, Nov. 2008.
4) Rader, R.A., BIOPHARMA: Biopharmaceutical Products in the U.S. and European Markets, online database at accessible at http://www.bioplanassociates.com/publications/pub_bpuseu.htm.
5) E.M. Kolassa, The Strategic Pricing of Pharmaceuticals, PondHouse Press, 2009
