What Underpins the Success of the Biopharmaceutical CMOs in Europe?

What Underpins the Success of the What Underpins the Success of the Biopharmaceutical CMOs in Europe?Biopharmaceutical CMOs in Europe?

Aiswariya Chidambaram, Research Analyst

Healthcare

October 31, 2011October 31, 2011

Functional Expertise� Particular expertise in:

- Analyzing regional sales performance, identifying performance gaps and providing relevant solutions to stakeholders for

the growth and development of regional business.

- Designing and roll out of appropriate training modules, conducting workshops on selling skills excellence and working

on development of Business executives at professional and personal levels.

- Conducting induction training to new recruits and field coaching on marketing projects to ensure smooth

implementation.

- Recruiting candidates and identifying talents at regional level by appropriate means of performance analysis and

competency mapping. Special projects implementation on a regional scale

Industry Expertise• Expertise in diverse therapeutic segments and product portfolios which include

- Diabetology – Oral Anti Diabetics

- Cardiovascular Diseases – Anti-hypertensives.

- General Medicine – Antibiotics, Anti-fungals, and Health supplements.

Today’s Presenter: Aiswariya Chidambaram

Aiswariya

2

- General Medicine – Antibiotics, Anti-fungals, and Health supplements.

- Women’s Healthcare – Oral Contraceptives

What I bring to the Team• In depth knowledge of four specific Therapeutic segments.

• Expertise in tracking Industry trends and events as part of Market Vigilance.

• Reasoning based recommendation for improved efficiency.

• Excellent communication and presentation skills.

Career Highlights• Have successfully completed a NIH project on Filariasis at the Tuberculosis Research Centre (Chennai).

• Completed internship projects on Industrial Microbiology, Cytogenetics and Karyotyping, and a course on “Tools in Bio-

informatics and Vector Designing.”

• Worked as a Performance Consultant for South India (covering four states – Tamil Nadu, Andhra Pradesh, Kerala and

Karnataka) with a leading Multinational firm, Bayer Healthcare.

• Worked on market research projects such as the “Global Generics Pharmaceutical Market” with Frost & Sullivan.

Education• Bachelors in Technology, specialization in Biotechnology, from Anna University, Chennai, India.

Aiswariya

Chidambaram

Research Analyst, Healthcare Practice,Frost & SullivanGlobal,Chennai,India

Focus Points

Biopharmaceutical Industry in Europe

Summary of Key Market Drivers and Restraints and Challenges

European Biopharmaceutical Contract Manufacturing Market – A snapshot

Biopharmaceutical R&D – What’s in the pipeline?

The rise of Biopharmaceuticals

Technology – “The Powerful Tool”

3

Focus PointsAnticipating Capacity Demand – A Tricky Speculation


Key Biopharmaceutical CMOs in Europe – An Outlook

Market Potential and Business Opportunities

Potential Threats to Biopharmaceuticals

What can be expected in the future?

Facing the Change / Conclusions

The Rise of Biopharmaceuticals

“Biopharmaceuticals – The Length and Breath of

Healthcare in Future”

What are biopharmaceuticals? – Biopharmaceuticals are pharmaceutical

drugs based on protein, therapeutic serum, virus, vaccine, blood

components or derivatives or gene transfer products, directly administered

into the blood stream by injection. They are complex macromolecules with

very high molecular weights compared to small molecules.

Technology

� Monoclonal Antibodies

� Recombinant Proteins

Applications

� Research

� Therapeutics

� Diagnostics

4

Biopharmaceutical Manufacturing – Biopharmaceuticals are generally

expressed in mammalian cells (mice, rabbits, etc.) or micro-organisms

(yeast, bacteria, etc.). Manufacturing involves highly sterile, aseptic

conditions and highly sensitive to changes in environment. Formulations are

predominantly injectables – pre-filled syringes or cartridges.

Source: Frost and SullivanWhy Biopharmaceuticals?

Stronger focus on target diseases, more effective and potent action, potential to cure diseases rather than just treating symptoms, lesser side effects.

Proteins

� Protein Therapeutics

� Oligonucleotides

� Gene Therapy

� Diagnostics

The Biopharmaceutical Industry in Europe

Public Biotech Company Data

Sales Revenues $18.465 B

R&D Expenditure $4.828 B

Net income (loss) $.651 B

Market Capitalization $84.394 B

Number of Companies

Public companies 182

Private companies 1,665

10.33%6.52%

48.9%

34.25%

Monoclonal antibodies

Recombinant Proteins

VaccinesInsulin

Overview of the European Biopharmaceutical Industry Biopharmaceutical Market: Percent Contribution of Therapeutic Segments (Europe), 2011

5

Total 1,847

� 2009 and early 2010 characterized by financial crisis and poor performance of venture capital industry in Europe.

