contractor growth modest in first half

©2011 PharmSource Information Services, Inc.1-703-383-4903

Part of the PharmSource ADVANTAGE sourcing intelligence service

®

Bio⁄Pharmaceutical Outsourcing Report 1 of 16

B u s i n e s s C o n d i t i o n s

ContraCtor Growth Modest in First halFContract service providers that report their financial results publicly experienced modest growth in the first half of 2011, with API manufacturers and discovery service providers showing the most progress.

Most API manufacturers saw volume and revenues improve in both commercial and clinical manufacturing. Among the major players, Lonza’s revenues were flat but the company expects a good second half based on a strong order book and growing development pipeline. Siegfried reported very strong growth in its exclu-sive synthesis business, and AMRI experienced growth in its development and commercial segments.

The positive performance in preclinical services was largely the result of strong performances by Asian providers of discovery chemistry services. WuXi Phar-maTech realized 13% growth in its China labs segments and Shangpharma’s revenues jumped 26%. Results in toxicology were mixed, with Covance reporting a 10% increase in revenue (including non-toxicology services delivered as part of the strategic relationship with sanofi-aventis). Charles River Laboratories, on the other hand, was down 11% (although its discovery-oriented research model services business grew 4%).

CMC services were up just 2% for H1 2011, reflecting mixed results at Catalent and Patheon, which dominate the segment. Catalent achieved 16% growth in its development services but fell 5% in commercial manufacturing, while Patheon grew 6% in commercial manufacturing and declined 2% in development services. The segment was helped by strong growth at SGS, which benefited from its acqui-sition of M-Scan last year.

Volume 16, Number 9September 2011

Business ConditionsContractor Growth Modest in First Half ................................................1

side effects ...................................................2Commercial dose Manufacturing

Ben Venue Exits Contract Manufacturing ...........................................3Fareva Acquiring Pfizer Richmond Facility .....................................5Patheon Continues Restructuring While Expanding PDS .............................6Commercial Dose Manufacturing in Brief .............................................................7

Commercial Packaging ..........................8Clinical dose Manufacturing

and PackagingCatalent to Acquire Aptuit Clinical Supplies Business ......................................8Clinical Dose Manufacturing and Packaging in Brief .....................................9

APi — Biomanufacturing ....................10APi — small Molecule

Spray Drying Gaining Popularity Among CMOs and Clients ..................11API — Small Molecule in Brief ...........14

Analytical services .................................14early development ................................14Phase ii-iV Clinical Research ............14drug discovery ........................................15Captive Capacity .....................................15outsourcing events ................................15

www.Pharmsource.com

to view B/PoR online click on this box or visit www.pharmsource.com

To access full articles you'll need your personalized PharmSource login codes. If you don´t have these available, please call us toll-free at 1-888-777-9940 (ET) or 1-703-383-4903 and we'll be glad to provide them.

www.pharmsource.com

http://asp.pharmsource.com

http://asp.pharmsource.com

http://www.pharmsource.com/

©2011 PharmSource Information Services, Inc. 1-703-383-4903 Bio⁄Pharmaceutical Outsourcing Report 2 of 16

Actionable intelligence for bio/pharma sourcing

The outlook for the rest of the year is mixed. API providers are generally positive about the rest of 2011, while preclinical toxicology CROs are circumspect about the outlook. Clinical CROs expect a stronger second half as strategic deals kick in.

A survey of CMC service providers (including privately-held companies) conducted by Pharm-Source indicated a broad range of performance, with some companies having a strong year for new signings and others experiencing negative performance. We expect that this is the pattern across the industry and that we will continue to see greater separation between the best- and worst-performing CROs and CMOs.

s i d e e f f e C t s

Side Effects identifies CMOs and CROs that might be impacted by key events affecting their clients, including company acquisitions, product acquisitions and licenses, product approvals, late clinical product terminations and FDA rejections.

Contractor Pharma Company Event Product Relationship

Potentially Positive

Abbott Contract Manufacturing

Seattle Genetics FDA approval ADCETRIS (brentuximab

vedotin, SGN-35)

Cell culture

Aquitaine Pharm International/

Pierre Fabre


vedotin, SGN-35)

Injectables manufacturing

Piramal Healthcare Pharma Solutions


vedotin, SGN-35)

Small molecule API manufacturing

SAFC Seattle Genetics FDA approval ADCETRIS (brentuximab

vedotin, SGN-35)


Albany Molecular Research Inc.

(AMRI)


vedotin, SGN-35)


WuXi PharmaTech Vertex Pharma Approval in Canada INCIVEK (telaprevir, VX-950)


Rentschler Biotechnologie

GmbH

Shire plc. FDA approval FIRAZYR (icatibant)

Injectables manufacturing

Catalent Pharma Solutions

InterMune, Inc. Launch of ESBRIET in Germany

ESBRIET (pirfenidone)

Solid dose manufacturing

Potentially Negative

Angelini Fine Chemicals

Labopharm Paladin Labs acquires Labopharm

OLEPTRO (trazodone

hydrochloride)


Confab Laboratories


OLEPTRO (trazodone

hydrochloride)


Confab Laboratories


RYZOLT (tramadol)


Source: PharmSource Lead Sheet



C o M M e R C i A l d o s e M A n u f A C t u R i n g

Ben Venue exits ContraCt ManuFaCturinGBen Venue Laboratories (BVL – Bedford, Ohio, USA) has announced that it is exiting the contract manufacturing business. Its facility in Bedford, Ohio, USA, will focus on manufacture of injectable products for its Bedford Laboratories generic injectables business. Current contract manufacturing clients will be transitioned out of the facility over the next several years.

The announcement was presaged in June, when BVL informed prospective clients that it would not be accepting new contract business for some undefined period. At that time, BVL indicated that it wanted to maintain a profile in the CMO market, and was an exhibitor at the BIO trade show.

