CROs/CMOs Powering Vaccine R&D At Biotechs

Print 29 May 2015
Louis Garguilo / Outsourced Pharma

“The older I get, the more I think about this. I was born in Costa Rica, and all these efforts in under-developed nations by the likes of GAVI and UNICEF are commendable. And certainly the role of Bill and Melinda Gates; all these people are real superstars in my book.”

           -- Marco A. Chacón, President & CEO at Paragon Bioservices, Inc.

Chacón and I are discussing the article, “Sanofi Pasteur: Vaccine Ecosystem In Danger.”

That article chronicling a price-manipulated “vaccine ecosystem” that Pharma, for the most part, wants out of, tells a much different story than the one Chacón will go on to detail.

The first is about vaccine shortages and cutting R&D investment. Chacón’s is a positive tale of a growing number of startups and biotechs utilizing CROs/CMOs to create a new R&D industry for innovative vaccines. The antagonists in the first case – placing price ahead of access and free-markets – are the very organizations Chacón lionizes above.

This is more than a case of divergent cognitive attitudes. These two articles – these two worlds – come down to this, really: Where does the troubled commercial-scale vaccine market of Big Pharma and large commercial CMOs (mainly located in India), intersect with the vitality in the biotech space for vaccine innovation supported by smaller service providers? How does one act upon the other? And if commercialization leads to a low-margin future, even if biotechs can fill the vaccine innovation gap, why would they want to?

New Energy In Vaccine R&D

Chacón’s Paragon Bioservices, which he founded in 1990 and is located in the UMB BioPark in Baltimore, MD, is betting on a positive future of vaccine innovation. The company has added GMP manufacturing, research, and process development services, and will employee over 150 by the end of this year. “We are heavily invested in the space, with 55% of our revenues coming from vaccines,” Chacón says.

Part of his positive outlook stems from the broadening of vaccine science and medical application. “We are investing in core capabilities, whether for specific vaccine development, broad therapeutic research or virus production.  If you look at marketing surveys on biologics in general, you’ll see projected double digit growth for many years to come.”

However, won’t Chacón and others see less activity in this space if successful development only leads to commercial products returning lower profitability than other classes of drugs?

“My answer is no,” he says after a long pause. “For example, the recent World Vaccine Congress was spirited, new chemistries palpable, and the need for new generation vaccines urgent. Emerging and neglected diseases have to be tackled, and vaccines are a way to control that. Bio-threats need to be assessed. The old-time vaccines, for lack of a better term, are still needed in great supply. There is still a lot of money in the sector. As of yet, if I see anything from my vantage point, I see an increase in vaccines and related business.”

Price Focuses The Mind On Innovation

Chacón sees the drive for lower prices in the established vaccine markets as a potential plus for his biotech customers, instead of a deterrent to entry.

The startups and biotechs – and Pharma clients – that Paragon and also bigger CRO/CMO like Catalent and Patheon serve, now build their business plans on the ability to not only develop new products, but develop them more cheaply than was possible in the past. The focus is on new technologies that demonstrate to funding sources the potential for future products that can be manufactured at low cost. That initial funding can come from government agencies such as the National Institute of Allergy and Infectious Diseases (NIAID), which Chacón calls “a worldwide leader in supporting basic immunology research that underpins all vaccine R&D.”

That challenge to develop inexpensive products gets passed down in practice to the service providers. And just as the biotechs use the goal of cost reduction as bait for funding, CROs/CMOs claim it as a reason for more outsourcing. “It becomes our challenge to generate a production process that is robust and cost effective,” says Chacón. “This is what our industry is good at, and plays to our strength.”

Private equity and other funding streams (e.g., university, foundation, and Pharma) must now perform earlier and more future-looking cost analyses to estimate the chances of arriving at a viable product. Biotech looks to service providers to provide these early clues. Viability is measured against both worlds discussed above: global commercial markets including under-developed countries, and more affluent markets with unmet or new medical needs.

“What Michael Watson of Sanofi Pasteur very adequately described in the first article is for the more historical and conventional vaccines,” says Chacón, “but also impacts potential R&D at Big Pharma. I understand that well. There is also this brave new world of technology in the expanded area of therapeutic vaccines. This is a different kettle of fish, where really interesting indications, certainly cancer, are being tackled by novel and seemingly potent vaccines, and developed by smaller biotechs with support from CROs and CMOs.”

At The End, A Shared Concern

These two worlds, then, intersect both in the present with R&D efforts, and in the future at the point of ultimate profitability. We started this article with Chacón’s quote bringing attention to the admirable goals of the global organizations in the middle of the commercial vaccine market. Still, price pressures applied past a point of profitability will negatively affect everyone: populations and patients (including in the West); Pharma, Bio and other suppliers and innovators; and CROs/CMOs.

“I am concerned in this regard,” says Chacón, summing up the concurrent states within the vaccine ecosystem. “At the end of the day, it has to be a total industry that is viable. And forces in the marketplace, with whatever good intentions, must be careful of that. We have to have an industry that innovates. If the forces are working to squelch innovation, then that has to be changed. On the other hand, there is legitimacy in having some checks and balances on how industry prices products. We do need policies that don’t impede entire countries from having protection from diseases.”

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