Patheon’s journey as an industry leader in the CDMO/CMO space—how they continue to expand their development and manufacturing services each year, while increasing the quantity of drugs they manufacture.
“The CDMO market, overall, is currently around a $40 billion-dollar industry. It’s growing at a seven percent rate,” said Rebecca Holland New, Corporate Officer and EVP, Enterprise Operations, Patheon. “Today, Patheon can address 75 percent of that business.”
Headquartered in Durham, North Carolina, Patheon Inc. is an international contract development and manufacturing organization (CDMO) with a broad range of services and capabilities from preclinical and clinical, to development, to scale-up, to commercial supply. There are approximately 8,000 employees worldwide.
“The company was founded in 1974 in Canada. We started with one facility and then branched out from there,” said Holland New.
Presently, the company has a diverse client list from every sector of the pharmaceutical industry. However, they originally had a much narrower focus.
“The company originally focused on contract manufacturing as well as ‘pharmaceutical development services’—think of that as R&D, analytical development, and formulation development,” Holland New explained.
An Industry Leader
Patheon can address 75 percent of the CDMO marketplace—compared to the nine percent that their nearest competitor addresses. They currently manufacture 20 of the top 100 drugs on the market today. Last year, the company launched 70 products. In 2016, they expect to launch over 150 products.
“There’s power behind that,” said Holland New. “I’m very proud, as an employee, to talk about that because it shows our expertise in being able to handle our client’s assets and repeatedly and effectively have the liability of getting those products through to market—in addition to the expertise around doing the tech transfer to allow success and rapid launch.”
Twenty-one percent of the overall FDA approvals in 2015 were coming out of Patheon, which is eight times larger than their nearest competitor.
This success can largely be attributed to the company’s rapid expansion of development and manufacturing capabilities through acquisitions.
“When we look at our last four or five years, our acquisitions have really focused on building capabilities that we didn’t have,” said Holland New.
Growth through Acquisitions
“The company, historically, has grown through acquisitions, so you’ll see that’s a big part of our growth strategy that will continue,” said Holland New.
By acquiring facilities that were typically owned by pharmaceutical companies, Patheon rapidly increased their footprint and capabilities. The company originally had expertise in complex manufacturing and pharmaceutical development services, but from there delved into some of the more complex areas of manufacturing as well as active ingredients (both small and large molecule).
“If we look at our acquisitions, five of our recent acquisitions all provided a variety of different benefits to us,” said Holland New.
The company’s first acquisition under CEO James Mullen was Banner Pharmacaps—allowing Patheon to expand its softgel manufacturing and R&D capabilities, which the company didn’t have previously. One of the largest providers of OTC, prescription, and nutritional softgel formulations, Banner is headquartered in North Carolina and also has facilities in Canada, Mexico, and the Netherlands.
“That [acquisition] allowed us to compete head-to-head with one of our larger competitors in the softgel market,” said Holland New.
“The second acquisition that we had was DPx, which was a pretty transformational acquisition for us in a variety of ways. We had market leadership already in contract manufacturing and pharmaceutical development services. But in addition to picking up additional capabilities/capacities, we also picked up APIs [active pharmaceutical ingredients] and biologics, as well as the North American sterile facility.
“If we look at how the market has been changing over the last couple of years, with additional focus on biologics for growth, this really moved us directly into that space.”
Bill Weiser, Executive Director, Global Head of Analytical Sciences, Patheon, said, “As more biosimilars come to the forefront, competitiveness within the biopharma sector will rise and pressure on their cost will increase. . . . In order to meet the demand from the strong growth forecast for biopharmaceuticals over the coming years, Patheon has geared up to provide more biopharmaceutical services.”
In this acquisition, Patheon merged with Royal DSM’s pharmaceutical products business, forming DPx. This new company consists of three businesses:
- Fine chemicals and API production
- Pharmaceutical services
- Proprietary products and technologies
“Our next acquisition after DPx was Gallus [BioPharmaceuticals],” said Holland New. In its acquisition of Gallus BioPharmaceuticals, Patheon also acquired two biologics plants in the U.S.—propelling itself further into the biologics space.
“That provided us with additional commercial-scale U.S. presence for our biologics,” explained Holland New. “With DSM [DPx], we had biologics in Australia and the Netherlands, but with Gallus we were able to get that commercial-scale and additional R&D expertise in North America.”
After Gallus, the company had two additional acquisitions in 2015:
- Agere Pharmaceuticals, which provided Patheon with low-solubility capabilities
- IRIX Pharmaceuticals, which provided the company with additional API development-scale solutions in North America
CDMO Agere is based in Bend, Oregon and specializes in improving the bioavailability of drugs. IRIX Pharmaceuticals, on the other hand, is located in Florence, South Carolina and has a knack for difficult-to-manufacture APIs.
“When we look at our history of acquisitions, there’s a large focus around adding new, strategic capabilities and capacity that would address client needs and that would immediately add value to the organization,” said Holland New.
The Development Process
But what is the process like for a company that is constantly acquiring new capabilities? What does their manufacturing process look like? What are some of the key things they look at?
“The key attributes to working with customers at any stage of development is beginning with the end in mind,” said Weiser. “Specifically, it is very important to understand the desired product, its attributes (format, packaging), the range of dosage forms/units, and the quantity of product needed both in development as well as commercial production. Then the activities to achieve this product profile along with their uncertainties are factored in the project plan along with targets for customer-driven milestones to achieve project success for both the customer and Patheon.”
Carefully evaluating the customer’s existing manufacturing process, Patheon looks for similarities and differences between the customer’s process and Patheon’s existing capabilities.
If the manufacturing process can be adapted to Patheon’s equipment, they can move forward quickly, explained Weiser.
“In some cases, we may have to recommend alternate processes such as roller compaction, for which bridging data may be needed. For complex or unique manufacturing processes, we have actually added specific equipment to support the customer, including dedicating facilities in some areas,” said Weiser. “The common theme is, again, understanding the process, the critical attributes, and the market demand to propose a best-fit solution for the customer.”
Standing Out in the Crowd
“If we look at industry leadership, (compared to competitors) we are able to address 75 percent of the dosage forms and we are serving over 70 countries,” said Holland New.
The company also boasts more than 95 percent right first time, on time delivery across the network. With 316 client audits and 36 regulatory audits since August of 2015 and no major findings, the company is not only kept on their toes, but on top of their game.
“That is a reputation and a record that is unmatched,” said Holland New.
“We are seeing increasing demand across the spectrum of our operations,” said Weiser. “However, two areas of substantial demand are in the API space, both for small and large molecules. For small molecules, on-shoring is increasingly popular as a consequence of quality and intellectual property challenges outside of western production operations. The perceived cost savings are not offsetting the logistic challenges of remote locations and vastly different time zones and cultures. For large molecules, the increasing number of biopharmaceutical compounds in development is changing the dynamic of the industry overall with a significant increase in large molecule development programs.”
Regardless of the demand, Patheon intends to meet any task head-on.
“As a market leader, we are transforming the industry,” said Holland New, “and we’re doing this in a variety of ways.”
By creating new models, managing networks, and maintaining flexible capacity, Patheon continues to hit its demand forecast, maintaining their spot as the number one client-ranked CDMO in the industry.