CDMO, Contract development and manufacturing organization, mainly provides process development and preparation, process optimization, registration and validation batch production and commercialized and customized R&D and production services for pharmaceutical manufacturers and biotechnology companies, especially innovative products organizations. The content of CDMO services covers the process development, production and packaging services of intermediates, APIs, and preparations, spanning different stages of R&D, and the order scale also shows a clear trend of enlargement with the progress of the project: preclinical/clinical phase 1 (kg/ 100,000 US dollars) → Clinical Phase 2 (0.1-3 tons / million US dollars) → Clinical Phase 3 (1-10 tons / 10 million-100 million yuan) → New Drug Application (3-100 tons / RMB 100 million) → After the new drug is launched (3-100 tons/drug of more than RMB 1 billion).
The inflection point of CDMO innovative drug orders is generally in the new drug application stage, and as the patent of innovative drugs expires and enters the end of the product life cycle, the order scale of CDMO also enters a relative decline period, and the large varieties of characteristic APIs are still profit. The core value of CDMO is to take advantage of its specialization and scale to help customers save costs, improve success rate and efficiency, and fully comply with the different stages of R&D and production:
❖ Cost: estimated by Chemical Weekly , the production link accounts for about 30% of the total cost of new drug research and development. Production cost is mainly composed of two parts, one is the cost of purchasing production equipment and its construction and maintenance, and the other is labor cost. Due to the advantages of specialization, CDMO enterprises have various types of production equipment, which can meet the production needs of different entrusting enterprises, and some of these equipment are expensive, and it is uneconomical for pharmaceutical enterprises to use only one drug for research and development; Due to the scale effect, the labor cost of CDMO enterprises is lower.
❖Success rate and efficiency: Since the production requirements of each stage of production are different, the production process needs to be improved at each stage. Relying on the technical accumulation of specialized production processes, CDMO enterprises can complete the process better and faster. The improvement of the production process, thereby improving the success rate of new drug development and production efficiency.
❖Compliance: CDMO enterprises help entrusted enterprises to optimize the level of production technology, operate and manage production, so that indicators such as product quality and environmental protection in production meet regulatory requirements.
The core concerns of large pharmaceutical companies are R&D efficiency and capacity flexibility. From the past data, the research and development of innovative drugs has become more difficult, the success rate of research and development has decreased, and the patent protection period has been compressed by the long research and development cycle, resulting in early patent challenges, serious decline in the rate of return of new drugs, lower-than-expected sales of new drugs, and excess production capacity. The situation is frequent, so large pharmaceutical companies have higher requirements for R&D efficiency and production capacity flexibility, which in turn generates demand for CDMOs.
Although the global generic drug and innovative drug markets are in a state of overall steady growth, according to EvaluatePharma, the global sales of innovative drug products that may be threatened by patent cliff risks will reach US$198 billion between 2019 and 2024.
On the whole, the average listing cost of innovative drugs is rising, while the peak sales of drugs show a downward trend, and the return on investment of innovative drugs has dropped significantly. According to Deloitte’s statistics, the average listing cost of innovative drugs rose from US$1.183 billion in 2010 to US$1.981 billion in 2019, while peak sales dropped from US$816 million in 2010 to US$376 million in 2019; The return on investment of innovative drugs for enterprises dropped from 10.1% in 2010 to 1.9% in 2018.
Therefore, whether it is a large pharmaceutical company or an innovative small and medium-sized pharmaceutical company, under the trend of declining investment returns on innovative drugs, they are all seeking the optimal solution for their own R&D and production activities, and different CDMO business models are also born out of demand. In Europe and the United States, the birthplace of the CDMO model, CDMO is more of a flexible production capacity for the commercial production of blockbuster varieties of large pharmaceutical companies. It relies on the competitive advantage of production line capacity to generate economies of scale. Lonza, Catalent, DSM and other international large-scale production capacity giants are Such representatives; and innovative small pharmaceutical companies that have grown up with the help of capital, prefer one-stop services from drug R&D outsourcing (CRO, Contract Research Organization) to product packaging, hoping to improve the connection between R&D and production. Efficiency and reduction of management costs, Hequan Pharmaceutical (a subsidiary of WuXi AppTec) and WuXi Biologics are the representatives of such integrated platform service providers; This kind of CDMO has been deeply cultivated in the subdivision field for several years, and has the ability to provide more effective solutions for drug companies in the field of technological advantages, so as to achieve deep binding from D (process development) to M (production), becoming a Segment leader.
The Medicilon Process Department is deeply involved in the entire industrial chain system of the R&D, procurement and production, from preclinical small-scale synthesis route optimization, process development and scale-up, process validation, quality research to commercial production.
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