Trends in Biopharma Contract Manufacturing in China and India

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By Vicky Qing Xia & Ronald A. Rader.
Posted on www.pharmoutsourcing.com

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Recent growth in the biopharmaceutical industry in both China, and India suggest a future positive outlook for contract manufacturing in both regions, but for the biopharmaceutical Contract Manufacturing Organization (CMO) industry in China in particular, we find rather dramatic changes. In our current Top 60 Biopharmaceutical Manufacturers in China Directory1 we describe the advances in the CMO sector in China, which started from virtually non-existent just 10 years ago. At the time, CMOs had not been permitted to operate in China; but rules have been changing and thanks to strong international and domestic market needs, as well as new regulatory and business reforms, doors have been opened for biologics CMOs. Today, the sector is attracting multinational pharmaceutical companies’ interest.

Contract manufacturing will significantly contribute to the overall industry’s growth, as domestic (bio)pharmaceutical research companies, which had been forced to fund and manage their own production lines, are now allowed to use contract manufacturers - who can typically perform critical manufacturing functions more efficiently. This is especially important for many early-stage drug innovators.

This shift in the regulatory system was made possible via collaborations between companies like Boehringer Ingelheim (BI) and local authorities, including BI’s investment in a biologics CMO in Shanghai. Mabplex, a domestic biologics CMO in Shandong, informed us that its business is showing strong growth potential just 10 months after it opened its doors. In that time, it generated revenue of over RMB 100 million ($15 million). WuXi Biologics, which focuses on international clients, started contract manufacturing services in 2008. In 2015, the company began construction on a new $150 million biologics manufacturing facility in Wuxi City. When complete, this new facility will be the largest mammalian cell culture manufacturing facility using disposable bioreactors in the world. This new facility will use 14x 2,000L and 2x 1,000L disposable bioreactors for late-phase clinical and commercial manufacturing. It will also be the largest biologics manufacturing facility of any kind in China. ShangPharma, another CMO, is also expanding with the construction of a new biologics production facility in Qidong, Jiangsu. JHL Biotech, a biologics CMO, has built and started operations at a new ~10,000L facility.

Things are changing rapidly for CMOs in China, but hindering their development is the still-evolving regulatory situation. As noted, until recently, developers performed the manufacturing of the products they developed, i.e., no third-party/CMO manufacturing for either trials or commercial production in China (although manufacturing for export markets has been largely unregulated, this is where much Chinese CMO activity is currently directed). This is no longer the case country-wide, with new reforms at CFDA including a Market Authorization Holder (MAH) program, under which a holder of a CFDA product approval (in certain regions), could be the product manufacturer. Under the program, use of a contract manufacturer is possible. This is an important development because contract manufacturing will help facilitate improvements in bioprocessing. Those lacking needed manufacturing infrastructure and expertise are no longer forced to spend funds to develop their own production facilities. This policy breakthrough came in 2015 and provides authorization to the State Council to carry out this pilot MAH program in 10 provinces and municipalities, effective through April, 2018.

Comparing China and India Biomanufacturing Growth

In our directory of the Top 60 Biopharmaceutical Manufacturing Facilities in China, we also defined total capacity and have found considerable growth in both liters capacity, and bioprocessing staff since the first edition published in 2007. Looking at biopharmaceutical manufacturing capacity, measured in terms of total on-site bioreactor volume (liters), this directory and BioPlan’s Top 1000 Global Biopharmaceutical Facilities Index2 India and China now both have comparable manufacturing capacities.

However, the countries are much different in terms of their biopharmaceutical industries. For example, China has not yet seen the results of the CMO programs mentioned above, but these are clearly showing promising results. On the other hand, in our recent primary research of bioprocessing executives we compared Chinese and Indian biopharma businesses.3 We found that Chinese companies are self reporting as being more oriented toward development of innovative, domestic products compared to Indian companies. Although many Chinese companies are pursuing biogenerics for lesser-regulated domestic and international markets, some are targeting major market approvable/GMP biosimilars. China currently has only a handful of biopharmaceutical manufacturing CMOs, while there are a significant number of these of all sizes in India. Both India and China also have a number of facilities belonging to major Western biopharmaceutical companies; many of these perform early research and screening.

