Lonza: CDMO Market Capacity

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Usually, what kind of drugs are outsourced? Do big pharma companies decide to outsource older drugs? How does it work from your perspective?

This is somewhat of a philosophical question. Generally, many companies tend to outsource the earlier phases more than the later phases. In the later phases, pharmaceutical companies often prefer to control manufacturing internally. The early clinical phases are outsourced to quickly determine if the molecules are promising in the clinic. The early phase is also more volatile, which highlights the issue of in-house capacity and utilization volatility.

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Usually, what kind of drugs are outsourced? Do big pharma companies decide to outsource older drugs? How does it work from your perspective?

If you're always at 100% utilization, that's ideal. However, the CDMO world exists because sometimes utilization is very low due to a lack of projects, leading to idle costs. Conversely, you might have 120% or 150% utilization, causing delays and loss of valuable patent time as molecules queue in your facility, preventing you from being on the fastest track. This is the dilemma, and it's why large companies outsource.

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How often do clients have the option to produce a drug in-house and also rely on a CDMO partner? Can they switch between the two, maintaining the flexibility to do both in-house and outsourced production? Do you often see clients keeping this optionality, or do they typically outsource a specific drug without maintaining internal capacities?

First of all, I think it depends very much on the volume of the drug. For instance, there are very low-volume drugs, like normal vaccines—not pandemic vaccines—where a few bioreactors can provide millions of doses. Or, if you have orphan drugs with about 2,000 patients a year, you need less drug. For other highly efficient drugs like T-cell engagers, the drug amount is reduced, and typically you go with outsourcing and stockpiling as a large pharma company.

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