� Monoclonal antibodies (mAbs) and recombinant proteins are the two largest segments, growing at rates of 11.8 and

8.2 percent in 2011.

� The future of Biopharmaceutical industry is promising, with biotech companies focusing more on innovation and

technological advancements and increasing interest of pharmaceutical companies to enter into the biotech business.

The European Biopharmaceutical Industry grew by 11 per cent from 2009 to 2010.

Note: All figures are rounded; the base year is 2011. Source: Frost & Sullivan

Biopharmaceutical R&D in Europe – What’s in the Pipeline?

100

150

200

250

Number of drug

candidates

� More than 1,200 biopharmaceuticals in the

pipeline.

� More than 50 percent of the drugs

represented by the five major countries.

� UK (234) and Germany (150) have the

maximum number of drug candidates in the

pipeline.

� Spain has shown a significant increase of 30

Biopharmaceutical Market: Number of Drugs in Various Stages of Clinical Pipeline, by Country (Europe), 2011

6

0

50

Spain Italy France Germany United

Kingdom

Phase I Phase II Phase III

� The Biopharmaceutical R&D expenditure in Europe, grew by 5 percent from 2009 to 2010.

�. As venture capital firms in Europe are interested to invest only in late stage biopharmaceutical companies, start-

up biotech companies gain access to funding, predominantly through venture capital firms based at the U.S.

� More than 50.0 percent of the products in the European pipeline account for therapeutic monoclonal antibodies.

� Spain has shown a significant increase of 30

per cent in 2010 from its 2009 pipeline.

Source: Frost and Sullivan


European Biopharmaceutical Contract Manufacturing Market – A Snapshot

35%

65%

mammalianmicrobial

Biopharmaceutical Contract Manufacturing Market: Percent Sales Contribution of Segments (Europe), 2011

The European Biopharmaceutical contract Manufacturing Market is estimated to be over $1.2 billion in 2011, growing at nearly 11 percent.

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73%

27%

Multipurpose CMOs only MAb & PAb CMOs

Biopharmaceutical Contract Manufacturing Market: Distribution of CMOs by Products Manufactured (Europe), 2011

Biopharmaceutical Contract Manufacturing Market: Distribution of CMOs by Manufacturing Services Offered (Europe), 2011



56

10

44

49

39

10

40

46

0 10 20 30 40 50 60

Total Contractors

Clinical supply

Clinical only with

commercial

Commercial

supply

No. of CMOs

Recombinant proteins Monoclonal Antibodies

Key Market Drivers and Restraints Summary

Key Drivers

Biopharmaceutical Contract Manufacturing Market: Key Drivers and Restraints Summary (Europe), 2012-2018

Increasing interest of Big pharma companies to

expand into the biotech sector

Enormous cost and time saving benefits

offered by CMOs Blockbuster biologics worth

$30 billion set to lose patent

protection by 2018

8

Key Restraints/ChallengesSource: Frost & Sullivan

Increasing competition from low

cost Asian CMOs

Increasing stringency in regulatory standards

Breach of patent and IP related

information

Financial crisis and poor performance of the venture capital industry in Europe

Highly capital intensive and risky

sector


• Customizable design• Enhanced Productivity• Significant operational benefits

• Optimized expression systems• Enhanced cell productivity & viability• Simplified purification process• Improved selectivity

• Minimizing human errors• Maximizing productivity• Improvised product quality

Upstream & Downstream Lyophilisation & PATDisposables/ SUBs

� Innovation

� Funding

� Expertise

� Regulatory compliance

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benefits • Improved selectivity

Single Use Technologies are specially designed for

• Muti-product contract manufacturing

• Easy transfer of operations

• Busy facilities and lean operations

Upstream technologies

• cell productivity - 2-4 g/L in established production processes

• 4-6 g/L in pre-clinical and clinical manufacturing processes

Downstream technologies

• mAbs – filtration & purification resins

• Recombinant proteins - higher selectivity and flow-through mode purification steps

• Lyophilisation - protein based drugs, preservation and packaging

• Process Analytical Technologies (PAT) - product driven approach to process based one

• Standardization of processes

• Reduced degree of variation

“Any sufficiently advanced technology is indistinguishable from magic” – Arthur C. Clarke

Anticipating Capacity Demand – A Tricky Speculation

Biopharmaceuticals Market: Demand for Outsourcing of Biopharmaceutical Manufacturing to CMOs (Europe),

2011 - 2018

15.9%

16.1%16.2%

16.5%

16.8%

17.0%

17.4%

17.5%

16

16.5

17

17.5

Demand for

Outsourcing (%)

Biopharmaceuticals Contract Manufacturing Market: Industry Capacity Utilization Rates Forecasts (Europe),

2011 - 2018

10


Note: All figures are rounded; the base year is 2011. Source: Frost & SullivanNote: All figures are rounded; the base year is 2011. Source: Frost & Sullivan

It is highly essential that CMOs make cautious decisions regarding capacity expansions and choice of contract deals, lest they be hit by over capacity and witness a subsequent erosion of profit margins.