The decision to pull out of contract manufacturing followed two recent regulatory inspections, one by the EMA and one by the FDA, which resulted in a significant number of observations and a lengthy 483 that the company is addressing. Those inspections were the latest in a string of adverse compliance and operating developments, dating back to a warning letter in 2007.

As a result of the need to remediate the ongoing compliance issues, BVL is capacity-constrained. Earlier this year, Bedford Laboratories gave wholesalers a long list of products that it is no longer supplying due to the capacity constraints.

BVL has made a number of changes to its facility and SOPs since receipt of that warning letter and earlier failed inspections, including design changes to its new, not-yet-opened cytotoxic injectable man-ufacturing area and agreeing to permanently close down some older areas of the facility. Despite the four years of effort, however, BVL has not been able to satisfy the FDA and EMA, as the failed inspec-tions of May and June 2011 indicated.

Why Exit Now?According to sources familiar with the situation, the decision to exit contract manufacturing was driven by the desire to maintain and grow the Bedford Laboratories generic injectable business, even at the expense of the contract manufacturing business. Bedford Laboratories sells its products primarily in the U.S. (with some sales in Canada, as well), and therefore, needs to focus primarily on satisfying the FDA. The need to comply with EU GMP requirements stems primarily from the contract manufacturing business. By jettisoning contract manufacturing, BVL can focus just on the FDA requirements, thereby greatly simplifying the path to achieving regulatory compliance.

BVL management confirmed its rationale in an emailed response to our request for a fuller explanation:

“We believe we can best serve healthcare providers and their patients in the long term by sim-plifying our business model, including additional focus on advancing regulatory compliance and operational efficiencies, and a long-term focus on one business – our core Bedford Labora-tories generics business.”

The decision to exit contract manufacturing also reflects the market reality of BVL’s diminished pres-ence in the CMO industry. The warning letter and subsequent failure to regain full regulatory approval have badly injured the company’s reputation in the market, and it appears to be years away from being able to regain its standing.

The biggest impact from BVL’s exit from contract manufacturing will be in the cytotoxic injectables segment, especially in North America, where BVL has been the principal player for many years. BVL manufactures some of the best known cytotoxic products on the market, including Doxil and Eloxatin. BVL’s 224,000-square-foot expansion of its main facility included three new vial fill lines and nine freeze dryers, with a total capacity of 2250 square feet. Containment for the filling lines uses a combina-



tion of full isolator and Restricted Access Barrier Systems (RABS) technologies. Only a few CMOs have the ability to handle cytotoxic products in North America, including DSM (Greenville, NC, USA), Uman Pharma (Montreal, Canada), and Oso Biopharmaceutical Manufacturing (Albuquerque, New Mexico, USA). None of these CMOs has the capacity to absorb all of the volume that will transfer out of BVL, however, and it is likely that some of the volume will go to CMOs in Europe and Asia (see table below).

In addition, BVL has some of the largest capacity in the industry for lyophilization of standard potency products, with nearly 5400 square feet of capacity. We don’t believe that contract manufacturing clients were absorbing a high percentage of that capacity, and there should be adequate capability in the industry to absorb it.

CMOs with Cytotoxic Injectable Capability

Company Location Lyophilization

DSM Pharmaceuticals USA Yes

Uman Pharma Canada Yes

Oso Biopharmaceutical Manufacturing USA Yes

Pfizer CentreSource USA, Australia Yes

Baxter Biopharma Solutions Germany Yes

Oncotec PharmaProduktion Germany Yes

Haupt Pharm Germany No

BSP Pharmaceuticals Italy Yes

Pierre Fabre France Yes

Nextpharma Technologies Belgium Yes

GP Pharma Spain Yes

Ebewe Pharma Austria No

GlaxoSmithkline Italy, Ireland Yes

Mustafa Nevzat Pharmaceuticals Turkey Yes

Dr. Reddy’s Laboratories India Yes

Claris Lifesciences India Yes

Source: PharmSource Advantage database



FareVa aCquirinG PFizer riChMond FaCilityFareva (Quetigny, France) will acquire Pfizer’s OTC manufacturing facility in Henrico County, Virginia, USA (near Richmond), according to a release from the Commonwealth of Virginia. No financial terms were announced.

The Henrico facility manufactures semisolid and liquid products for the OTC market, including well-known brands Chapstick, Robitussin, and Children’s Advil. All told, the operation manufactures 83 formulations across 300+ SKUs for 44 markets, according to promotional materials used to market the site.

The site’s manufacturing capabilities include three cream/ointment suites, one suppository suite, lip balm manufacturing facilities and 29 primary and secondary packaging lines. It has six QC labs covering 23,000 square feet, and a 286,000-square foot warehouse with a 28,000 pallet capac-ity. According to the promotional materials, the facility’s 24 million liters of liquid capacity and 2.2 million kg of semisolid capacity are only 35% utilized, and only 50% of the packaging capacity is used.

Pfizer currently has 500 staff at the site. Fareva will invest USD 42 million into the facility and hire an additional 90 people, according to the state press release.

The deal is just the latest in a string of pharmaceutical facilities acquired by Fareva from Pfizer. Fareva entered the pharmaceutical CMO business with the acquisition of Pfizer sites in Angers and Val-de-Reuil, France in 2005. The company bought Pfizer’s cytotoxic manufacturing operations in Feucht, Germany, in 2007.

The Henrico facility was on the market for over a year, and a number of major CMOs looked at it. However, most could not make the numbers work: While the initial revenue in the “transitional supply agreement” was said to be more than USD 100 million, the margins offered by Pfizer made the operation non-viable without a substantial influx of new business. Most CMOs that focus on Rx products prefer to stay away from the low prices and thin margins in the OTC segment. In fact, the CMOs that target the OTC segment, e.g., Perrigo, PharmTech and Robinson, seldom come up in discussions of the Rx segment.

