Traditionally contract development and manufacturing organizations (CDMOs) were Big Pharma’s Cinderellas, working hard behind the scenes, working their niches, usually seeing to either chemical or biologic active pharmaceutical ingredient (API) manufacturing, final drug product manufacturing, or early and clinical-stage development work.
Eventually, even Cinderella was invited to the ball and CMOs are too, increasingly being asked to the dance and to take on more and more production and commercialization tasks for Pharma’s innovators, as well as all those companies, big and small, serving markets near and far with well-known formulations and dose forms. Creating an organization that can serve the growing demands of drug owners and innovators large and small is no mean feat, and DPx Holdings B.V. has spent the last year creating a dance partner that knows all the steps: from the minuet of engagement, the foxtrot of clinical trials, the Charleston commercial scale up and the long Waltz associated with commercial manufacturing at scale to meet the demand for a successful compound.
Last March DPx was created from the merger of Patheon and DSM Pharmaceutical Products, the life sciences operations of Royal DSM in an effort to launch a full-service, end-to-end pharmaceutical contract services provider. Privately owned by JLL Partners (51 percent) and Royal DSM (49 percent), DPx is a culmination of the $2.65 billion deal between the two companies, a deal first announced late in 2013 and completed in March 2014. Led by CEO Jim Mullen (former CEO of Patheon), DPx is operated as an independent standalone company and is parent to business units Patheon Pharma Services, DSM Fine Chemicals and Banner Life Sciences.
According to DPx, the Patheon business unit encompasses solid and sterile commercial dose manufacturing, pharmaceutical product development services and the biosolutions and biologic businesses formerly associated with DSM Pharmaceutical Products. DSM Fine Chemicals’ main focus is centered on custom synthesis services for the Pharma and fine chemical industries. Banner Life Sciences focuses on R&D, in-licensing, out-licensing, commercializing formulation technologies and the production of proprietary, over-the-counter (OTC) and nutritional products. Headquartered in Durham, North Carolina, DPx manages some 8,000 employees at 20 locations globally including the U.S. and Canada, Europe, Latin America and Australia.
But beyond the merger that created the world’s largest organization of its type, the company continues to pursue its hoped-for market leading strategy. Last September, DPx completed the transaction to acquire Gallus BioPharmaceuticals LLC, another contract manufacturing company leader specializing in biologics. According to the Gallus presser, Patheon’s biologic drug substance business now spans four global facilities in Europe, Australia and North America and includes more than 550 employees.
At the time, DPx’s Mullen declared confidently that with the Gallus acquisition his company was now more capable than ever, able to provide customers with “an even higher level of service with our expanded service offerings and dedicated biologics presence in the U.S.” Mullen explained the acquisition allows DPx to better serve the biologics segment and that it aligns with the company’s strategy to “bring our customers an industry-leading, end-to-end service offering.”
Patheon pharma services business provides commercial manufacturing, pharma product development services for a full array of solid and sterile dosage forms, and biologic and chemical drug substance development and manufacturing. With the Gallus acquisition, said the company, Patheon is “now a leading provider of process development as well as clinical and commercial scale manufacturing of mammalian cell culture derived products.”
The deal sought to integrate two existing Gallus sites (St. Louis and Princeton, New Jersey) and complement the two existing Patheon sites in Groningen, the Netherlands and Brisbane, Australia. Three of these four global sites, said Gallus, have nearly three decades of mammalian cell culture experience, while the Brisbane site, opened within the last year, is considered a facility of the future for biologics, one which was covered extensively in Pharmaceutical Manufacturing’s January 2014 issue.
At the end of the day, the enhanced capabilities provided by the Gallus acquisition further supports Patheon’s end-to-end integrated offering strategy by providing small-scale API and biologic drug substance through to commercial manufacturing capabilities and the capacity to win more of this business going forward.
RESPONSE TO SUPPLY CHAIN COMPLEXITY
According to Mullen (whom Pharmaceutical Manufacturing encountered at DCAT Week 2015), “whether it’s the big pharma guys or some of the smaller customers, those companies want to outsource more, for one, because supply chains are getting more complex.” So they’re looking at outsourcing more work, but with companies with broader capabilities.”
Mullen says the strategy is to shrink the network of suppliers and in the process make the supply chain more manageable. Mullen points to emerging drug product complexity as another strategy imperative served by a CMO with robust technical capabilities. He notes a growing slice of products requires special, sophisticated processing capabilities and that includes both biological drugs and drugs in development on the small molecule side. “The estimate,” says Mullen, “is maybe a third of the pipelines out there that have solubility absorption issues.” So what does that mean, asks Mullen? “They need more specialty formulation technologies to solve these problems.” And what does that mean for DPx? “We keep building our technology base,” citing the recent Agere Pharmaceuticals acquisition as a transaction “exactly aimed at that problem.”
