These trends are further confirmed
elsewhere in our survey where we asked
specifically about outsourcing. We measured the percentage of facilities expecting to outsource substantial production
within the next five years (by 2022). We
queried regarding mammalian, microbial, yeast, plant and insect systems. In
Figure 2, we note that the only type of
production expected to generally maintain its outsourcing projections over the
next 5 years is mammalian cell culture.
In all other areas, manufacturers expect
a decrease in outsourcing, including microbial fermentation. It will be interesting to see if the projected outsourcing
is an accurate indicator of actual outsourcing over the next 5 years. Historically, mammalian cell culture has been
by far the largest segment, and has been
increasingly outsourced, but all other
areas have been difficult to predict and
sometimes shown drastic shifts in expected percentages of outsourcing from
year to year.
Budget trends of biopharma suppliers
Biopharmaceutical manufacturers and
CMOs are of course the key industry players. However, the opinions of vendors and
suppliers for the industry are equally critical in mapping future trends. In BioPlan’s
14th Annual Report, we also asked 131
respondents employed by suppliers about
Perhaps unsurprisingly, the budget
trends seen for vendors somewhat mirror
those seen for manufacturers and CMOs.
As seen in Figure 3, vendors are also projecting increased demand, so budgets
for “New capital equipment” ( 6.2%) and
“New facility construction” ( 6.3%) were
both reported at historically high levels of anticipated increases over the next
year. However, unlike manufacturers and
CMOs, those were the only two categories that were reported at such high levels
for this year. Most other areas saw either
modest growth or a slight decrease in the
expected budget for 2017.
Hiring new scientific staff and new
commercial staff both saw an increase in
budgets for this year over last year, but
both of those categories were somewhat
lower than the high reported in 2013-
2014. And hiring new operations staff actually saw a small decrease in budget for
this year compared with 2016.
Based on our analysis, while vendors
have clearly recovered from the economic downturn in 2008-2009, they may be
operating currently at sufficient capacity
to meet the robust growth needs of their
biomanufacturing and CMO customers.
Separately, we asked vendors to indicate
their general sense of optimism about
the market. Data indicate a dramatic
increase in the percentage of vendors
expecting continued ‘above-average’ expectations for financial performance in
2017. With 41% more vendors indicating
that they expect to do ‘much better’ this
year, compared to last.
While the anticipated budgets are
mixed, with 5 of 11 categories reported as
an increase for 2017, there are no sharp
decreases, and all areas are greatly im-
proved over 2009 budgets.
Will budgets continue to increase?
Biomanufacturers, CMOs, and suppliers,
may all have more budget available and
are continuing to recover at a healthy pace
from the economic downturn. Manufacturers continue to work leaner and harder,
trying to do more with less, and we are
seeing that the budgetary restrictions are
loosening in all areas, particularly those
that show far reaching and long-term
confidence in the industry, such as new
equipment and facility construction.
The focus remains on productivity,
which includes cost-cutting measures.
Although, it seems that in 2017, companies are looking at efficiency rather
than straight cost-cutting since the
budgets are expected to increase across
the board. As the industry continues
to grow and adapt, as it deals with
broad factors such as new technologies,
companies are continuing to increase
budgets by historically high levels in
nearly every category. This is an industry whose products are simply needed,
and biopharmaceutical products have
shown themselves to be largely immune to the worldwide economic problems and recessions.
There is a concern that mergers among
large vendors may result in reduced competition, and increased prices. But at present, the new products, innovation, and
profitability appear to be relatively in
balance, and our study shows, in separate questions, that pricing increases are
not ramped up significantly over the past
The large increases in budgets across
the board for manufacturers and CMOs
indicate that the biopharmaceutical industry may be headed in a positive direction. Budget increases in long-term
investments such as new facilities,
equipment, and technologies paint an
optimistic picture for the future of the
1. 14th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production, April 2017, BioPlan Associates, Inc.
FIG 3: Selected Vendors’ Average Change in Budget, 2017