The facility seems to be a more strategic fit for Fareva, which has operations spanning a broad range of consumer and industrial products, including cosmetics, food and home care products. Of Fareva’s EUR 820 million (USD 1.1 billion) in revenues, only about 40% comes from pharmaceuticals. The company reportedly plans to add cosmetics manufacturing to the site, according to the state press release.

The Henrico acquisition is also strategic to Fareva because it will be the CMO’s first North Ameri-can manufacturing facility. Fareva’s 10 current pharmaceutical manufacturing facilities, along with 17 of its 18 other manufacturing sites, are all in Europe. The company has one facility in Brazil, which makes consumer paper products.

For more information on the business and capabilities of Fareva Holding, click on this box or go to www.pharmsource.com and search by company name. If you need your access codes, just call 1-703-383-4903 (ET).

http://asp.pharmsource.com/Vendor/Vendor.asp?VendorID=1558




Patheon Continues restruCturinG while exPandinG PdsPatheon (Durham, N.C., USA) announced plans to further restructure its manufacturing operations and trim overhead, while expanding its development services offerings.

In its third quarter earnings announcement, Patheon announced four moves aimed at reducing costs and optimizing its capital expenditures:

♦ Exploring the sale of its commercial manufacturing operations in Swindon, UK;

♦ Closing its clinical packaging and analytical operations in Burlington, Ontario, Canada;

♦ Not accepting new contracts for manufacturing of semisolid products;

♦ Closing its European headquarters in Zug, Switzerland.

The company is also in the final stages of closing down its commercial manufacturing facility in Caguas, Puerto Rico.

The possible divestiture of the Swindon facility is the most dramatic of the steps announced by Patheon CEO James Mullen. The facility has capabilities to manufacture sterile products, and has dedicated areas for handling cephalosporin powders and lyophilizing cephalosporin products. The latter capabil-ity was installed in anticipation of the approval of ceftobiprole, developed by Basilea Pharmaceutica and licensed by Janssen Pharmaceutica. Janssen paid the costs of building and equipping the dedicated cephalosporin area, and paid Patheon reservation fees that were recognized when development of the product was discontinued. Patheon announced recently that it had signed two contracts for products that would utilize the cephalosporin lyophilization capabilities.

Aside from the cephalosporin lyophilization area, the rest of the Swindon commercial manufacturing operation needs significant investment to meet current standards for sterile products, and its financial performance has been problematic for several years. Mullen announced that Patheon has received a serious expression of interest from a potential acquirer.

Patheon will retain the development services operations at the Swindon site, and will base its European headquarters there once the Zug offices are shut down.

The closure of the Burlington facility means that Patheon is exiting the secondary clinical packag-ing business. Patheon opened the operation several years ago, but has generated no more than a few million dollars in revenue annually from the business. The operation is not seen as critical to the growth of the pharmaceutical development services (PDS) business.

The analytical chemistry operations at Burlington support the company’s manufacturing operations in the Toronto area. These activities will be moved to those manufacturing sites.

The partial withdrawal from semisolids reflects the dominance of specialized CMOs like DPT Labo-ratories (San Antonio, Texas, USA) and Contract Pharmaceuticals Limited (CPL - Mississauga, Ontario, Canada) in the semisolids segment. Patheon determined that it would need to make signifi-cant investments in its semisolid capabilities to be able to compete effectively, but the returns would be problematic; other CMOs, e.g., DSM Pharmaceuticals (Parsippany, N.J., USA), have made similar determinations in recent years. Patheon will continue to support semisolid products it is currently making and will continue to compete actively for non-sterile liquid products.

New PDS SiteWhile reducing its presence in certain business lines, Patheon is making additional investments in its PDS business. In October, the company will open a new PDS facility in the San Francisco area that will be geared to early formulation development services for small bio/pharma companies. The company is also committed to expanding its early development capabilities and technology portfolio, and announced its intention to expand its PDS capabilities in Europe.



In his conference call comments, Mullen stated Patheon’s view that the CMO business is likely to grow only at a low single-digit rate (3-5%), while projecting somewhat stronger prospects for development services (8-10%). The decision to close or divest facilities and exit business lines reflects hard-nosed analysis about where the company can be competitive and profitable in that environment.

In particular, the decision signals that Patheon executives have decided that the strategy of being a full-line manufacturing partner to major bio/pharmaceutical companies is not a viable one, and it makes sense for the company to focus its capital and management sources on those segments of the industry where it has significant scale and market share, especially solid dose, injectables and development ser-vices. Enhancing margins and targeting available capital at those business lines offers greater prospects for improved financial performance through higher utilization and revenue growth.

Perhaps the best example of the success of that strategy in the CMO space has been Catalent (Somer-set, N.J., USA), which in recent years has divested marginal businesses and facilities to focus on a core of services, especially oral drug delivery technologies, and seen its margins improve significantly. Many of the larger CMOs in the industry, especially those in Europe that have been built by taking on redun-dant facilities from global bio/pharma companies, could benefit from following a similarly hard-nosed approach to their business mix.

For more information on the business and capabilities of Patheon, Inc., click on this box or go to www.pharmsource.com and search by company name.

Commercial Dose Manufacturing in BriefBaxter BioPharma Solutions (Round Lake, Ill., USA) announced the expansion of its cytotoxic man-ufacturing facility in Halle, Germany, with the addition of a commercial-scale lyophilization unit.

Contract Pharmaceuticals Limited (CPL – Mississauga, Ontario, Canada) announced the elimina-tion of 128 jobs as it prepares to close its Buffalo, N.Y., USA, manufacturing site. The company will have eliminated a total of 260 positions by the end of 2011.

