The triangular factors related to outsourcing mAbs projects
With emerging biotechs playing a critical part in developing new drugs, Merck attempts to understand the interactions between parties when manufacturing monoclonal antibodies (mAbs).
Over the last decade, emerging biotechnology companies have played an increasingly critical role in the development of new drugs. According to a recent IQVIA report, emerging biotechs, (defined as companies with less than $500 million in revenue) patented more than 60% of the 59 new drugs that launched in 2018 (up from 50% in 2010). Furthermore, these organisations account for more than 70% of the current assets in the late-stage pipeline (up from 61% in 2008).
Contract manufacturing organisations (CMOs) and contract development and manufacturing organisations (CDMOs), together with their partners in the emerging biotechnology sector, play an integral role to support the swift and cost-effective development of novel drugs as they can help reduce the need for large upfront capital expenditures to build infrastructure. (See Figure 1)
Suppliers of equipment and consumables for process development and manufacturing of monoclonal antibodies (mAbs) play a special role in this ecosystem, since they often serve both parties. In an attempt to understand the interactions between emerging biotechs and CDMO/CMOs better, Merck, together with Ipsos, conducted a double-blinded global online survey in Q1 of 2019. The campaign surveyed ~130 participants that are affiliated either with a CDMO/CMO or an emerging biotech from the US, Germany, China, Japan and South Korea.
The key research findings can be summarised as follows:
The majority of emerging biotechs seek to engage CDMOs early in the development process to mitigate risk and save cost
According to the research, in most world areas approximately 40% of biotechs engage with CDMOs/CMOs during Phase 1. In China, this occurs more frequently during Phase 2. The primary motivation for outsourcing early-stage assets is managing risk, thereby ensuring a smooth manufacturing process. Cost savings is nearly equally as important for emerging biotech, as it reduces the need for large capital expenditures necessary for setting up in-house facilities, instead preferring to seek a partner to take on this responsibility for them (Figure 1).
Becoming a preferred vendor pays off for CDMOs, but a strong network is helpful
The survey also focused on the process for selecting CDMO/CMO partners. Findings indicated that emerging biotechs in all surveyed countries rely heavily on preferred vendors as well as informal networks. This highlights the importance for CDMOs to focus on building a strong network in the industry and ideally aim for preferred vendor status. Formal RFP processes seem to play less of a role in Western markets, however, this does not extrapolate to China, where they appear to be quite common, potentially driven by the absence of strong networks given the market’s lower maturity (Figure 2).
Cost matters everywhere, but other preferences vary by geography
Regardless of the process used—preferred vendors, an informal process or RFP—there is a consensus across geographies that cost competitiveness is a prime attribute for CDMO/CMO selection. Beyond that, however, there is again a geographical divergence. A CDMO’s track record and reputation are very important criteria in the U.S. and Europe. In these markets, emerging biotechs seem keen to establish stable relationships with CDMOs/CMOs so they can grow together and develop an asset together in a true collaboration. The track record is less important in China. Instead emerging biotechs prioritise the availability of specific capabilities (e.g. regulatory, quality, etc.), again reflecting the different maturity stage of this market (Figure 3).
CDMOs are gatekeepers for selection of equipment and consumables making them an important partner for consumables and equipment suppliers
Following CDMO/CMO selection, emerging biotech firms were asked about the guidance they provide related to protocols and equipment/consumables during the asset transfer. The research indicated that two separate decision-making processes seem to exist. On average, approximately 30 percent of the emerging biotechs recommend protocols, most often for cell lines, chromatography, and cell culture media. However, only about 20% provide recommendations related to equipment or consumables. It is interesting to note that of the emerging biotechs that provided recommendations, 50%-60% believe that their recommendations are being followed (Figure 4). These findings (1) prove the reliance on CDMO/CMO partners to develop a robust manufacturing process and (2) demonstrate that there is an opportunity for suppliers of equipment and consumables to drive a part of their business though engagement with the emerging biotechs.
To triangulate these findings, similar questions were asked to the CDMO subgroup and the research showed that only one third of CDMOs at least sometimes follow the recommendations they receive and 45% do not even consult their partner. The main reason to deviate from the received guidance is incompatible infrastructure, followed by a different preferred supplier (Figure 5). These findings highlight the powerful and critical role of the CDMO in the process and make it abundantly clear that the suppliers have to focus on this stakeholder group to drive their business.
When examining the nature of the relationship between the suppliers and the CDMOs, the research revealed that only 15% of CDMOs avoid switching suppliers, whereas the rest evaluated on a project-by-project basis which supplier to use (Figure 6).
Suppliers have several levers they can exploit to increase loyalty. When selecting suppliers, >80% of CDMOs indicate quality as a main attribute in the selection, rendering this attribute table stakes. There is a series of attributes that a large percentage of participants deem important and are therefore potential leverage points to drive differentiation (Figure 7).
In summary, the research furnished important insights for each stakeholder in the ecosystem that suppliers can leverage to better serve this market and increase efficiency in the drug development process.