Biomanufacturing Capacity Crunch Part 2: Building Optionality

By Matthew Pillar, Editor, Bioprocess Online

In conference event programming, in the trade press, and in water cooler conversation we’re making too many generalizations—which in turn create misperceptions—about the so-called biopharmaceutical manufacturing “capacity” crunch.

It’s often inferred that by “capacity” we mean “manufacturing space,” as in, “we have to wait 18 months to get production started because the outsourcing industry has no capacity.” But in reality, that capacity problem probably has much more to do with inflation, consumable/API/raw material supply, manufacturing inefficiency, and short cash runways than it does access to square feet and big-liter bioreactors.

Let me put it to you this way. I have, by middle-aged man standards, a larger-than-average cranium. That might give me plenty of thought manufacturing space, but it certainly doesn’t explain my lack of thought capacity. It’s the raw materials – the genetics, the lipids, the building blocks of the gray matter – that are in short supply. Supplementing those with new supplies of fatty fish and green leafy vegetables is getting pretty expensive to do. That’s before we get into any detrimental influences on my thought manufacturing capacity (I’m approaching the half century mark, and who needs another Yuengling?).

Point is, capacity is more comprehensive than physical infrastructure.  

Sole Sourcing Is A Bad Idea

Last week’s coverage of a BioProcess International manufacturing capacity and supply chain discussion among sponsors and CDMOs drove the point home. That column left off on the hard-realized evils of sole-sourcing, which is where we’ll pick up here. One of the discussion participants, Brian Taylor, EVP of Biopharma Solutions at SmartLabs, summed up with the observation that biopharma sponsors need to create optionality – from raw material, consumable, and equipment suppliers to sources of manufacturing capacity. He says that’s especially true for companies exploring new modalities, where supply and capacity precedents have yet to be set.

Larry Lockwood, VP of Sales at Aldevron Company, likens sole sourcing to not carrying an insurance policy – it’s not such a big deal until it is, he quips. Aldevron is a CDMO, and Lockwood says the company attempts to avoid a lack of insurance by understanding client needs as early in the process as possible, translating those needs to procurement, and gaining a comprehensive understanding of materials required.  He says Aldevron is also more effectively evaluating how long it takes to close deals with clients in the process of predicting how much material it needs in a specific timeframe. He says that’s important because once you realize you're sole sourced, you’re in bad shape in and it’s probably too late to make a difference.

Renovacor SVP of Technical Operations Kumar Dhanasekharan recognizes the importance of the move away from sole sourcing, but he doesn’t consider multi-sourcing a panacea. Manufacturing efficiency gains, he says, are the most powerful antidote to capacity challenges. When you reduce manufacturing risk by developing closed, continuous systems, you conserve raw materials, preserve clinical supply, and in turn, relieve the strain on capacity. Of course, we’re a long way off from “lights out” manufacturing in biologics, and more specifically, ATMPs. But Dhanasekharan suggests pursuing opportunities to build process intensification practices into process design wherever possible. Look for areas to design “closed” processes, he says, and reduce some of the waste in the manufacturing process. Vertex Sr. Dir. Of MSAT-Commercial Manufacturing & Supply Chain Ken Green agreed, stressing the importance of adopting technologies that improve yield from one step to the next.

The Impact Of Inflation On Biologics Manufacturers

It was at this point in the conversation that moderator and Darkhorse Consulting Founder & CEO Anthony Davies, Ph.D. invoked the 8.3% trailing 12-month inflation figure in the U.S. and asked the panel for its perspectives on the impact. Once inflation at that level begins to compound year over year, he surmised, it will impact manufacturing, capacity, and the biopharma industry’s ability to meet demand.

Again, Green agreed, zeroing in on the rising cost of raw materials. Long lead times and increasingly expensive materials are combining to create considerable procurement challenges, which will become even more acute as several ATMPs move from the clinic into commercial markets—and with multimillion dollar price tags to boot.

Kelly O’Hare, SVP of Operations at CDMO Lykan Bioscience, suggests the combination of inflation and conservatism in capital markets could ultimately—and perhaps ironically—have a favorable impact on innovator companies. She hopes the tough environment will inspire sponsors to be more thoughtful about their long-term process development and avoid rushing into clinical trials before their process development is optimized. To Dhanasekharan’s earlier point, O’Hare suggests partnering with development experts and only starting production when you’re really ready.

But Taylor, whose company works almost exclusively with early-stage biopharma innovators, sees firsthand just how difficult the combination of restrictive capital markets and inflation makes life for small biotechs. With no revenue, tight capital situations, and an inflated cost of goods, they’re struggling to get to the point of development optimization O’Hare references. Those tough factors, he says, only exacerbate the need to pursue optionality relentlessly, in the name of cash conservation and efficiency.

Optimistically, Dhanasekharan surmises that a rapidly expanding outsourced manufacturing footprint might, at least partially, offset the rate of inflation. While he doesn’t foresee ATMP manufacturing infrastructure sitting idle, he notes that several CDMOs have doubled and tripled their facilities in recent years and that several dozen are capable of large-scale manufacturing. Dr. Davies notes that several of those footprint expansions came at the hands of CDMOs snapping up facilities built by companies whose phase 3 programs failed. It’s telling, he says, that the people with the clearest line of sight to future manufacturing capacity demand are eager to grab manufacturing facilities as soon as they come on the market.

Will Underfunded Innovation Dampen Manufacturing Demand?

While Dhanasekharan hopes facilities expansion results in enough supply availability to, at least somewhat, meter the cost of rent, Green warned that gloomy economic factors are reducing the volume of programs coming out of pre-revenue sponsor companies. Those companies, he says, are increasingly funding only their most promising candidates, at least for now. It’s yet another wrinkle in the capacity crunch that’s yet to be played out – will a dearth in innovation dampen the demand that’s contributing to outsourced manufacturing capacity challenges?

Dr. Davies doesn’t think so. He projects that if early-stage programs are under increased pressure because of reduced funding and deal flow, late-stage programs and pre-commercial programs moving toward commercialization will be assuming an even higher percentage of the active programs in the field. He says the last five years have seen ballooning early-stage programs—some of which, perhaps, shouldn’t have been in the clinic—but the next few might see a glut of commercial and near-commercial activity consuming capacity.

Dr. Davies concludes that at this juncture and in these conditions, it's difficult to discern whether current manufacturing facilities availability is positive, negative, or neutral. To a one, however, panelists agree that we’re in the “capacity crunch” for the long haul. Asked if the conversation at BioProcess International will be different 12 months from now when the conference reconvenes in Boston, responses ranged from “no” to “not very much.” The mitigating controls you have of the situation, they agree, are proactive multiplication of raw materials sources (and the requisite corresponding QA work) and active investment in enabling process intensification and optimization technologies.

As for me, I guess I’ll hit Wegman’s on the way home. It’s kale, salmon, and a glass of water tonight.