The Biopharma sector, already a life science heavyweight, is seeing rapid growth at over 8% annually with global revenues now topping $163 billion, putting Biopharma at 20% of the entire pharmaceutical market, according to the global consulting firm McKinsey & Company. Advances in technology, a record pace of drug approvals, and mergers & acquisitions are fueling this growth, making Biopharma the leading growth sector within the pharmaceutical industry.
According to BioPharma Dive, merger & acquisition activity in the life science sector exceeded that of 2014 just within the first quarter of 2015. This trend is expected to continue as companies look to broaden their drug pipelines and take advantage of cheap historically low interest rates.
This industry isn’t going out of style anytime soon; it’s growing as some unlikely candidates are taking an interest in the industry because they see the potential of this segment. One of those unlikely sources of M&A activity is from the tech sector. A well-known tech company, Google Ventures, the investment arm of the search engine, was ranked one of the leading investors in digital health in 2015. Apple, IBM, and Samsung are among the top companies to join Google looking to cash in on this $3 trillion dollar healthcare industry in the United States. For example, Googles long-standing interest in healthcare and life sciences has led to the creation of the Calico project. The project involves a high-tech research and development lab that hopes to combat aging. Not just that, Google’s life sciences department, Verily, works with top researchers and medical experts to help provide the true picture of human health. The Biopharmaceutical sector requires heavy investment to overcome the operational and technological challenges required to scale-up complex, large molecule manufacturing, so investments can be invaluable for biotech startups According to McKinsey & Company, large-scale biotech-manufacturing facilities cost from $200 million to $500 million(and even higher in some cases), with a timeline of 4-5 years.
As advancements in technology and manufacturing have increased, so have the demands from FDA regulators. Currently, the biopharma industry is being bombarded with warning letters and remediation programs, with no relief in sight as the FDA beefs up guidelines around manufacturing. This is partly fueled by the growth of global markets manufacturing, as regulators attempt to govern vastly different manufacturing quality standards across the globe.
The advent of continuous manufacturing, which has sharply increased the complexity of supply chain and operations, has allowed companies to reduce their manufacturing and environmental footprints while minimizing costs across a portfolio of products being manufactured. Process monitoring allows for more consistent performance, less waste, and increased product quality. According to The Medicine Maker, “[t]he smaller bioreactors run for longer periods of time, producing the same quantities of product as the larger bio reactors but with a smaller footprint equating to reduced capital expenditure. It also allows for reduced energy, water and raw material consumption, leading to lower operating expenses.”
In addition, the process is becoming increasingly automated, allowing for a reduction in human intervention and errors. Although the FDA is in favor of continuous manufacturing and sees its potential benefits, some manufacturers are wary about how these new facilities will be regulated as the FDA and other regulatory agencies catch up to entirely new methods of manufacturing. As companies bring new facilities online and have a need for multi-product manufacturing, the continuous process is gaining popularity. With the potential cost of building out manufacturing facilities approaching $500 million, biopharma companies turn to continuous manufacturing to reduce cost and increase efficiency, this will allow more companies the capability of manufacturing a portfolio of products within one site, which may further drive consolidation within the industry.