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The critical role of Nordic CDMOs

Contract development and manufacturing organizations (CDMOs) are emerging as global key players within the pharmaceutical industry, and their Nordic presence and offering will give the region both resilience and a global competitive edge.

The Nordic region has a long tradition in pharmaceutical discovery, development and manufacturing. Several of our Nordic CDMOs have sprung from this long history and excellence, through the presence of both national and international big pharmaceutical companies. Icelandic Coripharma began for example with the acquisition of a production facility first built by Actavis and later acquired by Teva. A group of local investors and members of the management team of the plant and the commercial units came together with the aim of buying the facility and re-opening it. Production began in 2018, and in 2019 the company also acquired Teva’s former R&D site – making the jump towards establishing its own R&D and selling its own developed products.

“Many generic EU dossiers have been developed and manufactured at this site due to favorable patent laws in Iceland in the past.”

“Many generic EU dossiers have been developed and manufactured at this site due to favorable patent laws in Iceland in the past,” describes Lilja Valdimarsdottir, Director Commercial Operations at Coripharma. “Given the experience and knowhow of our employees, transferring products to Iceland is in many cases quite a simple switch.”

Norway’s Curida also has its roots in big pharma, and more specifically Nycomed, founded in Norway already back in 1874. Curida was born in 2015, when a group of employees and management acquired Takeda’s old manufacturing site in Elverum, which has existed since 1974 and had been part of Nycomed until 2011. In 2018 Curida acquired Ås Produksjonslab, a company that performed fill and finish of bottle products for the Norwegian pharmacy market.

A forth example is Swedish Recipharm, founded when a site manager and an OTC manager, Thomas Eldered and Lars Backsell, at Pharmacia purchased a closure-threatened facility from their employer in 1995.

In Denmark, former CMC Biopharmaceuticals (since 2018 a part of AGC Biologics) seized the opportunity when a big pharma facility was to be shut down in the U.S. In 2007, the company acquired the biologics development and manufacturing operation in Bothell, U.S., that Eli Lilly acquired when it purchased ICOS Corporation.

 

Lilja Valdimarsdottir, Director, Commercial Operations, Coripharma (left) and Recipharm (right)

 

Strategic M&As and novel modalities

A predominant growth driver for CDMOs during the last decade has been mergers and acquisition (M&As), as well as consolidation. According to an article by EY-Parthenon (2022), in the period from 2017 to 2021, 244 publicly announced M&A transactions involved CDMO companies. These acquisitions provide CDMO companies with both new and innovative technologies, as well as an extended geographical presence. Our Nordic giant Recipharm acquired for example around 20 facilities between 2001 and 2020. These acquisitions have added new technologies, more diverse dosage forms, and new customers, and made the company into one of the world’s largest CDMOs in terms of revenue.

“We are constantly looking for additional partnerships that strengthen our service offering.”

Antti Nieminen, CEO of Finnish Biovian, emphasizes that his company is continuously looking for new techniques, technologies, equipment, better ways and partnerships. “Being a flexible CDMO providing a one-stop service both for microbial recombination proteins and viral vector supporting both drug substance and drug product services, we are constantly looking for additional partnerships that strengthen our service offering,” he says.

Michael Stäheli, Head of Investor Relations and Corporate Communication at PolyPeptide Group, says his company maintains multiple partnerships to continuously develop its offering at the forefront of innovation and considers partnerships opportunistically. The company’s manufacturing of commercial therapeutic peptides started already in 1952, in Malmö, Sweden, as part of Ferring. It was set-up as a CDMO in 1996 and soon thereafter established a US subsidiary in Torrance. Since then, the Group has made several acquisitions and today the company manufactures around one half of all currently approved peptide drug substances, with a global footprint of six GMP-certified facilities in Europe, the U.S. and India.

“We also invest in our infrastructure across sites to meet the increasing capacity requirements emerging from the constructive fundamental trends in its market, including the growing demand for oligonucleotide-based therapies,”adds Stäheli.

 

Michael Stäheli and Antti Nieminen

Michael Stäheli, Head of Investor Relations and Corporate Communications (left), PolyPeptide Group, and Antti Nieminen, CEO, Biovian (right)

 

This is another key finding from the EY article, the requirement for mastering technology. It is not only important for CDMOs to be trusted partners for mature pharmaceuticals, but it is also essential for them to contribute specialty technical knowledge to maintain a competitive capability edge in manufacturing innovative products. This holds especially true in view of novel modalities. Of the 244 M&A transactions that EY teams investigated, one-third were related to novel modalities, such as cell and gene therapies, and novel nucleic acid therapies.

