Why Location Matters
By Paul Eschmann, head of international markets and business affairs, Basel Area Business & Innovation
Pharmaceutical companies continue to turn to CDMOs to boost efficiency and productivity in their efforts to progress new targets through to commercialization. While many factors can dictate the choice of partner, the location of a CDMO can have a significant influence on the communications channels, facilities, and skillsets that a potential partner has to offer.
The ever-increasing complexity of drug development is forcing many pharma companies and CDMOs to rethink their business models. What has worked in previous decades may not necessarily be fit for purpose in the coming years. Outsourcing drug development and manufacturing to contract organizations will likely continue its upward trend, but how and where they operate is potentially in flux. Choice of location is especially in the spotlight and is highly dependent on numerous factors, none more so than access to the talent needed to drive business growth.
Resources Are Shifting Westward
For the past two decades, innovator pharma companies have largely outsourced drug development and select manufacturing — including generics — to India and China, for the obvious economic advantage: labor and capacity are both abundant and affordable, which helps to keep costs down without sacrificing on speed. However, CDMO Primopus (formerly Escientia Switzerland), a subsidiary of the Indian company Deccan Fine Chemicals, has chosen the Basel area in Switzerland as its location. The company is taking a slightly different approach than traditional drug development and manufacturing models, with location firmly at the forefront of the conversation. Marcel Velterop, CEO of Primopus, explained: “Our model looks to bring more development and manufacturing stages back to Europe. We don’t aim to shift everything — this is a mere fantasy of people who don’t understand the complexity of pharmaceutical manufacturing and supply chains — but we think now is the time to start making the move.”
The medicines that were discovered 20 or 30 years ago were based on relatively simple chemistries compared to more recent active ingredients, which are increasingly complex and diverse. Nowadays, they often contain elaborate molecular structures, requiring more precise and complex workflows in the R&D and production phases, as well as having to comply with more GMP regulations.
The more complex drugs become to develop, the more CDMOs will need to rely on specific locations to fill the shortfall of personnel. China and India have been able to deliver against expectations until now, but a side effect of this outsourcing has been a growing shortage of talent elsewhere. Adding to the complexity is the diverse expertise required in running a biopharma company or a CDMO — from supply chain, QA, and quality control to R&D and engineering — that needs careful orchestration across the board. “In fact,” says Velterop, “it is essential that every stage is meticulously calibrated because, if there is a deviation, a batch could be rejected or, worse, potentially become a dangerous product for the patient. This is compounded by the sheer number of medicines currently available, which is only increasing every year.”
To help face these challenges, drug sponsors and CDMOs are more closely collaborating, ensuring a safe and consistent product, and this includes creating regional supply chains and reducing reliance on a single geography as a source of raw materials. Companies like Primopus are offering a hybrid model, where they will do the critical final stages of development and manufacturing in the U.S. or Europe — the Basel area in this example — and the upstream part in other locations.
A City With All The Ingredients For Biopharma Success
The Basel area has grown into a world-class life sciences hub, with over 700 companies across various sectors calling it home. This includes Big Pharma players, including Novartis and Roche; world-leading CDMOs like Lonza and Bachem, and dynamically growing companies such as Primopus, Celonic, and ten23 health. However, it’s not the only one in Europe. So what, then, is the appeal of this relatively small Swiss region to large, international biopharma companies and the like? Velterop seems to think it is down to a variety of factors that combine to create the perfect ecosystem, fit for the demands of the industry now and well into the future. He commented, “Switzerland has a high-cost reputation, which isn’t necessarily a bad thing for business, as companies have adapted by making efficiency the key to their success. The country is also known for its quality and precision technology, and these are obviously far more important than cost alone. These ingredients — efficiency, quality, and precision technology — are essential in the pharma industry and are a reason Switzerland has established itself as an attractive location for companies in this sector and an important part of why we chose to set up here.”
The region of Basel, in particular, provides a beneficial ecosystem for CDMOs, as it already has an established pharma community, including big names — such as Roche, Novartis, and Johnson & Johnson — and a whole host of other companies and startups. As a result, the area benefits from a lot of innovation arising in various sub-sectors, creating a balanced profile with all the facets needed for drug development. The supply chain is also well established there, and the local government provides an incredible framework for innovative businesses. Furthermore, Basel’s central European location — bordering France and Germany — and its proximity to international airports with direct flights to the U.S. and elsewhere make it easy to feed into the global supply chain.
“These factors are all important, obviously, but the most crucial contributor to our business model — and any company in this sector, for that matter — is access to specialized talent. Running a biopharma company or a CDMO requires a wide range of personnel from various backgrounds, which can be difficult to find in one place. There is competition, but the Basel area offers a large pool of professionals who thrive on opportunities. We’re currently recruiting and plan to soon double our staff,” concluded Velterop.
Life sciences has undergone tremendous change in recent times, driven by both unprecedented growth and scientific complexity. The pharma industry is no exception and, as outlined, it is in a state of flux, with traditional drug development models potentially unable to keep pace with current and future demands. Like never before, human resources have become the deciding growth factor, as the industry needs not only brilliant scientific minds but also a whole team of personnel from various backgrounds. In response, some CDMOs, including Primopus, are setting up operations in innovative ecosystems like the Basel area, as well as tweaking their operations, to ensure they become or remain a desirable partner.
About The Author:
Paul Eschmann is head of international markets and business affairs, Basel Area Business & Innovation.