Trends to watch at CPHI North America

April 18, 2023
The pre-show buzz: investors driving ESG, continuous manufacturing and reshoring

Ahead of CPHI North America next week, U.S. market experts weighed in on the prospects and opportunities for 2024 and beyond. They highlighted a number prominent trends, from process improvements to reshoring.

Push for sustainable manufacturing

Looking first at advanced therapies, CPHI experts predict that, despite recent slowdowns in financing, manufacturing growth will remain robust in next few years. However, investment capital is accelerating the change toward sustainable manufacturing and practices — particularly for contract manufacturers. This trend is being driven from three sides with pharma customers wanting supply chain partners that are focussed on reducing environmental impact, while investors (i.e. VC funders) are looking for biotechs and, more interestingly, CDMOs themselves that have ESG goals embedded in their businesses.

This is really shifting the metaphorical goalposts. Across the industry you see a desire by corporations large and small to showcase green chemistries, ESG programs, process improvements and waste reduction. Yet this is not just occurring in private conversations — it’s also visibly present in marketing communications at events like CPHI North America.

Running in parallel to the sustainability push, and in many ways in keeping with it, is the shift to continuous processing. In fact, according to our speakers it is now being undertaken at some scale by the majority of CDMOs — with even smaller contract providers exploring these technologies at least for pilot scale applications.

Bringing manufacturing back to the U.S.

While it has been talked about for a few years, reshoring and near-shoring — especially for finished products in the U.S. —  remains very real. Similarly, we also see supply chain security and dual sourcing strategies sought to ensure supply of innovative and critical medicines. You put all of these factors together and the outlook is extremely positive for the majority of manufacturers and contract providers in North America – which is a marked shift from just five years ago when many felt it was inevitable that contract services would move to lower cost regions.

The push to reshoring and de-risking the supply chain has been a tremendous boost to manufacturers in the U.S., but has also had significant knock-on effects to companies as far away India – with the shortage of U.S.-based contract partners opening opportunities.

“We see the trend for many U.S. pharma and biotech companies reallocating investments from China to India. They are not exiting China, but reallocating part of their investments to India, especially on the discovery side — chemistry, biology, and to an extent biologics,” says Manni Kantipudi, chief executive officer at Aragen Life Sciences — a contract developer with feet in both camps thanks to sites in U.S. and India. “On the manufacturing side, we are seeing companies reallocating their investments from China and taking it back to the U.S. This had a big ripple effect. As manufacturing companies in the U.S. and Europe reached capacity, these CDMOs started collaborating with companies in India.” 

Outlook for CGTs remains strong

One contract services area in the U.S. that has previously been predicted to grow above the market rate was advanced therapies. This growth remains consistent, driven in the majority by high demand and low number of CDMOs with capacity and the required technical experiences. Looking ahead to the remainder of 2023, despite a recent slowdown in the drug discovery pipeline, the CPHI speakers forecast CDMOs will continue to grow quickly.

Parviz A. Shamlou, Ph.D., executive director at the Jefferson Institute for Bioprocessing (JIB) suggests that once the short-term disruption, such as the backlog from the pandemic, has subsided, the industry will remain in extremely robust health. Ahead of his CPHI session on the state of the biopharma sector, he says, “In 2022, investment in CGTs was nearly $7.0 billion, and this is expected to grow to over $17 billion in the next five years. Over 3,400 biotech companies operated in the U.S. in 2023, nearly 7% more than in 2022. Therefore, the medium and long-term investment outlook for CGTs remains strong, which I think reflects the true power of these new therapies.”

Emphasizing this strength, there are some 1500+ clinical trials in cell and gene therapies, nearly 80% of which are in phase I and 2 — and with an average timeline of about a decade, the big picture looks very strong for CGTs.

If we look at the CPHI North America host city — Philadelphia — in particular, we see a region with an even stronger growth case in 2023. In fact, Shamlou points to the 40 companies presently involved in CGTs R&D, with nearly $3 billion of investments made. But this is where the real complexities begin and contract service demand rises, as CGTs remain patient specific. Shamlou explains that autologous, patient specific cell-based, processes introduce significant uncertainties into the manufacturing leading to unpredictable outcomes. “The manufacturing process is also highly manual, resource and time intensive and inherently non-optimized since T-cells from a patient in late-stage cancer may also not be ideal for the task,” says Shamlou.