“While the Nordic region has long been known for medical and biotechnology services, it has traditionally been focused on the small molecule pharmaceutical market. As a large molecule CDMO, we are pleased to be a part of this next wave of growth in the Scandinavian biotech industry.”

Kasper Øland, Senior Director, Business Development at AGC Biologics says that he indeed sees biologics services growing across the Nordic region. “While the Nordic region has long been known for medical and biotechnology services, it has traditionally been focused on the small molecule pharmaceutical market. As a large molecule CDMO, we are pleased to be a part of this next wave of growth in the Scandinavian biotech industry,” he says.

The Copenhagen site of AGC Biologics is one of the company’s most active biologics facilities, operating multiple mammalian and microbial cGMP manufacturing lines. The site is also about to finalize an expansion to extend its capabilities and more than double its single-use bioreactor mammalian cell-culture capacity, reveals Øland.

In Norway, Curida has just recently finalized a strategic acquisition of Diatec Monoclonals (changing names to Curida Diatec), a biologics company based in Oslo. By this acquisition the company has taken its first steps into biological production and growth in the international pharma outsourcing market. The acquisition enables the company to enter new partnerships with biotech and pharma companies, from early phase and all the way to market, it states.

In Oulu, Finland, Paras Biopharmaceuticals has also started offering an expanded and increased biologics CDMO capacity to biopharmaceutical companies, beginning in March last year.

As an example of Sweden’s efforts in strengthening its life science manufacturing offerings is the establishment of an innovation hub for advanced vaccines and biological drugs in Matfors in Northern Sweden. In 2021 Flerie Invest led a syndicate of investors in the acquisition of the Charles River Laboratories DNA and protein manufacturing subsidiary Cobra Biologics Matfors, including its 7,000 square-meter facility. In addition to the 52 million USD acquisition and further investment by Flerie, the Swedish government, through its innovation agency Vinnova, has supported the establishment of NorthX Biologics. The goal is to make this a hub for collaborations with innovative biotech companies and research institutes in Sweden, the Nordic countries and internationally.

“Through the investment, we will be able to maintain the production and development of new drugs in Sweden, which is an important piece of the puzzle for building Sweden’s position as a leading nation in life science,” said Jenni Nordborg, Head of the government’s Life Science Office at the time of the announcement.

 

AGC Biologics’ site in Copenhagen, Denmark.

 

A one-stop-shop service

Another trend mentioned in the EY analysis is that CDMOs are moving towards having a one-stop-shop service and customers increasingly expect them to provide expertise along and beyond the entire manufacturing process, including commercial launch. The customers are not only big pharma today, but also small biotech companies, with a sole focus on developing their drug pipelines without having experience in manufacturing. They also require an early integration of their operations with partnering CDMOs in the drug development and manufacturing process.

Furthermore, EY analysis reveals several examples of CDMOs expanding at the edges of the value chain, becoming active in clinical trial services as well as increasing their focus on the preclinical research stage by selected acquisitions.

In order to meet the growing demand for viral vectors, Biovian has decided to double its capacity for GMP viral vector manufacturing. Purification methods must be equally scalable, which is why Biovian is shifting away from centrifugation procedures, and toward chromatographic methods, the company states.

“To them, a service offering that covers the entire development process can make all the difference, as it speeds up the entire process and minimizes the risk for delays and additional cost.”

“The majority of Biovian’s customers are small to mid-size biotech companies that rely on timely progress toward clinical trials. To them, a service offering that covers the entire development process can make all the difference, as it speeds up the entire process and minimizes the risk for delays and additional cost,” says Antti Nieminen. “We take full oversight of each project to ensure seamless integration from early development to the clinic and beyond. Our customers greatly appreciate this unique, one-stop-shop concept. Our supply chain services span from gene to finished vial and similarly, our value chain services support clients in taking molecules from the laboratory bench to the clinic.”

Pre-COVID conditions and opportunities

The pandemic increased the demand for CDMOs producing medicines and vaccines at a rapid pace, and it also changed the role of CDMOs, from being foremost a project-by-project producer to becoming a key player in the pharma industry.

“One of the biggest challenges that our industry faces is with the supply chain, and that challenge grew larger because of the COVID-19 pandemic.”

“One of the biggest challenges that our industry faces is with the supply chain, and that challenge grew larger because of the COVID-19 pandemic. As a CDMO with a global network we can offer a large amount of material sourcing resources, effective bargaining power, and worldwide inventory and supplies. This gives us the flexibility and power to develop and manufacture products – even during a pandemic-induced supply shortage,” says Kasper Øland.

Antti Nieminen says that his company, Biovian, was fully booked during the pandemic and is still experiencing high demand. “It might change if our clients run out of funds, but so far so good,” he says.