Agere’s Bend, Oregon, facility is expected to serve as a solubility center of excellence and part of Patheon’s pharmaceutical development services (PDS) operations. “We see a growing need to offer customers an integrated, agnostic approach to address their development and drug delivery needs, said Patheon’s Michael Lehmann, president, global pharmaceutical development services and executive vice president global sales and marketing “With this acquisition, we strengthen our number-one pharmaceutical development services position with a solution that integrates scientific acumen and design automation.”
This past March Patheon also announced it has reached a definitive agreement to acquire IRIX, a company that specializes in difficult-to-manufacture API for drugs from early and late development, through commercial launch. Patheon secures additional API development and manufacturing services in the U.S., including high-potency (SafeBridge Class IV certified) and controlled substances (Schedule 1-4). IRIX, said the announcement, has a well-established reputation for the optimization of chemical processes and scale up for commercial API manufacturing at sites in Greenville and Florence, South Carolina.
Through its IRIX acquisition, DPx says it is now able to offer an array of cutting-edge process technologies, including biocatalysis, homogeneous catalysis and microreactors, and are better positioned to address an extensive range of supply chain issues for its customers. “Combining companies with shared commitments to both scientific excellence and customer service drives industry excellence, and we are excited to become part of the Patheon network,” said IRIX CEO Guy Steenrod. “This is a strategic deal that allows us to help customers solve complex challenges with comprehensive, integrated solutions.”
CAPACITY FOR FLEXIBILITY
There are myriad market and competitive drivers steering the strategies of drug owners hunting for business success. Increasingly, this success requires obtaining strategic partners to acquire the necessary resources — especially manufacturing capacity — to support the strategic aims of a given company and the market success of a given therapy. Mullen points to injectables as a good example of where DPx has been shaping its strategy to help companies span the gap. “It’s been a challenging market to find high-quality CMOs with reasonable capacity and flexibility,” says Mullen, noting that “it’s a market that’s been really stretched over the last few years.” He explains that when one looks at the volume of biologics coming along, not to mention biosimilars, “there’s a lot of pressure in the injectable space.”
ONE FOR ALL
Mullen says his company has been focused on being responsive to all sectors of the market and that includes companies with orphan drug indications and other smaller scale, smaller batch production needs. He says this portion of DPx’s potential market reports they’re having trouble finding contract service providers who want to deal with their special needs. “We’ve organized ourselves [to accommodate] small-scale and large scale,” says Mullen, explaining that DPx accomplishes this in different locations and with different lines, but have figured out how to meet the needs of players across Pharma’s diversity.
One of the things Mullen says DPx is good at is being able to offer its customers a shop that can get them through all the phases of development and right into commercial production. “We do that all the time. So by the time you get to the end of clinical [trials],” says Mullen, “you are already in our commercial facilities.”
END-TO-END INTEGRATED DEVELOPMENT
The preceding discussion serves to illuminate what Patheon and DPx have created to be successful and support its customers — of all sizes. Last October DPx renamed its DSM Fine Chemicals business unit to DPx Fine Chemicals. The change, said the company, aligns its business units with the name and strategy of DPx Holdings, further supporting the integration of its businesses in support of the company’s end-to-end development offering and a strategy that has been framed and branded as OneSource. The offering, said DPx, “supports Pharma companies with fully integrated services based on simplicity, speed and quality founded on industry-leading expertise.”
TOWARD TRUER COLLABORATION
Mullen says that some of the company’s customers they’ve worked more closely with over the years are actually starting to reach out and ask for a technical assist with their own facilities. “Now we have conversations about [the] need to pool … resources to figure out how to make a more robust process and compare best practices,” says Mullen, “so the nature of those conversations is changing — it’s a little less insular.”
Mullen notes that Big Pharma, historically, used to lead the development and technological innovation associated with processing and manufacturing operations, but that focus has shifted to the contract services community and companies like Patheon who, out of necessity, are introducing advanced processing/manufacturing solutions as well as technologies supporting operational excellence and compliance like advanced information technologies.
“Our strategy — if you look at what we have been trying to do over the last 12 months and what we’ve put together — is really about trying to read this market, which is saying ‘okay, we’re concerned about supply chain complexity’ and that ‘we want to do more business with fewer companies with broader capabilities.’ We moved to a strategy of saying, ‘look, we want to be a very broad provider, and we want to be able to further [our customer’s business goals from] development through commercialization, API through dose form development, through to commercial dose form packaging, so,” says Mullen, “we can take as many of these hand-offs and coordinations off your plate.”