These are exciting times for pharmaceutical manufacturing and 2014 is looking like it will mark the industry completing a strong pivot, shedding market blockers to support a long, profitable run downfield. Granted, football analogies are truly cliché when it comes to describing business behavior and its reaction to the competitive forces at play, but nonetheless apropos to help visualize what’s occurring across Pharma as drug makers tap their bank accounts and other financial resources to field advanced, efficient process and build new manufacturing facilities to house it in.
In the 2013 “10th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production,” Bioplan Associate’s researchers noted that while capacity by major biopharmaceutical concerns is likely not to increase overall, they are hotly pursuing process efficiency. “Biomanufacturers are showing a renewed urgency to improve productivity and reduce costs while boosting quality,” said Bioplan’s Eric S. Langer. “This is reflected in increasing budgets over the past four years supporting activities focused on production efficiency.” Bioplan’s research reveals that while plans for additional capacity by major biotherapeutic developers is trending lower, “CMOs are planning significantly more capacity expansion.” According to the study, nearly 60% of the CMOs responding will be planning to increase mammalian cell culture production capacity.
Between now and 2018, industry analysts are projecting that spending on manufacturing capacity will be robust. Last April, Industrial Info Resources released its report projecting that spending on new construction starts in North America is anticipated to reach at least $15 billion before 2013 is over. According to Industrial Info Resources, “As of March 18, 2013, the actual reported count for projects scheduled to begin construction in 2013 in North America was 730, representing a total investment value of just more than $17 billion.” This amount can fluctuate over time, said the report’s announcement, hence the conservative $15 billion projection.
Whether 15 or 17, the small and large molecule pharma industry is planning to spend tens of billions of dollars on capacity in the near future. And the timing of this investment couldn’t be better. While past market forces tended to stymie investment in process and production technologies (as well as greenfield sites), recent market trends have prompted new behaviors and spending trends. On the part of the majors, including companies like Pfizer, Merck, Roche, GSK and others, capacity consolidation is occurring, but as they focus on development, they are pushing production tasks to well-vetted CMOs — firms that are adding capacity to meet the near-term and future demands of these and other customers. Whatever the prompt, investments in processing technology now are buying into the incredible leap manufacturing technologies have made in efficiency and cost effectiveness, not to mention the increasing ability of pharma’s operational executives to understand and apply the advancements and innovations to their most profitable effect.
In this issue, I cover two new ground-breaking facilities that I feel reflect the mega trends affecting the industry. Since the turn of the century, the rise of biologics is fueling resurgence in the pharma industry not seen since the ’50s. We take a close look at Baxter’s new $1 billion Covington, Ga., immunoglobulin processing facility. It’s the biggest capital investment in the company’s history and highlights the acceleration of biological-based therapies into the pharma mainstream. Similarly, we take a close look at DSM’s new Brisbane biologics CMO that reflects the growing trend of developers seeking effective, efficient production capacity in locations that serve their global aspirations.
In spite of the world’s political tensions and economic pains, I think everyone is sensing that 2014 has real potential to be a good year and the start of a renaissance that will sustain the industry and make it healthier, more profitable and able to fulfill its mission of safer, less costly drugs and better outcomes for consumers. Happy New Year? I think so.