In order to adapt to the new decreased demand and continue their growth, CDMOs need to make their relationships with pharma companies even more strategic, suggests Boston Consulting Group (BCG) in an article entitled “What’s next for CDMOs after COVID-19” (2021). The authors describe that most pharma-CDMO relationships before the pandemic were largely transactional, i.e., pharma companies sourced manufacturing services from CDMOs on a project-by-project basis, most often using a fee-for-service or project-based contracting model.

However, the pandemic upended this balance of power, believe the authors. The largest source of additional capacity for the pharma companies were CDMOs. This means that now, when the demand for vaccines and medicines is decreasing, it is time for CDMOs to lay the foundation for more strategic partnerships.

 

Coripharma’s development and manufacturing is done with 100% sustainable energy.

 

Finding talent

Many CDMOs that NLS has spoken to mention that their employees are their greatest assets, that there are many highly qualified candidates here in the Nordics, but more needs to be done. There is a skills shortage in these areas, and there are specific needs for competences associated with production and process development of biotechs.

The rapid and positive growth seen in the Nordic life science industry has also led to an increased demand for competence that the educational institutions haven’t always been able to meet.

Curida in Norway agreed on this when I spoke to representatives from the company at NLSDays. “We are increasingly noticing this need and we sometimes recruit from abroad in order to fill our vacancies,” says Mira H. Børstad, Site Manager ISO of Curida Diatec.

Kasper Øland, AGC Biologics, agrees and says that although there is a high-caliber and diverse talent pool in Denmark, he has noticed that since the start of the COVID-19 pandemic, the market is incredibly competitive.

“To help matters, we source talent locally and globally. We are committed to work-life balance, new ways of connecting and communicating, social clubs and activities, Diversity, Equity, and Inclusion (DE&I), and celebrating the 50+ cultures represented on-site for their history and uniqueness,” he says. “There are strong academic institutions that inspire and produce some of the best biology, chemistry, and biochemistry scientists in the world, and Scandinavia is a popular area to work in due to its salary and benefits.”

At Polypeptide’s facility in Malmö, the company has an active hiring program ongoing, particularly for production chemists, says Jens Fricke, Managing Director at PolyPeptide Sweden. “Suitable candidates are available, but of course, employers in the sector compete for good candidates.”

“Of course, if allowed to wish, we would like to see relevant manufacture and GMP as part of an academic education. We would certainly be able to offer a quick employment.”

Biovian is located Turku, a city that possesses three high-class universities and a university hospital.

“This provides a pool of talent needed to support Biovian’s growth. However, most new students do not have experience from manufacture and especially not under GMP. We therefore have an internal education system to bring everyone up to speed. Of course, if allowed to wish, we would like to see relevant manufacture and GMP as part of an academic education. We would certainly be able to offer a quick employment,” says Antti Nieminen.

Lilja Valdimarsdottir, Coripharma, says that the number of qualified and experienced people in Iceland is quite high, and 60% of the employees today have over ten years of experience in this field. “We do however also seek to strengthen our team with persons located abroad, that provide specific market expertise and other valuable knowledge,” she adds.

 

Kasper Øland, Senior Director, Business Development, AGC Biologics (left), and Jens Fricke, Managing Director, PolyPeptide Sweden, Photo: Nille Leander (right)

 

Joining forces

Another hot topic when it comes to Nordic pharma manufacturing is the issue of establishing joint vaccine production facilities to be prepared for future pandemics. In Sweden last spring, Valneva Sweden’s COVID-19 vaccine manufacturing facility was inaugurated – the first and only one of its kind in the country.

“The presence of a manufacturing facility in Sweden increases the conditions for emergency preparedness. The pandemic has underlined the value of domestic production,” said Lena Hallengren, Minister of Health and Social Affairs, at the inauguration.

Last year Sweden also took the initiative for a Nordic co-operation, mapping the resources of both public and private companies when it comes to the development and production of vaccines in the region. Earlier this year Vinnova published the report “A Nordic joint feasibility study – Potential for collaboration on innovation, development and production of vaccines”.

“The Nordic countries are today heavily dependent on commercial vaccines that are developed and produced outside the region, and the parts of the vaccine development and production value chain that exist in the region are largely dependent on a large number of globally distributed suppliers.”

The compiled knowledge base about the Nordic countries showed that the resources for the development and manufacture of vaccines are unevenly distributed across the five countries. It also showed that the Nordic countries are today heavily dependent on commercial vaccines that are developed and produced outside the region, and the parts of the vaccine development and production value chain that exist in the region are largely dependent on a large number of globally distributed suppliers.

