How Biopharma Came to Be in The Spotlight
The word “biopharma” is frequently tossed around in economics and in epidemiological communities, but its operations are worth understanding on a deeper level. More than ever, all eyes are on the biopharma industry to answer the looming questions surrounding COVID-19 and the resulting public health emergency. Prior to COVID-19, the biopharma market was well-positioned to enter the decade as a top revenue-generating industry. Their revenue generation is not only made possible through the essential treatments they provide but through their contract manufacturing model.
The research coming out of biopharmaceutical giants indicates the anticipated market growth, as well as the necessity to maintain robust manufacturing capacities. However, production manufacturing is a considerable expense that requires costly financial start-up costs. These are barriers that can prolong the release of necessary treatments and push aspiring biopharmaceutical companies out of the market. Fortunately, biopharma contract manufacturing organizations, such as Samsung Biologics, keep the industry running.
Founded in 2011, Samsung Biologics partners with biopharmaceutical companies to optimize product development and manufacturing. In October 2018, Samsung Biologics opened its third biologics manufacturing plant in Songdo, South Korea. This plant established the Samsung Group, Samsung Biologics’ parent company, as one of the world’s largest biologics contract manufacturing operators (CMO) in the world. As of 2019, Samsung Biologics brings in annual revenue of $400 million. These figures amplify Samsung Biologics as a leader in biopharma contract manufacturing and emphasize the essential function that biopharma contract manufacturing serves to the entire biopharma industry.
The Appeal of Outsourcing in the Biopharmaceutical Market
One might correctly expect that anyone looking to develop a successful biopharmaceutical treatment will incur insurmountable monetary costs. These financial constraints function as a barrier to entry for many companies looking to break into the biopharmaceutical markets. As a result, only the companies with the most impressive manufacturing capacities end up successfully releasing treatments into the market. Despite the challenge, this has not necessarily deterred companies from breaking into the market. Instead, the need for expansive production capacities at affordable costs has shaped how the biopharmaceutical market functions.
Instead of investing to build the production capacities internally, biopharma giants turn to outsourced production. Over the past few years, the market reflects a deep reliance on biopharma contract manufacturing. Biopharma contract manufacturing involves an agreement between at least two companies. In a partnership contract, for example, one company looks to develop a new biopharma treatment, and the other uses its superior production capacities to research, develop, and create that treatment into a functional product.
The History of Biopharma Contract Manufacturing
Ultimately, we see that biopharma contract manufacturing allows companies a fighting shot. Those who seek to collaborate with biopharma contract manufacturers are able to remain competitive at a more attractive price than if they were to invest in developing the treatment internally. Outsourcing production also ensures that companies with an idea can release their treatment to the market in a much shorter amount of time.
Biopharma contract manufacturers were first classified under the CMO acronym: contract manufacturing organizations. The earliest CMOs were formed to provide large-scale, biopharmaceutical commercial manufacturing for companies who already developed their own manufacturing processes. Companies would “rent” manufacturing capacities from the CMO to fulfill the requirement of filing a biologics license application (BLA). How CMOs were classified in relation to their partners varied. Some were spin-offs of companies that had built excess capacities, while some technically existed within the pharmaceutical companies they served as a third-party division.
The biopharma contract manufacturing aspect of the biopharmaceutical industry has transformed to increase the emphasis on CMOS as key players in treatment development. While many are still partly or completely owned by pharmaceutical companies, some exist under their own framework and funding. Perhaps the most significant development into biopharma contract manufacturing includes the expanding list of provided services. CMOS now advertise early development support and fully integrated services. This transition to full-service contract development reclassifies contract manufacturing organizations, to contract development and manufacturing organizations (CDMOs). This demonstrates the changing priorities of biopharmaceutical companies; instead of restructuring to become “fully integrated pharmaceutical companies,” the emphasis is now on efficiently releasing products to the market as quickly as possible.
Case Study: Samsung Biologics
As of mid-2019, over 235 companies offer biopharma contract manufacturing services. Forty percent of these 235 companies advertise that they operate at all scales of operation. This 40% of companies include Samsung BIologics. Samsung Biologics is a South-Korean based contract development and manufacturing organization that was founded in 2011. Although a majority of biopharma contract manufacturers operate out of North America and Europe, the expanding influence of Samsung Biologics demonstrates the Asian region’s emerging impact.
Samsung Biologics emphasizes partnership and capacity-building within their services. There is a paradigm shift for biopharmaceutical companies to not only market themselves as capable of full-capacity manufacturing, but well-equipped for specialized services, too. Samsung Biologics is no exception. Their expertise includes seamless technology transfers, clinical and commercial manufacturing, and analytical testing. Samsung Biologics also advertises aseptic fill/finish services, a specialized service not typically offered by the contract manufacturing providers in years passed. This highlights how Samsung Biologics is a quintessential example of how modern, innovative CDMOs optimize necessary research services that guarantee the biopharmaceutical market’s anticipated growth.
The success of Samsung Biologics is a testament to how a successful CDMO can catalyze lucrative, results-driven biopharmaceutical product manufacturing. For example, public health continues to dominate global discourse as the international community grapples with a solution to combat the novel COVID-19 pandemic. Research surrounding potential vaccines and medical treatments highlights the role of biopharmaceutical companies in creating these developments. This indicates that there is a greater, unprecedented need for biopharmaceutical researchers to develop and release treatments as quickly as possible. Fortunately, CDMOs such as Samsung Biologics generate hundreds of millions of revenue that enable them to expand their production capacities, as indicated by their third production capacity opened in October 2018. The international community can rest assured that through the biopharma contract manufacturing model, coupled with expansive financial resources and market collaboration, treatments will reach the market as quickly as possible.