Gilead Sciences (San Dimas, Calif., USA) resolved all issues from a September 2010 FDA warning letter regarding its San Dimas manufacturing facility. The warning letter cited deficiencies, includ-ing contamination, related to production of the fungal infection treatment AmBisome and inadequate quality procedures for production of the antiviral Viread.

Grand River Aseptic Manufacturing (Grand Rapids, Mich., USA.) received GMP approval from the FDA for its sterile injectables facility in Grand Rapids, Mich., USA. The 11,400-square-foot facil-ity offers clinical- and commercial-scale injectables manufacturing services, including an aseptic filling suite, lyophilization, analytical and microbiological service capabilities.

Pharmaceutics International, Inc. (PII – Hunt Valley, Md., USA) received GMP certification from the FDA and EMA following a joint inspection from both agencies. PII also received marketing autho-rization for a softgel product and reauthorization for a tablet product from the EMA as a result of this inspection.

Rechon Life Science (Malmö, Sweden) entered an agreement to commercialize and manufacture NovaDel Pharma’s oral spray formulation of the insomnia treatment Zolpimist. Rechon has permission to manufacture and market the drug outside of the U.S. and Canada. Under the terms of the agreement, Rechon will submit a regulatory filing to the EU, and must distribute the drug in at least three countries outside the EU within 12 months.

SCM Pharma (Northumberland, UK) entered into a commercial supply agreement with Alliance Pharma to provide packaging, filling and testing of three injectable products – Edrophonium, Isoniazid and Pentagastrin.





Toyobo (Shiga, Japan) announced an investment of JPY 1.2 billion (USD 15 million) to expand its con-tract services capabilities. The company plans to increase its aseptic filling capacity to 1,800 vials/hour and upgrade the lyophilization unit at its manufacturing plant in Otsu, Japan. The new unit is expected to be completed in January 2013 and operational shortly thereafter.

C o M M e R C i A l PA C k A g i n g

Masters Pharmaceuticals (Cincinnati, Ohio, USA), a third-party logistics provider, received DEA reg-istration for its 148,000-square-foot distribution center in Fairfield, Ohio, USA.

MD Logistics (Plainfield, Ind., USA) opened a new 55,000-square-foot facility in Reno, Nev., USA. The new cGMP facility will provide warehousing for pharmaceuticals, including controlled room tem-perature and cold chain storage and distribution services. MD Logistics intends to hire approximately 20 people to fully staff the site by 2012.

C l i n i C A l d o s e M A n u f A C t u R i n g A n d PA C k A g i n g

Catalent to aCquire aPtuit CliniCal suPPlies BusinessCatalent Pharma Solutions (Somerset, N.J., USA) has agreed to acquire Aptuit’s (West Lafayette, Ind., USA) clinical trial supplies business for USD 410 million in cash. The deal is expected to close by the end of 2011.

The acquired business includes clinical packaging facilities in New Jersey (two), Kansas City, Mo., the UK and Singapore. The Kansas City site also has capabilities for formulation development and manufacture of clinical trial supplies. Based on a presentation by Aptuit at the JPMorgan Healthcare Conference earlier this year, the business had revenues of about USD 125 million.

According to Scott Houlton, president of Catalent’s Development & Clinical Services business, the acquisition brings several strategic benefits to Catalent:

♦ Scale in the clinical supplies business. Catalent claims that the acquisition will position the company as the number two provider of clinical supplies services, as the combined revenue of the Catalent and Aptuit businesses will be about USD 300 million. Houlton sees that scale as critical to Catalent’s efforts to gain preferred provider status with the major bio/pharmaceutical companies.

♦ Expanded cold chain capabilities. Demand for capabilities to package, label and store clinical supplies under cold and frozen conditions has been expanding as biologics account for more of the development pipeline. While Catalent has announced several recent initiatives to expand its capacity in these areas, Aptuit’s greater capacity will give Catalent an immediate boost in capa-bilities.

♦ Presence in Asia. Acquiring Aptuit’s operations in Singapore will give Catalent a clinical pack-aging operation in Asia for the first time, increasing its ability to service bio/pharma companies running trials in that region and putting it on more equal footing with Fisher Clinical (Allen-town, Pa., USA), which has operations in Singapore and India.

♦ Expanded clinical supplies manufacturing capabilities. In recent years, Catalent has focused its development capabilities on high-value specialized delivery technologies, including softgel, controlled-release, blow-fill-seal and inhalation. The Kansas City operation has more basic and lower-value solid dose capabilities, but Houlton sees advantages in being able to serve a broader range of clients and getting an earlier look at compounds that might be candidates for the advanced-delivery technologies.



With the sale of the clinical supplies business, Aptuit will focus on its chemistry-based development ser-vices offerings, which include process development, solid state chemistry, and formulation development from facilities in the U.S., the UK, Italy and India. The company had already announced plans to shut down clinical supplies manufacturing operations in the UK.

The acquisition of Aptuit’s clinical supplies business represents an important strategic initiative by Catalent. For several years, the company signaled that its primary focus was on its drug delivery tech-nologies, where it has significant scale and technology advantages, and can command superior margins. The Aptuit acquisition opens up a new front for the company, as it seeks to accelerate growth ahead of an anticipated initial public offering in the next few years.

What has surprised the market is what Catalent is willing to pay for the Aptuit assets. The USD 410 million represents a multiple of more than 3x revenues, and a speculated 10-12x EBITDA. The replacement costs of the assets certainly don’t justify the price. We must assume that Aptuit has long-term contracts that will generate a steady stream of profits in future years.

Some observers speculate that Catalent will be able to achieve significant costs savings by consolidating Aptuit’s facilities with its own, but we are doubtful that such benefits can be realized in the near term. We don’t believe that Catalent has much spare capacity in its current facilities, so it will need the Aptuit facilities to accommodate growth. Further, we believe that Catalent will have to make some significant investments in facilities and information technology to catch up with competitors Fisher Clinical and Almac (Craigavon, UK).