Developing Domestic Biologics Pipelines

Development of biologics pipelines by domestic companies will drive the business of biopharmaceutical contract manufacturing in China. This will happen as the pilot MAH system is expanded and builds a legal foundation and industrial infrastructure for biopharmaceutical contract manufacturing, along with development of biologics pipelines by domestic companies. From our Top 60 China Facilities Directory, dozens of domestic companies, both new and old, have started monoclonal antibody (mAb) development projects, most involving biogeneric/ biosimilar versions of Western products, with few of these marketed fully in China. While some of the more established companies are tending to build their own production facilities, many of the newer biotech companies are or will be working with CMOs. For example, NASDAQ-listed BeiGene, a biotech company with a focus on innovative drug development founded by returnee scientists, has signed contract manufacturing deals with Boehringer-Ingelheim Biologics China, with this being the first large multi-national corporation (Big Pharma) CMO manufacturing in China, through BeiGene’s participation in the pilot MAH program. Another biotech company, Zai-Lab, also signed a strategic cooperation agreement with BI under which BI is to provide process optimization and manufacturing services in its Shanghai facility for a new monoclonal antibody being developed by Zai-lab.4

CMOs in China Adopting More Technology Platforms

BioPlan’s recent studies of China’s biopharma companies also have found CMOs in China to be more open-minded in adopting single-use technology, compared to domestic biologics developers/manufacturers. While most domestic biologics companies still consider single-use technologies as a relatively expensive solution and prefer stainless steel equipment. JHL Biotech has already kicked off operations at its single use technology based GE KuBio modularly-constructed CMO facility. Some biopharmaceutical manufacturers, including 3S Guojian, the first mAb-manufacturers in China, are considering using hybrid (single use/ stainless) systems for manufacturing of biologics. Further adoption of single-use equipment, including by stainless steel-based manufacturing facilities, in China is expected.

Compared to India, generally portrayed as its main competitor in emerging biopharmaceutical commerce, China is on a more rapidly growing development track, while progress in India is slowing. Strategically, China is making coordinated progress, including rapid expansion of manufacturing capacity and fixing quality issues. India’s problems include less improvements in infrastructure (electricity, water, cold chain management); a slower growing economy, with unaddressed quality/GMP problems. At a time when China is addressing its hiring, training and quality management problems, India has reported less coordinated, regional activities that are not leading investors, as is occurring in China, where there is more government coordination of planning and funding. Further, Indian companies have less funding for innovative biopharmaceutical development capacity, with biogenerics and biosimilars a stated biopharmaceuticals goal.

India’s International Investment Strategies

Already we are seeing a reduction in foreign investment in India vs. China; and the successful Indian biopharmaceutical manufacturers are increasingly investing more overseas, including expansion of manufacturing capacity For example, some of the largest biopharmaceutical players in India are building major new biopharmaceutical manufacturing facilities in other Asian countries and/or are emphasizing major expansions in their primarily generic drugs manufacturing and distribution networks in the U.S. and Europe, including buying companies and doing more fill-finish.

According to recent reports, Indian companies have already invested $1.5B in 2015, and more in 2016, rather than investing in India. As an example, Aurobindo Pharma, which makes most of its drugs in India, is planning a second U.S. facility. Its first U.S. plant was established in August 2016, and the company will build a second sterile injectables plant in New Jersey.

Due to increasing regulatory pressure from the FDA over quality problems in India, some companies are planning to enter the US and staff facilities with trained a US workforce; seen as easier than trying to achieve that level of quality in India.

Overall, ongoing trends indicate that, once fully freed from restrictive regulations, the domestic Chinese CMO industry will rapidly take off, and China will become the single-most dominant player in Asia in terms of biopharmaceutical CMOs and overall biopharmaceutical manufacturing capacity. In fact, just scaling-up to serve its domestic markets with biogenerics will result in very rapid growth in the Chinese biopharmaceutical industry, particularly CMOs.

References

  1. 2nd Edition, Top 60 China Biopharmaceutical Manufacturing Facilities Directory, BioPlan Associates, Inc., Rockville, MD USA, February 2017.
  2. Top 1000 Global Biopharmaceutical Facilities Index,BioPlan Associates, Web site/database at www.top1000bio.com.
  3. China’s Advances in Global Biopharma and Bioprocessing: A 10-year projection in need for innovation and quality improvements; January 2017, White Paper Survey of 50 Chinese Biopharmaceutical Executives, BioPlan Associates, Inc. Rockville MD, www. bioplanassociates.com
  4. BioChina Facilities Newsletter; BioPlan Associates, Inc. Quarterly, see www. bioplanassociates.com