Most of the record levels of funding pouring into life sciences and biotechnology are going toward scientific advancement, but a growing need for production capacity, especially for emerging cell and gene therapy, is fueling the growth of biomanufacturing outsourcing.
Contract development and manufacturing organizations, or CDMOs, are driving new growth in an industry that has already seen tremendous expansion by taking on the job of producing the therapies generated by new technology, where expertise doesn’t exist yet at scale.
“Currently, there’s a big lack of manufacturing capacity, and existing CDMOs are expanding to meet those needs,” Chardan Senior Research Analyst Keay Nakae said. “I see the imbalance lasting for at least three to five years.”
The CDMO market, where the big players include names like Lonza, Cambrex and Thermo Fisher Scientific, has grown between 12% and 14% for the past 18 years, said BioPlan Associates Managing Partner Eric Langer, a longtime analyst. It is a $4B-a-year industry today in the U.S., a figure expected to more than double by 2030.
“The CDMOs I’m talking to are growing wildly and always thinking about what’s their next location,” said Brian Cohen, a senior vice president in CBRE's New England Consulting Group who consults businesses on site selection.
CDMOs' growth strategies differ, Cohen said. Some firms will buy and operate a facility via a licensing agreement with a client, producing drugs for them for several years and then transitioning that facility to their own use once the deal is done. But CDMOs are always looking; with clients waiting for a clinical or regulatory milestone as a starter gun to scale, CDMOs need to be prepared for rapid growth.
“It’s evolving as we speak,” CBRE Director of Research Suzanne Duca said. “In established markets, CDMOs have been a component of the ecosystem for a while. And now as everybody is talking about life science and everybody wants to be the next hub, it’s important to see that CDMOs are key to fueling the market. But there needs to be all the talent, labor and everything else to make it happen.”
CDMOs offer a benefit to startups, allowing them to funnel vital funding dollars toward science instead of developing in-house manufacturing capacity. That capacity not only requires physical space with expensive build-out and equipment requirements, but also means finding talent with supply chain, testing, analytics and manufacturing experience. Outsourcing these tasks also means scaling up quickly is easier.
“Catastrophic success is a common industry phrase,” said Audrey Greenberg, co-founder and chief business officer of the Center for Breakthrough Medicines. “All of a sudden, there’s a huge market need and having capacity is an extreme advantage.”
Greenberg believes the development of the Center for Breakthrough Medicines site in King of Prussia, Pennsylvania, near the startups and spin-offs emerging in Philadelphia, showcases one vision for the future of life sciences real estate.
The $1.1B, 680K SF facility, the world’s largest cell and gene therapy CDMO, located within the larger Discovery Labs development, includes viral vector manufacturing suites, cell therapy suites and plasmid manufacturing. Positioned adjacent to a bank of incubator spaces, it will allow startups to collaborate closely with manufacturing teams, creating what Greenberg believes will be a huge magnet for talented firms.
“Current therapeutic platforms were developed in academic labs and present a challenge to scale and manufacture,” she said. “It’s critical the industry bring to market partnerships that offer scalable, proven and efficient platforms for scaling up production.”
CDMOs tend to locate near existing clusters to encourage more collaboration between research and manufacturing talent, and they seek out the same kinds of spaces used for other types of biomanufacturing: large, warehouse-like spaces with floor-loading capacity, docks, backup power and near a talent base that can support the specialized labor to operate these facilities. Those focused on cell and gene therapy will need new equipment and an enhanced use of IT and digital record-keeping technology.
North Carolina Biotechnology Center Director of Life Science Economic Development Laura Rowley said the state has seen increased investment by CDMOs. Fujifilm Diosynth Biotechnologies, KBI Biopharma, Thermo Fisher and Abzena have announced plans to expand in North Carolina, drawn to the state’s existing ecosystem and workforce training programs focused on specialized programs for biomanufacturing.
CBRE’s Cohen said the growth in CDMOs will likely continue to benefit existing clusters. He compared it to data centers; in their infancy, companies wanted to be close to their data, whereas now, they’re more comfortable with remote storage.
Because of the size and scale of these sites, it’s likely they will unlock real estate on the fringes of markets like Boston and San Diego that are too far off the beaten path for startups looking to be close to existing clusters.
“Historically if you look at the main markets, research happens in the core,” Cohen said. “But with the more diverse labor pool for CDMOs, they can really spread out.”
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