Bio News & Views,10 Years of Bio-Outsourcing

he past 20 years of biopharma outsourcing has seen pendulum swings in strategy as kinks were worked out of the system and this new industry grew and matured. Ten years ago, the drug industry (including biopharma) was in the process of backing away from the ‘fully vertically integrated’ business model that had been in vogue in the early 1990s, and was moving toward an outsourcing model. Virtual companies were getting funding and investors were recognizing the value that contract manufacturers and other outsourcing firms added to good discovery and intellectual property. Now, 10 years along the biotech industry’s maturation, we’re seeing smaller swings toward more mature operating strategies. Fluctuations have leveled out, as has demand. For example, we’re now at an equilibrium with about 48% of biomanufacturers outsourcing at least some of their production, according to our recent 6th Annual Report on the industry.1

The industry’s approach to outsourcing has changed over the past 10 years. Back then, the industry was quite focused on ensuring it could produce the biologics coming through the pipeline — having sufficient supplies of product to fill demand. Costs were a secondary concern.

Dr. Michel Ultee, vice president of Laureate Pharma, a biopharmaceutical CMO, recalled, “In 1999 the industry was beginning to focus on remedying the ‘capacity crunch’ that was expected based on the success of several antibody-related therapeutics, such as Enbrel, which at the time couldn’t be produced fast enough to meet demand.” This capacity shortage was seen as a serious threat to the biopharma industry, and some were predicting the need for huge increases in cell culture capacity as pipeline products reached commercialization.