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15.5

2011 2012 2013 2014 2015 2016 2017 2018

Year

Key Biopharmaceutical CMOs in Europe – An Outlook

Market Share: 20 - 40 percent

•Lonza •Boehringer Ingelheim

Market Share: 5 - 10 percent

•Rentschler Biotechnologie

Tier 1

Tier 2

Tier 3

Biotech Contract Manufacturing Market: CMO Market Share by Tiers of Competition (Europe), 2011

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•Rentschler Biotechnologie•Sandoz•Fujifilm Diosynth Biotechnology•Royal DSM Market Share: < 5 percent

•Celonic GmbH•BIOMEVA GmbH•ProBioGen AG•Others


Market Potential and Business Opportunities

� Strategic and highly competitive market

� Mammalian Contract Manufacturing - future of CMOs

� Biosimilars are likely to have a great impact on the market growth

� Potential drug candidates in pipeline

� Increasing interest of Big Pharma companies and multinational generic companies

� Increasing number of newly reported diseases

� Remarkable success of existing biopharmaceuticals

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� Remarkable success of existing biopharmaceuticals

�Advent of newer, innovative technologies

� Strategic alliances between technology providers and CMOs


“There is untapped potential for CMOs which are properly positioned, as it is a market, where high growth and rapid rise in profits are anticipated.”

Potential Threats to Biopharmaceuticals

Transgenic

CloningOther Threats

� Product failures – pre-clinical and clinical

� Capital investment

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Transgenic animals

� Capital investment

� Financial crisis in Europe

� Negative perception of Industry

� Regulatory barriers

� Intellectual property and patent laws

Careful outweighing of benefits and risks is essential

for CMOs in order to grow and sustain in the

Biopharmaceutical Contract Manufacturing Market.


What Can Be Expected in the Future?

Therapeutics

Government

Regulatory bodies like EMEA to drive new product and technology introduction

Increase in approval rates of new biopharmaceuticals and biosimilars

Globalization

Consolidations, mergers, acquisitions

Opening and expansion of Asian markets

Global capital markets

� Transition from “small molecule blockbuster” model to “biopharmaceutical model

� Increase in public awareness, acceptance and approval of biopharmaceuticals

� Increase in outsourcing of biopharmaceutical manufacturing by Big Pharma companies

� Development of “Virtual Pharma”

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Technology

Development of Transgenic technologies

Stem cell technologies

Cloning technologies

Therapeutics

Development of RNA-i based therapeutics

Development of anti-sense based therapeuticsRecombinant protein therapeutics

Monoclonal antibodies

� Development of “Virtual Pharma”

� Differentiation and consolidation strategies adopted by Biotech companies and CMOs

� “A-one-stop-shop” offered by CMOs, promoting a complete portfolio of products and comprehensive range of services

� Large CMOs moving into niche areas of biopharmaceutical manufacturing

� Further development and implementation of transgenic technologies

� Establishment of regulatory pathways for biosimilars and transgenics

“ The best way to predict the future is to create it” – Peter Drucker


Facing the Change

Reacting to Change

• Develop biopharmaceuticals for key indications

• Customize according to customer needs and preferences

• Comply with new government policies

• React and respond as needed

• Defend and protect company’s position in the market

Strategic Posture Actions Strategy

“ Change is the law of life. And those who look only to the past or present are certain to miss the future.” – John F.

Kennedy

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Anticipating Change

Leading the

Change

• Analyze prospects for market globalization

• Research customer needs, preferences and expectations

• Monitor new technological developments to predict future

• Foresee capacity requirements

• Pioneer new and better technologies

• Introduce innovative products, that open new market opportunities and spur creation of whole new industries

• Seek to set industry standards

• Plan ahead for future changes

• Invest in R&D

• Instill competitive capabilities

• Improve product line

• Strengthen distribution

• Seize the offensive

• Be the agent of industry change

• Influence rules of the game

• Force rivals to follow


Conclusions

� The future of contract manufacturing in Europe is controlled by mammalian cell manufacturing.

� Demand for contract manufacturing and capacity additions is strongly driven by biosimilars and pipeline of biologics.

� Interest of Big Pharma companies in the Biopharmaceutical sector is likely to set the consolidation wave high in the industry.

� Manufacturing capacity demand – supply gap is likely to shift towards excess

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� Manufacturing capacity demand – supply gap is likely to shift towards excess demand by 2018.

� Given the immense potential and growth opportunities in the Biopharmaceutical Contract Manufacturing Market, particularly mammalian contract manufacturing, the CMOs which are properly aligned are sure to emerge as bread winners.


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