BioPharma
Situation
A biopharmaceutical refers to any pharmaceutical drug product manufactured, extracted or semi synthesized from biological sources. These drugs are produced using biotechnology. These drugs are proteins, nucleic acids used for healing and are made from native sources instead of direct extraction. Today, biopharmaceuticals produce global revenues of over $162B and it is the rapidest growing sector of the pharma industry.
This article covers companies offering contract research and manufacturing services to pharma and biotech companies anywhere along the drug discovery and development pipeline (including post-commercialization phase) and those engaged in commercial manufacturing/supply of drug substances and products (both small molecules and biologics).
Problem and Implication
Biopharmaceuticals are becoming a core of the pharmaceutical industry but this transformation would be stunted if there aren’t any transformation in the laboratory scenes in terms of strategy, technology and operations, some of the problems faced in this sector are:
Complicated Machinery: The machines that produce large molecules require manufacturing capabilities of high grade sophistication. They are usually frozen genetically modified cells that must be liquefied without damage and made to survive in a reaction vessel; this process must be done without damaging the fragile structures of the organism. Because of this requirement, the next problem crops up.
High costs: Complicated machineries cost great costs. Major large scale manufacturing facilities require $200M to $500M as opposed to small scale molecule facilities that cost $30M to $100M and can take four to five years to build. The cost of running these facilities combined with expensive raw materials and the cost associated with skilled experts to operate them.
Quality compliance and scrutiny: Quality is a major challenge faced in this sector. The industry frequently receives warning letters and scrutiny from their nation’s drug agencies. Compliance, efficiency factor into probes that they present to the biopharmas.
Need Payoff
More than 3290+ companies have been founded in this sector, 259 funded in last 5 years, $891M invested in last 2 years with National Institutes of Health, Signet Healthcare Partners, Ampersand Capital Partners, Department of Biotechnology, SV Health Investors being the most active investors. There are 5 subcategories here:
CRO: There are 5 subsectors here – Integrated Preclinical CROs, Boutique Preclinical CROs, Clinical Development, Full-service, and Bioanalytical Services with an overall investment of $2.1B. Two companies that would be shortly enunciated here are:
Syrrx (1998, San Diego, $79M): Syrrx is a drug discovery company focusing on drug targets that have been validated in human clinical trials. This company was acquired by Small Business Innovation Research, Bay City Capital, Lombard Odier and 8 other investors.
Crown Bioscience (2006, Santa Clara, $55M): Drug discovery and preclinical development services for cancer and CVMD (Cardiovascular and Metabolic Diseases). Notable investors are: Lilly Asian Ventures, Majuven, Orbimed and 7 other investors.
CDMO: There are 5 subsectors here – Small Molecule, Biologics, All Drug Classes, Niche Services, and Allied Services with an overall investment of $2.3B. Two companies in this sector that would be enunciated are:
Laurus Labs (2005, Hyderabad, $288M): Manufacturer of APIs and provider of Contract Research and Manufacturing Services. Major investors are: Goldman Sachs, HBM Partners, Morgan Stanley etc.
Pharmaceutics International (1994, Hunt Valley, $118M): Small Molecules CDMO Soonicorn. Signet Healthcare Partners, Athyrium Capital Management, Hildred Capital Partners and 1 other investor.
Suite: With two subcategories here – Biologics and Biosimilars, and Small Molecule and and an investment of $74.9M. Syngene (1993, Bangalore, $62.6M) is a notable company here. They provide a suite of contract research and manufacturing services for both small molecules and biologics. True North Co is a major investor.
Auxiliary Service Provider: There are 2 subsectors here – Logistics and Supply Chain, and Marketplaces. This sector received an overall investment of $132M.
Conclusion
With over $2.6B in contract services between 2010 and 2017, biopharmaceuticals are at the forefront of scientific innovation. Biopharma’s have annual growth of 8 percent and this rapid growth would allow biopharma to produce new challenges, strategies that would consistently yield new types of products. There are myriads treatment originals that promise a better scene in this sector. Future investors should master a broad set of technical and operational capabilities.
References
The WWW Traxcn Report McKinsey Report