Biotech drugs such as genetically engineered hormones and monoclonal antibodies make up a sizeable and growing proportion of the pharmaceutical market. Biologics represented 7% of the pharmaceutical market in 2002, and by 2006 they are expected to make up 12%. Seven hundred new biologics are currently being tested, with up to 200 entering late-stage trials. This year, as many as 40 new biologics could make it to the market, according to Kalorama Information, a life science market research firm in New York.1
Reducing expenses has become one of healthcare's major woes. As biologics continue to capture market share, they will also be scrutinized for ways to cut cost. Experts say that biomanufacturers have come under increasing pressure to address the problem.
Making biotech drugs is an expensive business. Of the estimated 170 biomanufacturers worldwide, nearly one-half are located in the United States.2 Mark Bamforth, senior vice president for corporate operations and pharmaceuticals at Genzyme in Cambridge, Mass., estimates that in the United States, each bulk manufacturing facility costs between $200 and $400 million to build, and takes four years before gaining approval by the US Food and Drug Administration. The greatest barriers for biomanufacturers are the costs associated with building, validating, and operating a facility, according to a 2003 survey of 100 biopharmaceutical manufacturers.3
However, the cost of not having the production capacity can be even greater. In 2000, the rheumatoid arthritis drug, Enbrel (etanercept), became so popular that Immunex (later bought by Amgen) was unable to make enough of the product to meet demand. This shortage may have cost the company more than $200 million in potential sales revenue.1
The shortage, together with a 2001 report by a J.P. Morgan analyst that predicted that the demand for biologics would exceed bio-manufacturing capacity by four-fold in 2005, caused a bit of a panic. The industry began adding new facilities at a furious rate. No drug has since experienced the same capacity shortfall, however, and it's now clear that these fears were largely unfounded.
After the recent building boom, many in the industry agree that a capacity shortage no longer exists, although some are still building facilities to address certain niches, such as the production of small amounts of a drug. For example, Eden Biodesign, a Cheshire, UK-based biopharmaceutical consulting business, plans to operate the National Biomanufacturing Centre, a government-contracted facility opening in 2006 near Liverpool. Derek Ellison, Eden's business development director, says the facility will produce small amounts of biologics for clinical testing.
No longer plagued by fears of a never-realized capacity crunch, biomanufacturers are focusing their attention on the immense cost pressures facing the entire healthcare industry. The solution, some say, might include the out-sourcing of large-scale production to countries where costs would be reduced. Or, the answer could lie in the use of nonmammalian cell culture systems, such as yeast.
On the negative side, some experts believe that the cost problem won't be solved by "down on the pharm" scenarios in which barn-loads of transgenic animals produce drugs in milk. Indeed, more than one-quarter of biomanufacturers believe that transgenic plant or animal systems won't become a cost-effective alternative in the near future.3 A great deal of risk is involved in using transgenic animals, says Sandra Fox, president of HighTech Business Decisions, a biomanufacturing consulting firm in Moraga, Calif. If manufacturers build a huge tank for a product and it fails early testing, they can use the tank for something else, she says. But it's a lot harder to recycle a herd of goats engineered to produce one dead therapeutic. "There's just a lot of skepticism right now," Fox says.
TECHNOLOGY TO THE RESCUE
Source: BioPlan Associates
Respondents were asked: When do you believe drug production using plant or animal systems will be a viable alternative to traditional bioproduction methods?
Some manufacturers hope that changes in the cells and equipment used to make biologic drugs will rescue them from cost pressures. Indeed, another survey of over 600 biopharmaceutical scientists by Eden Biodesign found that many believe new technology is key to reducing manufacturing costs in the long term.
