Dive Brief:
- Over the next two years, Merck KGaA plans to invest $47 million in the bioprocessing industry in Asia. This spend follows a $95 million investment announced in November 2016 in the life science division of the company's Nantong, China location.
- A portion will be devoted to opening two new manufacturing centers, slated to be completed by 2019 — one in Songdo, South Korea, and the other in Mumbai, India. The focus of the Songdo site will be cell culture media production, whereas the India unit will aim to aid Germany-based Merck in the expansion of its manufacturing capacity.
- Another chunk of the investment will go toward the development of a manufacturing site in Wuxi, China, which is expected to be finished by the end of 2018. The company estimates it will be able cut drug production lead time in half by introducing single-use equipment at this location.
Dive Insight:
The investments in new manufacturing and distribution centers across Asia will support what Merck KGaA identifies as "custom manufacturing capabilities," likely meaning it will be prepared to take on more projects for various clients in the area — perhaps even before it wins the business from pharmaceutical customers.
The demand for biologics production has exploded, and many companies offering contract manufacturing say they are currently running at or near capacity. Bringing new facilities online is considered one of the easiest ways for manufacturers to cut the time to production.
Efforts to build new capacity in a brand-new location can take as long as five years. Even in cases where capacity is already available, it can sometimes take a contract development and manufacturing organization (CDMO) two to three years to actually begin producing a drug for a pharmaceutical client.
"In biopharmaceutical research, time is of the essence," said Udit Batra, CEO of the life science arm of Merck KGaA, in a statement. "Our investments in the important Asian markets of South Korea, India and China ensure that our customers have ready access to the products needed to develop new therapies and biosimilars that accelerate access to health for people everywhere."
Merck's dedication to increase capacity supports Asia's burgeoning biosimilar pipeline, and could allow current and future biosimilar developers in the area to reserve capacity in advance, before any actual deals are forged. These platform enhancements related to capacity are largely proactive; they may help Merck lock up prospective customers well ahead of production start dates.
Specifically, the incorporation of MilliporeSigma's Mobius single-use equipment at the Wuxi, China site could facilitate expedited production of biosimilars. Because physician acceptance of biosimilars is a bit better outside of the United States, capacity predictions are often more straightforward overseas, so an added benefit could be that companies in Asia are able to more accurately forecast demand for biosimilars.
Eric Langer, president and managing partner at consultancy firm BioPlan Associates, Inc., told BioPharma Dive that investment in Asia could have an impact on the U.S. market.
"Domestic biologics companies in China, specifically, have grown dramatically since 2008," Langer emphasized.
He estimates that back in 2008, 90% of the biologics made in China were generic medications made for the domestic market (i.e., copies of Western biologics that would not meet GMP standards or be exported to Western markets). Today, though, he sees a 20% growth rate in facility expansion and contract manufacturing, and a "very substantial focus on GMP production for Western markets by Chinese drug developers."
Langer added, "within 5–10 years, we will see Chinese-manufactured biologics on the market, including many biosimilars and even some innovative biologics."
"Keep in mind that Chinese biologics manufacturers are still under cost pressures, so while they may wish to purchase from Western suppliers, Western prices are still a challenge. This is creating a rather healthy domestic market for many of the products currently made only by Western vendors. Thus, we can also expect to see greater competition on the supply and bioprocessing devices side coming from China."
Langer suggested competition could be a potential threat to vendors operating primarily in Western markets, as well.
"China is expanding its biologics production capacity at 20% annually, almost twice the U.S./EU rate. Most of this is targeting GMP production ... and single-use technologies have clearly proven to [be the fastest approach] to manufacture a biologic at a quality level [that would be suitable for exportation]."