Catalent is taking on some financial risk in the deal. The company had USD 205 million cash on hand at the end of June 2011, and will probably borrow much of the purchase price. Moody’s announced that it has put Catalent debt under review for a possible downgrade because of the acquisition.

As for Aptuit, the deal will enable the company’s owner, private firm Welsh Carson, to repay debt accumulated in building the company and possibly return some of the equity invested in it. The specu-lation in the industry now is what steps Welsh Carson might take with the remaining company. We understand that private equity and strategic buyers are already making inquiries about the possibility of acquiring all or parts of the business, but Welsh Carson has not revealed its plans.

For more information on the business and capabilities of Catalent Pharma Solutions, click on this box or go to www.pharm-source.com and search by company name.

For more information on the business and capabilities of Aptuit, Inc., click on this box or go to www.pharmsource.com and search by company name.

Clinical Dose Manufacturing and Packaging in BriefEncap Drug Delivery (Livingston, UK) expanded its service offering to include a feasibility package that evaluates formulations for colonic drug delivery. The company will offer Phloral coating technol-ogy, a pH-dependant coating which contains a resistant starch component that is broken down by the microbiota in the colonic region. The feasibility package will include prototype formulation evalua-tion, stability testing of the compound for metabolism by colonic bacteria, dissolution testing, and an optional PK study.

SCM Pharma (Northumberland, UK) announced the expansion of its services portfolio with the addi-tion of formulation development capabilities. Services will be offered at the company’s facilities at the University of Sunderland, and will include emulsions and suspensions for parenteral, oral and topical administration, as well as support for analytical testing and stability studies.







Xcelience (Tampa, Fla., USA) and Bend Research (Bend, Ore., USA) entered into a partnership to provide oral solid-solubilization formulation and clinical manufacturing services. Under the agreement, Bend will provide process development services, while Xcelience will handle GMP manufacture of clinical trial materials.

Xcelience also announced plans to expand its contract research facility in Tampa Bay, Fla., USA. The company intends to add nine rooms, totaling 1,000 square feet, to its current facility, and to build an adjacent 24,000-square-foot facility. It will hire 45 additional employees over the next three years to staff the expanded site. Xcelience is adding new equipment, including a capsule-filling machine for powder and pellets, an extruder, a spheronizer and a bottom sprayer to its fluid bed processor.

A P i — B i o M A n u f A C t u R i n g

Advanced BioScience Laboratories (ABL – Kensington, Md., USA) completed validation and began operations at its new biologics manufacturing facility in Rockville, Md., USA. The 72,000-square-foot facility has laboratory space to provide process development, preclinical testing and research. It features suites for the production of mammalian- and microbial-based therapeutics, viral-based vaccines and vectors and aseptic filling of parenteral products.

Apceth (Munich, Germany) received approval to manufacture somatic cell therapeutics in Germany. The company now intends to offer contract manufacture and development of somatic cell therapies. In order to support the expansion of its portfolio, Apceth has opened a new facility outside of Munich in Ottobrunn, Germany. The company now has 600 square meters of clean room space, including five clean room suites.

Bachem (Bubendorf, Switzerland) has renewed its supply agreement with AstraZeneca to provide the hormone therapy goserelin. Bachem has continued to produce goserelin for AstraZeneca for more than 20 years.

Batavia Bioservices (Leiden, Netherlands) entered a partnership with Xendo (Leiden, Netherlands) under which Xendo will provide engineering, regulatory and clinical support services and Batavia Bioservices process development and analytical services. Under terms of the agreement, all Xendo Manufacturing bioprocess activities will be transferred to Batavia Bioservices. In addition, Batavia will gain simulated moving bed (SMB) purification technology and microbial process and product development capabilities.

Boehringer Ingelheim (BI – Ingelheim, Germany) entered into an agreement with ProBioGen (Berlin, Germany) under which BI will apply ProBioGen’s GlymaxX technology to its antibody cell lines. The GlymaxX technology will be integrated with the BI-HEX expression system, and both companies will jointly market the technology.

CMC Biologics (Copenhagen, Denmark) announced a capacity expansion of its manufacturing facil-ity in Copenhagen with the addition of a 2,000-liter single-use bioreactor.

GlaxoSmithKline (GSK – King of Prussia, Pa., USA) and Dendreon ended their contract manu-facturing agreement under which GSK produced Provenge, a recombinant treatment for metastatic hormone-refractory prostate cancer. The contract was scheduled to end in 2015; Dendreon cited lower-than-expected sales as its reasoning for ending production of the drug.

IDT Biologika (Dessau-Rosslau, Germany) entered into an agreement with CellCura to provide testing and adaptation of CellCura’s protein-free media for the production of cell lines used during the manufacture of vaccines.

Lonza (Basel, Switzerland) entered into a non-exclusive license agreement with Oxford BioTherapeu-tics. The agreement will enable Oxford to use Lonza’s GS Gene Expression System for research and development, as well as commercial production of its proprietary oncology therapeutics.



Lonza also received a warning letter from the FDA for several cGMP violations at its manufacturing facility in Hopkinton, Mass., USA, following an April 2011 inspection of the site. The letter cited viola-tions related to testing, quality and production of the API used in Eisai’s oncology treatment, Ontak.

A P i — s M A l l M o l e C u l e

sPray dryinG GaininG PoPularity aMonG CMos and ClientsSpray drying technology has been applied in the pharmaceutical industry for many years, but has recently gained interest as a means to enhance the performance of APIs and as an economical alternative to other drying or coating technologies. As acceptance of spray drying grows, more CMOs are investing in the technology.