Many biologics are manufactured using mammalian cell lines that provide the postprocessing modifications, such as glycosylation, that complex biologics require. Mammalian cell culture is used more than any other system, and biomanufacturers plan to expand this type of production by 2008.3
Compared to yeast and Escherichia coli, however, mammalian cell lines are expensive and inefficient, says Tillman Gerngross of Dartmouth University. Microbes can reach a greater cell density, enabling manufacturers to pack more into a smaller space. Gerngross predicts that over the next few years, more biomanufacturers will switch some of their production over to yeast. He says it's already happening: Currently, one-fifth of today's biologics are produced in yeast, as is one-half of the world's supply of insulin.
In his laboratory at Dartmouth, Gerngross and his team have also engineered yeast to produce human patterns of glycosylation on each biologic, by knocking out the processes that introduce unwanted sugars and replacing them with human analogs. "You get a very defined human glycan structure attached to that protein," he says. Gerngross can produce several grams of protein per liter of broth in three days when using yeast. By comparison, producing 5 grams of protein per liter using mammalian cells can take three weeks.
Gerngross has created a New Hampshire startup company called GlycoFi around this technology. As chief scientific officer, he says he is now collaborating with Biogen IDEC, Eli Lilly, Bayer and others to transfer their biologics from mammalian cells into yeast.
Some companies are considering the use of disposable bioreactors and other throwaway parts such as tubing, mixing bags, and waste bags, in order to reduce costs. Being able to simply discard a tube, rather than clean it, might speed up production and streamline the overall process, says Eric Langer, managing editor at BioPlan Associates, a biotechnology market research firm in Rockville, Md.
However, any change in the manufacturing process faces one major hurdle: getting approval from regulatory bodies such as the FDA and the European Medicines Evaluation Agency. Unlike small-molecule manufacturing, biomanufacturers get approval for both the drug and the process used to make it, and that approval can take years. It also can be expensive, says Langer, since the FDA requires manufacturers to validate every step. "There's a huge burden on the producer to document every stinking little piece of equipment," he says.
Courtesy of Genzyme Corporation
Changing any step in the manufacture of an already-approved product often requires that the entire validation process be repeated to make sure the new technology doesn't change the final product, notes Langer. This is done for good reason, as even minor manufacturing changes can alter a drug's safety. For example, the incidence of a rare complication known as pure red-cell aplasia began to increase in patients taking a Johnson & Johnson product called Eprex, despite 20 problem-free years on the market. After four years of investigation and $100 million, the company learned that a new stabilizer had interacted with the syringes' rubber stopper. "Any change in the process can end up with the product being changed in a way that impacts its clinical safety," says Audrey Phillips, executive director of bio-pharmaceutical policy at the company.
Langer says the rigorous system of regulation can discourage manufacturers from ever introducing any changes, even improvements, to the already existing system. This level of regulation "seriously reduces the creativity on the manufacturing side," he notes. "To propose a change requires a lot of guts. There has to be a reason for making a change that outweighs the cost associated with it."
Gerngross says his yeast technology, which has not yet been approved, has an edge over other new techniques because the FDA has already accepted yeast. New technologies such as transgenic plants or animals may have a more difficult time, he notes. "Anyone who goes in first, the agency is going to look at very carefully," says Gerngross.
TRANSGENICS STILL UNTESTED
No transgenic plant products are commercially available, but expression systems using corn, tobacco, potato, rice, and duckweed have already emerged. Some companies are testing the use of transgenic plants to produce treatments that target cystic fibrosis, pancreatitis, and the bacteria that cause tooth decay.
Transgenic animals can be genetically modified to produce human recombinant proteins in milk. According to Kalorama Information, small farm animals such as goats and sheep can each generate up to 900 liters of milk per year, and dairy cows can produce more than 10 times that amount. Moreover, animals require a lot less money to operate and maintain than stainless steel bioreactors.
However, experts agree that barriers must be overcome before transgenics are a viable alternative to traditional systems. Transgenics can take a long time to go from gene to protein, Gerngross says, and even if they cross the regulatory hurdle, which is high, transgenics may end up costing the same amount as traditional methods. Manufacturers need to purify, fill, and finish the proteins after they are produced in plants or animals, which adds to the cost, he says.
