Outsourcing A Survival Strategy or a Tool for Speed to Market A Case Study

Outsourcing is becoming increasingly widespread and essential in the biopharmaceutical industry. Its imprint on biotech world business and on the development of biopharmaceutical drugs is becoming ever more pronounced. It is estimated that almost one-half of biopharmaceutical companies contract out at least part of the production of their products.¹ On the other hand, those companies that do not outsource production often contract out some of their development activities.

Michele Antonelli, Ph.D.

The biotech contract-manufacturing market has more than doubled in the last three years, from $1 billion in 2000 to almost $3 billion in 2003. Of this outsourcing, approximately 46% is microbial fermentation, 30% mammalian cell culture, 4% transgenic, 12% fill and finish, and 8% services support.^{1, 2}

The need for outsourcing has intensified during recent years, for three main reasons:

• There is clearly an increased number of biotechnology products. One of the main causes for this increase is the deeper engagement of biotech companies in therapeutic indications — such as oncology and inflammatory diseases — to respond to the changing needs of the world market. Today there are more than 60 products in phase II/III to treat cancer indications.

• There is also a surge in the number of biopharmaceutical companies, which makes the market even more competitive. For the many new actors in the field with limited manufacturing experience, the need for out-sourcing is obvious.

• The advent of biogenerics, the short life span of the current molecules, and the necessity to get early return on investment, have combined to put strong pressure on drug development groups to accelerate speed to market.

WHAT CAN BE OUTSOURCED?

In principle, every step from pre-clinical lead discovery to marketing can be outsourced. This could include each of the activities shown in Table 1, and most long-established biotech companies are likely to have outsourced nearly every single step at least once in their history.

Table 1. Outsourcing Candidates

DO IN-HOUSE OR OUTSOURCE?

Keeping in mind that the main goal of the biotech industry is to ensure product availability at the desired quality to meet worldwide patient demand, each biotech company must eventually answer the following question: "Should our biotech company build our own process development and manufacturing capabilities, which is expensive and lengthy but achievable, or should we rely on external professionals and outsource these activities?" The same question, with a slight bias, can be reformulated as: "Should our company take the chance of transferring a lab-scale process to a multi-product industrial facility, with high risks of initial poor process control or product changes?" or "Should our company outsource only specific activities, i.e., those where the scientific and technical know-how is missing and difficult to build?" These questions underline the fact that outsourcing, like any other major activity, has advantages and drawbacks. These pros and cons are summarized in Table 2.

Table 2. The Pros and Cons of Outsourcing

The pros are driven by considerations of speed to market and efficient use of available resources. The cons of outsourcing all relate to the risks of losing control over several aspects of product development: project planning, budgeting, product quality, compliance, and later process expertise. The decision to outsource will always be a question of balance between pros and cons, risks and opportunities, although it should also be recognized that in many instances, e.g., for small biotechs or newcomers, outsourcing is the only option.

The answer to the question of "do in-house or outsource?" is mainly linked to two major factors: the strength of the company, and the urgency of the leading projects and priority setting.

Large and medium-sized biopharmaceutical companies may seek to develop and manufacture their biopharmaceuticals in-house, to maximize industrial know-how, to build quality into the manufacturing process, to control production, and to create intellectual property. Such companies will tend to minimize outsourcing to limited and specific development and manufacturing activities, and will tend mainly to use outsourcing as a tool to enhance speed to market. In comparison, smaller and start-up companies may do the opposite. Typically, start-up companies bring bright ideas for new, innovative lead products, but in most cases, they have nonexistent or limited internal expertise to confront highly challenging manufacturing and development issues. The solution for these companies is to outsource all development and manufacturing activities; thus, outsourcing clearly becomes a survival strategy for them. Frequently, those products that reach phase I and II clinical trials are offered for licensing to a larger biopharmaceutical company to carry on the development.

CASE STUDY: SERONO INTERNATIONAL

Serono International is a relatively large biotech company and is considered to be the third-largest biotech company worldwide, after Amgen and Genentech. It has eight recombinant products on the global market in four therapeutic areas, and its revenues exceeded $2 billion in 2003.

As a large biotech company its strategy for manufacturing is as follows :

• Build in-house large-scale manufacturing capacity.

• Keep in-house biotech core process development and manufacturing activities.

• Build wide expertise in a range of fields, from genetic engineering to industrial production.

• Perform day-to-day process improvement in-house.

• Maintain and expand co-development and partnership with biotech companies.

• Outsource specific high-technology tasks to specialized research organizations.

Serono International is, thus, a company that exemplifies the following: "Think broad, with an open mind, go where the real leadership and expertise are mastered, but . . . master your own process."