During the spray drying process, particles are dried while suspended in a hot drying gas, typically air or nitrogen, enabling the liquid feed solution to be transformed into a dry powder during a single continu-ous action as the moisture steadily evaporates. Altering the parameters during the spray drying process enables production of complex formulations to exact specifications. Particle size and shape, bulk density, dispersability, polymorphism, and flow parameters can all be carefully controlled. “By controlling the temperature at the inlet and outlet of the spray-dryer, along with the rate at which the spray solution and drying gas are introduced into the dryer, the morphology, particle size, and density of the result-ing powder particles can be controlled,” explains Dan Dobry, vice president of Engineering at Bend Research (Bend, Ore., USA). Bend Research specializes in enhancing the oral bioavailability of poorly water-soluble compounds through its spray-dried dispersion (SDD) technology, and produces solubilized formulations for early development through commercial launch.

Formulating Insoluble APIsA key application for spray drying technology is solubility enhancement, which enables the formula-tion of insoluble APIs that have poor bioavailability. “This technology addresses a substantial problem, because low aqueous solubility has been an increasing challenge for the pharmaceutical industry in the past decade. Nearly one-third of all compounds in early development have poor bioavailability due to low solubility, representing significant lost economic and therapeutic opportunities,” notes Dobry.

“The development of SDD and similar solubilizing technologies based on spray drying have been successfully used to increase the bioavailability of low-solubility APIs,” Dobry explains. When spray drying is used to enhance solubility, an amorphous dispersion is generally created between a polymer and the API to make a solid solution. The SDD can then be easily incorporated into the final dosage forms, such as tablets and capsules. Bioavailability enhancements can be as high as 100- to 1,000-fold.

“Controlling morphology is the key advantage in using spray drying technology during the produc-tion of APIs,” continues Mak Jawadekar, an independent consultant in drug development. “It offers improved characteristics before incorporating the API, as a spray-dried dispersion along with other suit-able polymers, into the formulation or before making the final dosage form–that is, prior to formulating it with other excipients and ultimately its compression into tablets or encapsulation into hard gelatin capsules.”

Less API During Early DevelopmentDobry notes that “The [spray drying] process is robust and highly scalable, capable of producing quan-tities of material as small as 1 milligram for laboratory use, up to metric ton quantities for commercial applications.” As a result, it is more cost-effective than other technologies. For example, early-stage feasibility screening can be performed with very small quantities of valuable API and later scaled-up with a minimum of developmental runs. “This technology gives an advantage over applicable particle-



size reduction or lipid solution approaches, which commonly require more of the active pharmaceutical ingredient to produce exploratory dosage forms,” explains Dobry.

There are several other advantages to the use of spray drying. “Spray drying can also be conducted using flammable, organic solvents with nitrogen as the heating media, which opens up a wide range of potential formulations,” adds Joseph Persyn, manager, Microencapsulation & Nanomaterials, Chemistry and Chemical Engineering Division at Southwest Research Institute (San Antonio, Texas, USA).

Spray drying can also be applied to enhance solid dose for-mulations. This includes the production of encapsulated powders for controlled release of APIs and taste masking.

Spray Drying and Injectables ManufacturingSpray drying has been gaining support as an alternative to lyophilization, with proponents arguing that it is a more cost-effective and efficient process. Specifically, it allows for the production of larger quanti-ties of material in a shorter time, since it is a continuous process. Lyophilization, on the other hand, is a batch process. “The lyophilization process takes up a lot of space and is time-consuming. It can take four or five days,” says Ian Lafferty, chief technical officer at Aesica Pharmaceuticals (Newcastle-upon-Tyne, UK). “With spray drying, I can get instant results. I can produce dry powder in minutes and carry the process on for days.”

“Spray drying is especially useful when there are temperature sensitive ‘actives’ involved, and provides a useful alternative to lyophilization, which is a much harsher method of drying. It is also used when large quantities are needed because it is a continuous production process,” continues Sam de Costa, sta-bilization project manager at Nova Laboratories (Leicester, UK).

These properties have led to aseptic spray drying being applied in the biopharmaceutical industry to produce stable vaccines, peptides and proteins. Nova Labs, for example, offers validated, cGMP aseptic spray drying capabilities. Aesica is in the process of installing a similar facility, and plans to offer aseptic spray drying services.

Another important advantage to the application of spray drying is the ability to make an API more thermally stable. “This allows you to make compounds that don’t need cold chain storage or shipping, which becomes important in emerging markets where cold chain is more difficult,” notes Lafferty.

“At Nova, we have combined aseptic spray drying with our stabilization platform, VitRIS (vitrified readily injectable suspension), which results in a room temperature-stable, ready-to-inject pharma-ceutical, and removes the need for refrigeration of products,” says de Costa. During the process, the company adds glass-forming sugars to the formulation; these create glass microspheres that protect the biomolecules from thermal destabilization.

Strong Growth Trajectory Projected, CMOs to BenefitWhile spray drying is often not the first line choice, it continues to grow in popularity.

Dave Hoffman, vice president of Particle Design & Exclusives at Hovione (Lourdes, Portugal), and Filipe Gaspar, director of RD of Particle Design at the same company, assert that spray drying is set to become more widely used in upcoming years. “Many large pharmaceutical companies are already beginning to embrace spray drying, which will further promote the use of this technology,” they explain. “The recent growth in pharmaceutical spray drying was driven by its advantages over conven-tional multiple-step processes and competing particle engineering technologies. It allows not only the replacement, in many cases, of all those complex, time-consuming and yield-reducing isolation steps, but it also produces a final product with tailor-made particle properties.”