 Shamlou predicts that the availability of a universal chimeric antigen receptor (CAR) expressing T- cells in which universal CAR-T cells are engineered out of third part healthy donors will change the cell therapy landscape in the future.

 “Allogenic cell therapy is definitely the future, but presently, therapies are largely based on autologous cells. The challenge is that most traditional CDMOs find hard to respond rapidly to the needs of researchers and start-ups for access to clinical and commercial manufacturing space for autologous cell therapy products,” says Shamlou. “So yes, capacity at the early phase development level in particular is a big issue.”

The advantage of continuous manufacturing

Another CPHI North America speaker — Bikash Chatterjee, CEO of Pharmatech Associates [a USP company] — suggests that CDMO supply chains are potentially the biggest single risk to product resilience, and yet remain an area often overlooked by drug sponsors in partnering criteria.

He prophesizes that with many of the largest CDMOs now running at capacity, drug sponsors will need to focus on mitigating risk and building resiliency when using smaller or mid-sized CDMOs. Ahead of the conference, Chatterjee forewarns that with demand for services increasing at the same rate as U.S. regulatory burdens, both CDMOs and sponsors need to be looking at their supply chain today to avoid the risks of tomorrow.

A potential solution to some of these problems is however, already here — in the form of two new technologies. Both continuous manufacturing and multi-tenant architectures for cross-party data sharing will deliver step change improvements in supply chain resilience.

Chatterjee explains that equipment for continuous has advanced considerably and is now cost-effective and easier to operate in a PAT environment. “Systems are much easier to clean, easier to maintain, and this has tremendously reduced the barriers to entry for manufacturers. And now with the integration of control and PAT sensors with feeders — the equipment evolution is the real gamechanger for adoption,” says Chatterjee. “The irony is that much of the anxiety around installing continuous solutions is the added perceived risk, yet they actually reduce the manpower needed and, of course, are inherently more resilient for control and processes.”

The other advantage of continuous and PAT processes is that they are inherently more green and efficient than batch processes. Bob Girton, partner at Edgewater Capital Partners, suggests this is something all manufacturers must look to as the specter of ESG goals increasingly shifts to the supply chain. The challenge here is that we don’t yet have any consistency of standards of expectations.

For example, the large multinationals are often applying expectations right down into their vendor network — which might be undeliverable in the way they envisage it, especially without the larger company’s support, guidance and engagement. The risk is that it then quickly becomes little more than a check box exercise.

 “What you don’t want is ESG operating as an island separate unto itself, something that is not embedded in the business. And this is the crux of the conundrum for CDMOs: how and why do you create the business case for ESG?” says Girton. “To give a specific example with a company of ours that is using green chemistry: They are not undertaking this because its ‘green’ but because the chemistry is better. It's a better solution. And so the business case is embedded inside of what you're actually innovating to the core.”

Girton advises manufacturers to stop and review, and clarify why the company is going down a climate-focused, carbon credit or a DEI (diversity, equity and inclusion) program. Be sure to ask how is this going to impact operations, decisions made and priorities set, and how will it actually improve the  organization’s performance. But ultimately, Girton points out that CDMOs that consider next generation technologies and reducing carbon are more interesting business proportions and better investment options for venture capitalists.

In his CPHI North America session, Girton will highlight how to go about deciding when and what to implement. His number one consideration is to know your customers, know your market, and ask questions — continue to revisit the untested. For example, if looking at continuous manufacturing, CDMOs may choose not to implement right away, but they need to be aware and looking at what will be the trigger point to go from a watching brief to implementing.

Continuous is a very good example of this, as the cost has come down tremendously and purchasing pilot equipment for flow chemistry is not that expensive. Girton advises getting the capability and then starting to play with it or maybe partnering with an academic lab.

“There are a lot of ways to go about testing the technology and getting a feel for it, but without actually going the next step. It's a case of being aware of what's going on in your market, rather than saying, ‘I'm just going to ignore it’ and not implement methods that are more ESG compliant. The cost of access is also so inexpensive now that it's more of a time resource and efficacy than it is pure dollar concern,” say Girton

CPHI North America will run for three-days and spans 50 sessions with five dedicated tracks. Sign up today to attend CPHI North America and meet other leaders from the world’s largest and most innovative pharma market.

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CPHI North America Content Team