In launching this new series of articles under the theme of delivering affordable biologics, from gene to vial, we intend to examine some of the challenges the bioprocess industry faces. We will discuss the implications of key cost challenges facing the industry, develop an understanding of the economics underlying development and manufacturing, and explore options for driving out cost. We wish to encourage dialogue and debate, so in addition to the articles we will also use webcast interviews and conference sessions to define and shape this discussion.

What are these challenges? Is bioindustry really that different from other innovative industries, or should we be taking note of what happened in, for example, electronics? The biopharmaceutical industry, which is a segment of the pharmaceutical industry, has tended to regard itself as different from other industry sectors because of its complex products, long development times, and close link to human health. The past three decades have seen rapid growth in biological medicines based on recombinant DNA technology (1).

The vaccine industry, by contrast, was established in the 19th century. It was in the doldrums by the late 20th century, but in recent years it has become a driver for growth in the biopharm sector. There are lessons to be gained from the vaccine industry's drive to extend access to its products to the majority of the world population (2): That access has been extended by driving down costs (3). Many issues the biopharm sector faces appear to be the consequence of a maturing industry with structural impediments to its development brought about by regulation, political restrictions, and market structure.

Back to the question of whether this industry is special. As far back as 1992, the answer was probably “No” from the business perspective, at least for the pharmaceutical industry. According to a study that year of the whole drug sector: “One of the industry's biggest problems lies not with inventing and marketing pills, but with making them,” and “During the past decade their manufacturing costs have crept up to reach one-fifth of sales, double what they used to be a decade ago and more than the 15% of sales they spend on average on R&D” (4). As for biopharmaceuticals, in 1992 the industry was only just developing. Up to around 2000, the conventional wisdom was that manufacturing costs were unimportant: It was all about products and the underlying science. However, that perception was untrue for the major successful rDNA blockbuster products that were replacement proteins. They were manufactured at very large scale (tons), and manufacturing cost for them was indeed at issue.

Identifying Challenges

In 1992 from an external perspective traditional pharmaceuticals were seen to have a problem in regard to both research/development and manufacturing costs. We know now that biopharmaceuticals are more capital intensive than pharmaceuticals and have relatively high operating costs (5). So why were manufacturing costs not considered to be an issue for bioprocessing? Our thesis is that manufacturing costs are increasingly recognized as being important, indeed. This is becoming manifest in the industry and is linked to successes with monoclonal antibody (MAb) products. The situation is complicated by other structural issues relating to stagnating productivity in R&D that is increasing R&D costs (6). Our view is that process development and manufacturing are inextricably linked and must be considered as a whole. First let's consider several challenges facing the industry.

High Treatment Costs: New drugs are seen by the public and regulators to be excessively expensive. In one example, the Avastin colorectal cancer treatment is quoted at $50,000 per treatment, with higher prices being cited for other products (7). Such costs are effectively limiting access to new drugs in many countries, whether on the basis of a patient's ability to pay or through a managed healthcare system. This situation has led to heated discussions among patients, healthcare providers, legislators, the industry, and the public at large. Many are concerned that the industry is perceived to be making excessive profits from novel treatments (8,9), which contributes to its low esteem among patients and regulators. One way the biopharmaceutical industry can effectively tackle this negative perception is by more effective public communication and transparency around costs.

Cost/Benefit Assessments: Whether justified or not, those relatively high prices are negatively affecting the industry with cost regulators now assessing the cost benefit of new medicines. A formal methodology was developed by the United Kingdom's National Institute of Clinical Excellence (NICE) in 2000 and is being assessed and implemented by a number of other countries including the United States (10). At the same time many people are calling for more regulation and transparency in the relationships between the industry and its stakeholders, a theme we will return to in future installments of this series.

Greater Competition Between Companies: As the biotherapeutics industry develops, more players compete for similar therapeutic areas. More competition between the major players results in multiple drugs at varying stages of development competing for the same disease targets (11).

Biosimilar Competition: Much of the debate over the cost of new drugs is being driven by spiraling healthcare costs overall, which — coupled with high drug prices — has led to a demand for mechanisms by which biosimilars (follow-on biologics) can be approved for market to reduce drug costs and increase the availability of better quality healthcare to more people. The arguments for and against are complex, but the European Union has a mechanism for biosimilar approval, with a number of biosimilars marketed to date (somatropin, epoetin alfa, and epoetin zeta, to name a few). Once the period of exclusivity comes to an end for innovators, strong price competition will come from companies supplying biosimilars.

So what does all this mean for the biotherapeutics industry? Many of the challenges we see are driven by spiraling healthcare costs that are leading to stronger calls for price regulation, increasing competition, and cost transparency. The difficult balance is doing that without stifling the innovation that brings about novel treatments in the first place.