AdVAntAges of sPRAy dRying teChnology

♦ Highly flexible technology

♦ Ideal for temperature-sensitive production

♦ Produces higher volumes

♦ Continuous production

♦ Control of particle morphology

♦ Greater solubility enhancement compared with lyophilization

♦ Scalable to nearly any production size

♦ Efficient and cost-effective



As the popularity of spray drying grows, CMOs that specialize in the technology are set to benefit due to the nature of the technology. “Spray drying will always be a niche in the marketplace as it requires highly specialized technique and expertise,” argues Lafferty. “It is something for which pharmaceutical companies will continue to seek contract services.”

In fact, the PharmSource Advantage database already lists 37 contractors that offer spray drying capabilities at the clinical and commercial scale. Notably, the providers come at the business from different angles. Some offer it as part of API development and manufacturing, others as part of dose formulation and manufacture; a third group incorporates it into a materials engineering specialization. The different angles reflect the variety of ways in which bio/pharma companies are tackling both the solubility problem and the opportunity to increase efficiency with continuous processes.

CMOs Listed in PhARMsouRCe ADVANTAGE that Offer Spray Drying

Name Segment Manufacturing Scale

Almac Group Dose Commercial, Clinical

Abbott Laboratories Dose Commercial

Aptuit API Commercial, Clinical

Aesica Pharmaceuticals API, Dose Clinical, Commercial

Astron Research Dose Clinical

AuroSource API, Dose Commercial

Bend Research Materials engineering Clinical

Boehringer Ingelheim Pharma Chemicals API Commercial

CMIC-VPS Dose Clinical

Coating Place Dose Clinical

CoSci Med-Tech Materials engineering Clinical

DSM Pharmaceuticals Dose Commercial

FAMAR Dose Commercial

Formosa Laboratories API Commercial

Formurex Materials engineering Clinical

GEA Process Engineering Materials engineering Clinical

GlaxoSmithKline API, Dose Commercial

Hovione API Commercial

Metrics Dose Commercial, Clinical

Nova Laboratories API, Dose Commercial, Clinical

Niels Clauson-Kaas API Commercial

Omnichem API Commercial

Osny Pharma Dose Commercial

PharmaForm Materials engineering Clinical

Pharmatek Laboratories Dose Commercial, Clinical

PharmaZell Dose Commercial

Phoenix Chemicals API Commercial

QS Pharma Dose Clinical

RohnerChem API Commercial

Sigma Pharmaceuticals Dose Commercial

Southern Research Institute Materials engineering Clinical

Southwest Research Institute Materials engineering Clinical

Spray-Tek Materials engineering Commercial

Temmler Pharma Dose Commercial

WellSpring Pharmaceutical Dose Commercial, Clinical

XSpray Microparticles Materials engineering Commercial

ZaCh Systems API Commercial



API — Small Molecule in BriefAMPAC Fine Chemicals (Rancho Cordova, Calif., USA) entered into an agreement with Chimerix to provide commercial-scale validation of the API manufacturing process for Chimerix’s antiviral drug, CMX001, at its facility in Rancho Cordova, Calif., USA. CMX001 is being developed for the U.S. Bio-medical Advanced Research and Development Authority (BARDA) as a prevention and treatment of smallpox.

Ashland Specialty Ingredients (Ashland, Ky., USA), a specialty chemicals company, completed its acquisition of ISP Fine Chemicals (Columbus, Ohio, USA) for USD 3.2 billion.

IPCA Laboratories, parent company of the CMO Covenance (Mumbai, India), entered an agreement to acquire Onyx Scientific (Sunderland, UK). Onyx Scientific, which will continue to operate at the Sunderland facility under its name, provides custom synthesis, analytical services, solid state chemis-try, stability testing, process development, scale-up and cGMP manufacturing (up to a few kilogram). Covenance offers API — small molecule and formulation capabilities in support of Phase II through commercial-scale programs. ICPA intends to promote a package whereby early development projects will be completed by Onyx and scale-up and late phase manufacture by Covenance.

BASF Pharma Solutions (Florham Park, N.J., USA) announced that it will increase the prices of its excipients and generic APIs by 10%.

A n A ly t i C A l s e R V i C e s

Aspex (Reston, Va., USA), a provider of analytical equipment, expanded its capabilities to include contract GMP analytical services. Aspex completed the construction of its new analytical services labo-ratory in January 2011 and opened the facility in April 2011.

SGS Life Sciences Services (Geneva, Switzerland) announced the expansion of its facility in Poitiers, France with the addition of cell-based bioassays. The company will also update its flow cytometers and add a biosafety suite.

e A R ly d e V e l o P M e n t

Cetero Research (Cary, N.C., USA) announced the expansion of its preclinical analytical services portfolio with the expansion of several clinical dermatology and transdermal delivery system services at its facilities in Miami, Fla., USA; St. Louis, Mo., USA; Fargo, N.D., USA; and Toronto, Ontario, Canada. The company will now offer adhesion, irritation and sensitization trials services.

Eurofins Optimed Clinical Research, a CRO located in Gieres, France, and a subsidiary of the Eurofins Scientific Group (Kraainem, Belgium), entered into a partnership with Spaulding Clini-cal Research (West Bend, Wis., USA) to jointly offer early stage clinical services. The companies will provide study design, data management, statistical analysis and medical writing services.

MPI Research (Mattawan, Mich., USA) entered a partnership with vivoPharm (Hershey, PA) to jointly offer services from early-stage discovery to clinical development and regulatory approval.

P h A s e i i - i V C l i n i C A l R e s e A R C h

ICON (Dublin, Ireland) entered a contract agreement with Bristol-Myers Squibb (BMS) to provide early-phase clinical research services and clinical pharmacology at its San Antonio, Texas; Omaha, Neb.; and Manchester, UK, facilities. ICON will also provide protocol design and development, project management, clinical monitoring, medical monitoring/pharmacovigilence, data management, biostatistics, pharmacokinetics and medical writing.



