Biopharmaceutical companies focused on advanced therapies are changing industry R&D, manufacturing, and supply chain models according to KPMG.
The audit, tax, and advisory services firm shared details of the trend in its Healthcare & Life Sciences Outlook report, explaining that for companies developing cell, gene, and nucleic acid-based therapies, innovation is a necessity.
“As pharmaceutical companies increasingly centre their business models on gene therapies, RNA antisense oligonucleotide therapies and cell therapies like CAR-T… completely new R&D and manufacturing models will be required,” the KPMG report says.
KPMG says companies that choose to own the whole spectrum of R&D and manufacturing can create partnership opportunities, citing Pfizer (NYSE: PFE) as an example.
“The capacity to manufacture viral vector-based therapies and plasmids can become a competitive differentiator and allow the company to be viewed as an attractive partner to small and mid-sized biotechs looking for a manufacturing path,” the report says.
Other developers may not want to take on the risk of ownership and, instead, will utilize third-party partnerships according to KPMG.
“More cost-conscious competitors will continue to outsource to strategic pharma service partners, although this approach raises some potential risks associated with lack of full control particularly when it comes to capacity constraints,” the report says.
An effective manufacturing strategy is particularly important for companies developing therapies for rare diseases. The ability to get treatments to patients effectively and reliably is vital from a competitive standpoint, according to KPMG.
“In the rare disease space, revenue curves rise and peak quickly—three to five years, versus 10 to 12 years for standard pharmaceuticals—so laggards won’t have a sufficient market to address,” the report says.
KPMG added, “In the rare disease space, it may be particularly critical to develop winning R&D and manufacturing platforms that enable repeatable commercial success over the next decade, at least until manufacturing capacity constraints become less of a risk to future commercial success.”
KPGM again cited Pfizer to illustrate the emerging trend whereby firms developing “functionally curative drugs” move to ensure they have sufficient capacity before bringing innovative treatments to market.
Pfizer bought Chapel Hill, NC-based Bamboo Therapeutics in 2016, citing its adeno-associated virus-based therapeutic platform as the motivation for the deal. Last year, Pfizer announced it would spend $500 million to build a gene therapy facility in Sanford, NC, explaining that the new site would “help advance Pfizer’s work in manufacturing highly specialized, potentially one-time gene therapies that use custom-made recombinant adeno-associated virus (rAAV) vectors.”
KPMG contends that by bringing the first functional cure to the market, a company can quickly address the prevalent population leaving other firms competing for market share among what’s left.
“Smart large cap first movers recognize this issue and have been targeting capabilities and then investing in them, e.g. Pfizer’s acquisition of Bamboo followed by a $500m manufacturing investment,” the report says.
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