Next-Gen Biologics Market Worth $30B by 2024

June 10, 2014
Visiongain analysts see great potential and challenge in biologic’s near future

Considering that in 2013 the next-generation biologics market attained a value of more than $1.5 billion and achieved a CAGR of 30 percent since 2008, the next 10 years of development and market penetration for biological drugs hold great potential say visiongain analysts. In the research and analytics firm’s recent study, “Next-Generation Biologics: R&D, Industry and Market 2014-2024,” the report’s analysts predict an incredibly robust market expanding significantly over the next decade, hitting some $30 billion by 2024.

According to Visiongain, the market for next-generation biologics, including approved and pipeline in the leading submarkets (ADCs, antibodies, antibody fragments, insulins, coagulating factors, growth hormones and biosimilars) present both tremendous opportunity and challenge to this dynamic segment of pharmaceutical manufacturing industry.

At present, says the report, the leading next-generation biological therapy in 2013 was Roche’s Kadcyla (trastuzumab emtansine), which generated $250 million in revenue in spite of being introduced in March. Regenerative medicine was the leading submarket in 2013 according to visiongain analysts: “Therapies in that sector have been available for more than a decade. Technologies covered by this submarket hold the potential to dramatically change treatment options in many disease areas in the coming 10 years.” Geographically, says visiongain, the U.S. accounted for nearly two-thirds of the revenue generated by next-generation biologics in 2013, with many companies launching products here as opposed to emerging markets.

In the Pipeline
Visiongain forecasts that there will be at least five blockbuster next-generation biologics creating a market worth $1 billion by 2024 and that in the same period, revenues of the seven top brands including Adcetris, Kadcyla, Gazyva, Tresiba, Afrezza, Plegridy and Eloctate, are likely to bring in $10 billion, fueling even more development. “Next-generation biologics will address shortcomings in current therapies,” say visiongain, including inconvenient dosing and concerns over side effects.” Development trends say analysts include sustained release to help dose intervals and compliance, and reformulations for oral and topical administration.

Get Over It
As mentioned, visiongain predicts a $30 billion market and five blockbusters by 2024—but there are some very real barriers the industry will have to leap in order to achieve forecasted numbers. For example, the study reveals there will be manufacturing hurdles. “Proteins are the most complex molecules in nature,” say visiongain analysts describing the complexities, “with some aspects of their structure and function depending upon the chemical and physical properties of their environment, such as temperature and pH. Bioactive proteins, including biological drugs, can have additional modifications, including glycosylation - where sugar molecules are attached at various points. Other complexities include folding of the proteins’ amino acid chains into highly organized structures and association of multiple protein molecules into aggregates.”

It is this 3D structure of the proteins in a biological drug, the report notes (in addition to its amino acid sequences), that give the drug its functional characteristics. According to visiongain, the protein’s structure is what makes the manufacture of biologics so complex and so costly.

Linker Technology Required
“For next-generation biologics,” say visiongain, “further manufacturing challenges stem from ensuring that fused molecules are bound in the correct place and with the correct degree of binding. This has been a particular challenge for the first generation of ADCs, where the number of small molecule cytotoxics bound to each antibody molecule has been difficult to control.” Development of site-specific linker technology for bound molecules, predicts visiongain, will improve the consistency of manufacturing across the next-generation biologics market, “although this advanced technology will add to production costs, we believe.”

Contract Manufacturer Investment and Development Trends
Demand for contract manufacturing is growing throughout the pharmaceutical industry, although uptake in the biotech sector is relatively low in 2014, says visiongain. “Less than 10 percent of biotech manufacturing is outsourced ... However, that will change in the near future, with companies looking to cut manufacturing costs to increase flexibility and improve profitability for therapies, where margins will be squeezed by payers looking for discounts.” Large biotechs, visiongain predicts, will continue to invest in their own manufacturing facilities to 2024, keeping commercial production of first- and next-generation biologics in-house. For example:

• In October 2013, Roche announced planned investment of $900 million in expanding current and adding new manufacturing facilities in the EU and U.S. The investment includes $670 million in expanding capacity at two manufacturing sites, as well as $210 million in adding an ADC manufacturing site in Switzerland.

• Novartis began work on a manufacturing facility in Tuas, Singapore in February 2013. The company plans to invest $500 million in building the plant, which will specialise in mammalian cell culture. Novartis expects the facility to open in 2016.

• In April 2013, Bristol-Myers Squibb began work on a $250 million expansion of its U.S. biotech manufacturing site in order to provide capacity for new product launches. Since 2007, the company has invested $1.1 billion in the facility, which manufactures Orencia (abatacept), among other products.

Clinical-stage manufacturing for these large biotechs, as well as for smaller companies with early-stage development programs, represent an opportunity for CMOs, according to visiongain, looking to enter the next-generation biologics market. “With few CMOs offering manufacturing for next-generation biologics, particularly regenerative medicine and next-generation antibody technologies, those that invest early will benefit significantly to 2024,” says visiongain.

There are risks in investing in these technologies, offers the report, including the high costs in establishing dedicated manufacturing spaces for products that may not succeed in clinical trials. So far, say report analysts, CMOs have chosen to invest in lower-risk next-generation sectors, such as protein pegylation technologies and ADCs, where market experience for novel therapies is established.

“Leading CMOs in the next-generation biologics sector include Lonza, Piramal Pharma Solutions and Fujifilm Diosynth Biotechnologies,” says visiongain, “which offer clinical and commercial-scale ADC manufacturing.”

A Solid Platform from Which to Grow
Biologics account for an increasing share of the pharmaceutical pipeline, notes visiongain analysts. In recent years, says the report, up to a third of new drug approvals in developed markets have been for biologics. These drugs accounted for seven of the ten bestselling drugs in 2013. Further, biological development programs continue to be more successful than small molecule programs, with close to a quarter of biologics entering clinical trials reaching the market, compared with less than 10 percent of small molecule therapies.

“The high revenues, high success rates and large target patient populations have appealed to pharmaceutical companies in recent years, with many increasing the share of R&D funding spent on biologics. Development of novel platforms, driven by greater understanding of the mechanisms of biological drugs in the body, is driving growth in next-generation biological drug development, say visiongain’s analysts, and that over the next 10 years, a growing number of development platforms will be validated in clinical trials, leading to an increasing rate of next-generation biologic approvals to 2024.

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