LogiPharma 2011 October 3-5, 2011, Boston, Mass., USA www.wbresearch.com/logipharmausa/

Partnerships in Clinical Trials Asia October 12-14, 2011, Shanghai, China www.clinicalpartnershipsasia.com

AAPS 2011 Annual Meeting & Exposition October 23-27, 2011, Washington, D.C., USA www.aaps.org

ICSE 2011 – The International Contract Services Expo October 25-27, 2011, Frankfurt, Germany www.icsexpo.com

CPhI Worldwide 2011 October 25-27, 2011, Frankfurt, Germany www.cphi.com

European Outsourcing Awards October 26, 2011, Frankfurt, Germany www.europeanoutsourcingawards.com

In addition, ICON announced the appointment of Ciaran Murray as the company’s new CEO.

PPD (Wilmington, N.C., USA) entered into discussions with Carlyle Group to be acquired for approxi-mately USD 4 billion, according to a report in Bloomberg.

d R u g d i s C oV e Ry

Albany Molecular Research Inc. (AMRI – Albany, N.Y., USA) received a five-year federal con-tract from the NIH to provide medicinal chemistry and other drug discovery services as a part of the National Institute of Neurological Disorders and Stroke (NINDS) Medicinal Chemistry for Neurothera-peutics Program (MCNP). Under the terms of the agreement, AMRI will receive initial funding of USD 10 million and additional funding up to an estimated USD 43 million.

Selcia (Essex, UK) opened a new facility in Hopkinton, Mass., USA. The facility will provide the com-pany’s proprietary fragment screening services.

C A P t i V e C A PA C i t y

Gilead Sciences (San Dimas, Calif., USA) entered an agreement to acquire Genentech’s clinical bio-logics manufacturing facility in Oceanside, Calif., USA. Under the terms of the deal, which is expected to close by Q3 2011, Gilead will receive Genenech’s process development assets and hire approxi-mately 55 employees from the facility. However, Genentech will retain ownership of the commercial manufacturing facilities at the site.

The 70,000-square-foot facility manufactures biologic compounds for toxicology, Phase I and Phase II clinical studies. Gilead intends to use the facility to develop and produce GS 6624, its investigational monoclonal antibody in development as a treatment for certain cancers and fibrotic diseases, as well as another antibody currently in preclinical testing.

Roche (Basel, Switzerland) announced plans to invest USD 200 million in its Mississauga, Ontario, Canada research facility over the next five years. The facility will manage Roche’s clinical trials and employ a staff of 200.

Takeda Pharmaceutical (Osaka, Japan) received a JPY 24 billion (USD 313 million) grant from the Japanese government to build a commercial-scale production plant for influenza vaccines in Hikari City, Japan. The new facility is expected to be operational by the end of 2013. Takeda also received a similar grant in August 2010 under which the company established a collaboration with Baxter Inter-national (Deerfield, Ill., USA) to license Baxter’s proprietary Vero cell culture-based influenza vaccine technology and purification technique for use in Japan. Takeda will continue to collaborate with Baxter to establish commercial-scale vaccine production.

o u t s o u R C i n g e V e n t s

continued on nex page

http://www.wbresearch.com/logipharmausa/

http://www.clinicalpartnershipsasia.com

http://www.aaps.org/Meetings_and_Professional_Development/Conference_Mini_Sites/2011_AAPS_Annual_Meeting_and_Exposition/Overview/

http://www.icsexpo.com

http://www.cphi.com

http://www.europeanoutsourcingawards.com



LogiPharma Asia November 22-24, 2011, Singapore www.wbresearch.com/logipharmaasia/

Partnerships in Clinical Trials March 5-7, 2012, Orlando, Fla., USA www.clinicaltrialpartnerships.com

DCAT Week 2012 March 12-15, 2012, New York, N.Y., USA www.dcat.org

INTERPHEX 2012 May 1-3, 2012, New York, N.Y., USA www.interphex.com

BIO 2012 Annual Convention June 18-21, 2012, Boston, Mass., USA www.bio.org/events/

DIA 2012 Annual Meeting June 24-28, 2012, Philadelphia, Pa., USA www.diahome.org

EDITORIAL ADVISORY BOARD MEMBERSJohn Budzinski, PhDPhelix Pharma Outsourcing Consultants, Inc.

Mak Jawadekar, PhDConsultant in Drug Development

Martin L. Jeiven, MSPresident, Jeiven Pharmaceutical Consulting, Inc.

Howard L. Levine, PhDPresident, BioProcess Technology Consultants

Julie PedeliniSenior Director, Johnson & Johnson Pharmaceutical Research & Development

Paul C. StuartVice President, Clinical Supply Chain Pfizer Worldwide Research and Development

Bio⁄Pharmaceutical Outsourcing ReportPublished monthly.

©2011 PharmSource Information Services, Inc. All rights reserved. No part of this publication may be reproduced in any form, except as allowed by law, without prior written permission of the publisher in each instance.

Bio⁄Pharmaceutical Outsourcing Report is designed to provide accurate and authoritative information. Every reasonable effort has been made to ensure its accuracy. It is not intended to replace government regulations, agency guidance, expert legal or business counsel, or the reader’s professional business judgment.

PO Box 8163 Springfield, VA 22151-8163

Voice: 1-703-383-4903 Fax: 1-703-383-4905

E-mail: [email protected]: www.pharmsource.com

Publisher: James C. Miller

Managing Editor: Eurona Earl Tilley

Industry Analysts: Ryan Worthen, Brooke Wilson, Pamela Hider, Akhil Rachamadugu

Graphics and Design: Sue Gift

o u t s o u R C i n g e V e n t s ( C o n t i n u e d )

http://www.wbresearch.com/logipharmaasia/

http://www.clinicaltrialpartnerships.com

http://www.dcat.org

http://www.interphex.com

http://www.bio.org/events/

http://www.diahome.org

contractor growth modest in first half

Documents