However, several areas of strength were identified, which can be developed and built on. These include solid academic research on vaccines and immunotherapy, national infrastructure for research, innovation and clinical trials, and researchable patient records. “In addition, large global pharmaceutical companies and CMOs and CDMOs have capacity for vaccine development and production in the Nordic region,” the authors of the report concluded. Several of the Nordic CDMOs that NLS has spoken to also has a positive attitude towards Nordic cooperation in general.

“We should be seeking to align with our fellow Nordic organizations to help advance our industry,” says Kasper Øland, AGC Biologis, and Lilja Valdimarsdottir, Coripharma, agrees. “Generally, we feel that a Nordics cooperation is a very good idea, although vaccines and immunotherapy is not our specific expertise,” she says.

“We are open to help and to contribute to cooperative efforts if they make sense. From experience we all know that regional efforts will not be easy to manage,” adds Michael Stäheli, PolyPeptide.

“We would for sure be interested in participating in such co-operation, but it must be on commercial terms. Being a small CDMO does not provide the margins to stay idle. We always need to make sure we have enough orders to stay healthy. We have a great responsibility towards our employees, clients and ultimately towards all patients who will benefit from drugs manufactured by Biovian,” says Antti Nieminen.

 

Kasper Øland, AGC Biologics, sees biologics services growing across the Nordic region. Photo: Christian Buck

 

The Nordic CDMOs’ USP

Nordic Life Science also asked some of our Nordic CDMOs how we can grow stronger, attract more customers and compete globally, for example with manufacturing in developing countries.

“When it comes to competing with manufacturing in developing countries, it is all about the risk the customer is willing to take. We take pride in our operations in Copenhagen because we know the teams working there are at the forefront of scientific innovation and knowledge. While there is a potential for a higher cost, the Nordic region also offers a higher level of quality and less risk of having issues with your products,” says Kasper Øland.

Jens Fricke, PolyPeptide, also emphasizes the importance of our Nordic strengths in quality, innovation and flexibility to compete with suppliers from countries that might have a comparative cost advantage.

“We have in general a good scientific base and have an organization that communicates well in English. With this base, and a strong history of delivering on-time-in-full in this regulated environment, we have a brand in the market. We see that we differentiate ourselves by a high degree of transparency and good skills in collaboration and communication in the partnership with our customers,” he states.

“To remain ahead of the game and to offer customers leading-edge value requires an open spirit and flexibility, at all levels of an organization and within its society.”

To be able to compete with other countries’ cost advantages, innovation across all dimensions plays a key role, Fricke continues. “This includes innovative products, but equally important innovative processes and the constructive evolution of the whole ecosystem and the societal or governmental environment. To remain ahead of the game and to offer customers leading-edge value requires an open spirit and flexibility, at all levels of an organization and within its society. Our location in a country with a very robust/solid infrastructure, our processes and procedures are all basics for our customers. Highly skilled employees, transparency and strong collaboration skills are advantages, and geographic proximity is important and appreciated.”

Biopharmaceutical manufacture is probably the best example of manufacture that actually has a good market in the Nordics/Europe/US, says Antti Nieminen, Biovian.

“The reason for this is our quite demanding GMP system and continuous authority inspection. Biovian is inspected by FIMEA, being a EMA member. As a patient, I’m very happy about these tough inspections making quality the most important deliverable,” he says.

Antti Nieminen also says that the exceptionally high employee retention rate, together with the fact that 50 percent of the people working at Biovian hold a master’s or Ph.D. degree, have resulted in accumulated experience and expertise within the company. Thus, clients can count on Biovian’s skilled and passionate workforce to carry out even the most challenging and complex projects. “Moreover, the Nordic ethos shapes our way of working; high standards and dedication on delivering high-quality services are our key strengths,” he says.

 

Photo of Coripharma’s commercial team: Heida HB

 

Finland has the happiest people in the world (fifth year in a row 2022) and offers an exceptional stabile infrastructure with world-class electrical grids, wastewater systems and clean nature, adds Nieminen.

“In order to maintain our Nordic strengths within CDMO we need to deliver quality, operational timelines, with focus on customer experience and working in line with the sustainability goals.”

“In the current climate our energy stability and independence sets us in Iceland apart from many other countries and allows us to keep manufacturing costs similar, while costs continue to rise in many countries,” adds Lilja Valdimarsdottir, Coripharma, and highlights another important advantage that Nordic CDMOs share – high ambitions when it comes to sustainability. Coripharma’s development and manufacturing is for example done with 100 percent sustainable energy.

“We use sustainable energy and have a low carbon footprint. Electricity is produced with hydropower and geothermal energy,” describes Valdimarsdottir. “In order to maintain our Nordic strengths within CDMO we need to deliver quality, operational timelines, with focus on customer experience and working in line with the sustainability goals.”