BARRIERS TO BIOPHARMACEUTICAL MANUFACTURING
Source: BioPlan Associates
Respondents were asked: What is the single most significant barrier to biopharmaceutical manufacturing?
Like other industries, biomanufacturers are considering shifting production to countries where it costs less to build and operate a facility. By 2008, the percentage of biomanufacturers who plan to outsource some production will increase by 12%. Countries such as India, South Korea, Singapore, and China, among others, "will eventually become major players in the industry," says Patrick Lucy, business leader for microbial biopharmaceuticals at Dowpharma in San Diego, Calif.
However, some obstacles must be overcome before these countries can compete with facilities in the United States and the European Union. Out-sourcing production of a biologic also means giving up some control over the product, a step companies may be hesitant to take. "You're betting the drug on your ability to manufacture it," and developing countries will need to prove themselves before companies will entrust them with a potential blockbuster, says Roger Wyse, managing director at Burrill and Company, a life sciences merchant bank in San Francisco.
Some companies also have logistical concerns, says Fox, such as the ability to conduct business when the company and its manufacturing plant are in different time zones. David Smolin, vice president of protein-therapeutics development for pharmaceutical research at Bristol-Myers Squibb, notes an additional concern. If a company builds a facility in a country with less stringent intellectual property laws, a citizen might discover how to make the drug and produce generic or less expensive versions.
Bamforth notes that outsourcing to developing countries "certainly has its place," but he argues that companies gain a lot by making the drugs themselves rather than outsourcing to contract manufacturers, regardless of location. He says in-house production enables companies to make their own production decisions. Moreover, they can retain any workers who develop additional skills from making the drug. In-house manufacturers may also be more motivated to make technological improvements that increase yield, since it's their money, says Bamforth, while contract manufacturers are mostly concerned about filling up extra space. "We believe that manufacturing is core to what we do."
Will Biogenerics Cut Costs?
They are called many different things: "biogenerics," "follow-on biologics," and now, "follow-on protein products" (FOPPS). All these terms describe products that are generic versions of biologics, and the debate over whether such products will ever exist, or save consumers money, is heating up.
IMS, a pharmaceutical market research organization headquartered in Connecticut, estimates that the biopharmaceutical industry is worth $24 billion in the United States alone. For sales of traditional drugs, generics have captured approximately 9% of the US market. Individual biologics can be very profitable. For instance, in a recent 12-month period the anti-anemia biologic, Procrit (epoetin alfa), earned more than $3 billion in sales in the United States, according to IMS.
Biopharmaceuticals worth nearly $10 billion are expected to come off patent during the next five years. Last year, Australia approved the first biogeneric in a regulated market, a copycat version of a human growth hormone. The European Union is developing its own regulations for biogenerics.
Eric Langer, managing editor at BioPlan Associates, a biotechnology market research firm in Rockville, Md., argues that biogenerics have a huge potential to reduce costs for consumers. People who make generic drugs are manufacturers only, not researchers, he notes, and are therefore experts in the manufacturing field. They will know how to optimize cell lines, media, and other processes, and "squeeze the maximum efficiency" out of them, he says.
The opponents, generally those who manufacture brand-name drugs, wonder whether generic biologics will really reduce costs. Biologics are significantly more complicated than small, chemically derived drugs, says Johnson & Johnson's Audrey Phillips. They are very difficult to make and, therefore, very easy to inadvertently alter. Any slight change in the process can be a disaster for patients, she notes.
Consequently, generic makers of biologics might be required to go through elaborate steps to prove that their drugs are identical to the originals. They may even need to conduct an entire new set of clinical trials, says Phillips. In contrast, she notes, if a small-molecule generic manufacturer wants the same indication as an existing product, the company need only conduct relatively simple tests to show that the drug is chemically identical to its predecessor.