SPI Infoamtion

Table of Contents

Executive Summary

The contract manufacturing market
CMO industry analysis
Manufacturing strategies in the biopharmaceutical industry
Managing contract manufacturing
India and China - emerging outsourcing markets

Chapter 1 The contract manufacturing market

Summary
Introduction
Overview of the global contract manufacturing market
Current market drivers

The expansion of the biopharmaceutical contract manufacturing market
The reorganization of pharmaceutical production

Case Study - Pharma manufacturing site close-down

Growth in Offshoring - Asian CMOs becoming a global force

Current market restraints

Fewer new drug approvals
The threat of overcapacity
Increased competiton - low barriers to entry

Conclusions

Chapter 2 CMO industry analysis

Summary
Introduction to biopharmaceutical manufacturing

The stages of pharmaceutical development

Primary manufacturing
Secondary manufacturing

Structure of the CMO industry

Size of contract manufacturing organizations
Does size really matter?

CMO business models - evolving over time

The advent of biopharmaceutical contract manufacturing
CMOs focusing on early drug development stages
The emerging full-service CMO business model
Examples of CMO service offerings
Lonza Group Ltd.
Patheon Inc.
Siegfried Group

CMO Industry Outlook

Chapter 3 Manufacturing strategies in the biopharmaceutical industry

Summary
Introduction
Strategic options for manufacturing

Vertical integration - The business model of the past

Drivers of vertical integration
Benefits of vertical integration

The deconstruction into a fragmented industry structure
The shift towards outsourcing
The make vs. buy decision

Factors influencing the make vs. buy decision

Mixed sourcing models
The sale and leaseback model

Examples of recent sale and leaseback deals

The potential downsides of outsourcing

Transaction costs of outsourcing
Drivers of hidden costs in outsourcing

Efficiency, effectiveness and flexibility, all in one outsourcing project?
Outsourcing manufacturing is like buying commodities
The need for a comprehensive contract
Contracts do not matter CMOs are insurance companies
The project is not the client’s problem anymore
The first failure should be the last attempt

Conclusions

Chapter 4 Managing contract manufacturing

Summary
Introduction
Key factors in selecting and managing a CMO
Sourcing CMO partners

Defining the goals of outsourcing
Writing a Request for Proposal
The site visit - a critical step
The Selection

Managing the CMO relationship

Technology transfer and scale-up

The Design of Experiments (DOE) used for the scale-up process
Challenges of the technology transfer process
The importance of engineering runs

Ensuring regulatory compliance

The definition of responsibilities
The importance of change control in contract manufacturing
The Annual Product Review and other ways to ensure compliance

Due Diligence - common pitfalls and how to mitigate the risks

Avoiding faulty contracts and contractors

Case Study - Pharmaceutical companies caught out by Inyx collapse
Due diligence from a CMO perspective

Risk management in the outsourced relationship

The business risk
The technical risk

The CMO Relationship - A lifecycle model

Stage 1 - Aligning relationship strategy with long-term business needs
Stage 2 - Employing a structured evaluation and selection process
Stage 3 - Building working relationships
Stage 4 - Technology transfer and scale-up
Stage 5 - Ongoing operations
Stage 6 - Changes over time

Awarding preferred provider status

Chapter 5 India and China - Emerging outsourcing markets

Summary
Introduction
Contract Manufacturing in India

Size of the Indian CMO market
Patent situation and implications for foreign direct investment

Challenges in current patent law

India as a preferred offshoring destination
The new, integrated business model of Indian CMOs

Challenges facing the CRAMS business model

Expansion strategies of India’s major contract manufacturing organizations
Conclusions

Contract manufacturing in China

Drivers of the Chinese contract manufacturing market
Challenges of the Chinese contract manufacturing market
China’s regulatory framework
Intellectual property protection
Counterfeit drugs
Case Study - China’s Heparin producers
China’s major contract manufacturing organizations

CMOs offering finished drugs services
Biopharmaceutical contract manufacturing in China

Conclusions

Chapter 6 Appendix

Bibliography
Index

List of Figures

Figure 1.1: Size of the global contract manufacturing market, 2002-2011e
Figure 1.2: Structure of the pharmaceutical API market, 2007
Figure 1.3: Structure of the pharmaceutical API market, 2006
Figure 1.4: Size of the contract biomanufacturing market, 2000-2008e
Figure 1.5: Contract manufacturing providers across the service chain, India
Figure 1.6: FDA approvals for NDAs and NBEs, 2000-2007
Figure 1.7: Captial expenditures of top 15 pharma companies, 2004-2007
Figure 2.8: Drug development and relevant milestones during the pharmaceutical manufacturing process
Figure 2.9: Lonza’s life science platform
Figure 2.10: Siegfried’s pipeline in 2006
Figure 3.11: Change in pharmaceutical industry structure over time
Figure 3.12: Categorization of varying degrees of integration
Figure 3.13: Percentage of manufacturing output produced through CMOs, 2007 and 2010e
Figure 3.14: Business objectives for moving to contract manufacturing
Figure 3.15: Considerations influencing the make vs. buy decision
Figure 4.16: Critical success factors for the manufacture of an early phase product
Figure 4.17: Stages 1 - 6 of the CMO lifecycle
Figure 4.18: Percentage of outsourcing dollars spent on preferred providers*(2007)
Figure 4.19: How many preferred providers do you utilize?*(2007)
Figure 5.20: Assessment of API manufacturing costs by region, 2005
Figure 5.21: Size of India’s contract manufacturing market 2005-2010e
Figure 5.22: Global outsourcing expenditure and segmentation of contracted services, 2005 and 2010e
Figure 5.23: Size of China’s API Industry, 2005 and 2010e

List of Tables

Table 1.1: Big pharma ongoing or recently completed manufacturing projects
Table 1.2: New entrants in the pharmaceutical CMO market
Table 2.3: Key characteristics of biotechnological and chemical API manufacturing (figures indicative only)
Table 2.4: Summary of services offered by contract manufacturing organizations
Table 2.5: Structure of the CMO industry
Table 2.6: Mammalian cell culture capacity in the biopharmaceutical industry
Table 2.7: Comparison of in-house production vs. outsourcing
Table 2.8: Pros and cons of the ‘one-stop shop’ concept
Table 3.9: Challenges for the pharmaceutical industry
Table 3.10: The benefits of outsourcing
Table 3.11: Examples of transaction costs
Table 3.12: Drivers of hidden costs in outsourcing
Table 4.13: Typical steps of an outsourced project
Table 4.14: Definition of responsibilities for main quality areas
Table 4.15: Risk-mitigation tactics for pharmaceutical companies
Table 5.16: Selected contract manufacturing/ research deals in India as of July 2007
Table 5.17: Strategic options for Indian pharmaceutical companies