There are two key drivers of outsourcing at Serono: high product quality ("platinum quality") and speed to market. These two drivers have led to the formulation of the following basic rules, which experience has shown to support the best outsourcing agreements:

• Fair agreement on service and/or product supply

• Clear milestone definition

• Partnership attitude

• Strong technology know-how

• In-house transferability of the technology and the know-how

• Premium price for platinum quality

• Partner/third-party plans integrated into Serono master plan

Based on the above key points, Serono has a wide, yet very specific, outsourcing portfolio, as shown in Table 3.

Table 3. Serono Outsourcing Portfolio

Two examples of selective outsourcing at Serono will now be described. One is related to a specific technology that supports speed- to-market and quality objectives, and the other is part of the company's drive to achieve platinum quality.

EXAMPLE I: PURIFICATION PROCESS IMPROVEMENT

The problem to be solved was that the current capture step (first recovery) of the process for clinical Phase III trials did not meet Serono's target levels of quality and efficiency. Therefore, the objective was to improve the purification process of a new molecule to meet clinical Phase III standards within an established time plan. This is illustrated in Table 4.

Table 4. Serono International - Purification Process Improvement Plan

An extensive development program was launched, and over 50 commercial chromatographic resins were tested, but without significant improvement. It then became clear that alternative technologies should be used to develop a simpler process with platinum quality results (HCP <5 ppm and aggregates <1%). One of the approaches to reaching this goal involved developing a custom-made affinity ligand that would provide the desired selectivity. The development was outsourced to a highly specialized company with proven records of expertise in this field. The development study was based on protein structure, and a ligand was developed with high specificity of binding to the target protein, as shown in Figure 1.

Figure 1: 3-D Protein Structure Model and Potential Binding Sites

The most desirable features of the prospective ligand were: high selectivity, chemical robustness, low cost, industry proven, and high purity. Within 10 weeks, 1728 ligands were screened and an optimal ligand was selected. This process is shown in Figure 2. The development activity performed by the outsource could not have been done in-house at Serono due to a lack of the specialized expertise that this contract research organization (CRO) brought to the project. Definitely this collaboration shortened the time to market and improved the quality and efficiency of Serono's development process.

Figure 2. Ligand Development Study

EXAMPLE II: FINE DETECTION OF PROTEIN X AGGREGATION

The objective of this project was to develop methods to detect, quantify, and classify (characterize) protein X aggregates to prevent or at least minimize their level in the final product. Understanding of the type of aggregation (covalent versus non-covalent bonds, hydrophobic or ionic) would permit kinetic and thermodynamic studies of the aggregation process, of the mechanism of aggregation, and of the factors affecting their appearance or their disintegration. This information would impact on the ability of manufacturing to minimize the level of aggregation by improving the storage, handling, and shipment conditions of the intermediate and final bulk. The issue was that the analytical methods were not sufficiently sensitive to reach the objective; thus, new, sensitive methods had to be developed to quantify and classify protein aggregation.

This task was outsourced to a specialized CRO that developed and introduced state-of-the-art analytical tools, such as AUC (analytical ultra centrifugation) -sedimentation velocity, and new high-performance liquid chromatography (HPLC) methods to enable the detection and qualification of all classes of aggregates.

With these characterization technologies, it was possible to obtain the following results:

• In "normal conditions," non-covalent aggregates constituted the majority of protein X oligomers

• Reversion to monomers was possible upon addition of new excipients

• Dimers could be reverted to monomers upon proper manipulation and processing (as per standard operating procedure)

• Storage temperature was critical (e.g., freeze/thaw cycles)

• Aggregation could be significantly reduced by mixing with a cryoprotectant (prior to freeze/thaw)

In this case, the specialized CRO helped Serono to better understand the drug molecule, to improve final product quality to reach platinum quality standards, and to provide strong support to manufacturing.

CONCLUSION

The decision to outsource depends partly on a company's size. For a start-up or small biotech firm, outsourcing is a must, but one that is not without risks and costs. For an established biotech company, outsourcing is an opportunity to:

• Work with the best experts, giving them the possibility to work on industrial molecules and models.

• Master the company's own process and improve understanding of its molecules.

• Favor partnerships and generate innovative processes and products.

• Generate additional scientific data to support complex requests from health authorities.

• Achieve cost benefits, when the outsource partner is solid in its processes (microbial fermentation, small molecules, anti-sense peptides, etc.)

• Reach platinum quality standards, establish new intellectual property protection, and raise the bar for the quality attributes of third-generation products.

ACKNOWLEDGEMENTS

I wish to thank my colleagues Dr. Avinoam Kadouri and Dr. Gianni Baer for discussing with me Serono's Biotech Process Development Vision, and for their great help in the preparation of this manuscript.

Michele Antonelli, Ph.D., is senior vice president, manufacturing at Laboratoires Serono S.A., Zone Industrielle, CH-1267 Coinsins, Switzerland0041.22.354.54.02, fax 0041.22.354.50.18, michele.antonelli@serono.com.

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