Keeping Pace with Big Pharma

Some of the company's best work on innovation is driven from within the pharmaceuticals cluster, which accounts for about 10 percent of DSM's overall revenue and incorporates four businesses: biologics, small molecules, finished dosage forms, and anti-infectives. The group has a history as a CMO and also as a supplier in producing the active ingredients for key essential medicines, including penicillins, cephalosporins, and other anti-infectives. The strategy now is to move beyond the CMO role to secure lead status as an integrated supply chain service partner in emerging high-growth markets, with a particular emphasis on Asia.

The group is also developing new technologies to boost the cost-efficient production of complex biologics—and biosimilars. "In the high-growth economies of China and India, there are already 200 to 300 local companies committed to producing biosimilar drugs; some are already marketing them," King says. "The opportunity for us is that their process technologies are quite old. We can license our advanced capabilities to them or come in as a CMO. Either way, we help them lower their manufacturing costs, which is key to gaining the advantage in biosimilars."

Sidhu says: "The questions we now get from the industry are not about how fast we can build that specialized production facility in time for a registration decision by the FDA. The dialogue is far more strategic: How can we do manufacturing differently, using process technologies to reduce time to market or prevent product shortages? How do we increase security of supply through multisourcing? Or lower the risk of steep financial investments in new facilities as well as hedge the political complications that stem from employing large numbers of workers in different areas? There is an awareness that costs can be taken out of the old system of production and that this is a new source of competitive advantage in a market divided between commodity products and advanced therapies. For either, how well you manage manufacturing will determine a big chunk of your ROI over time."

Productivity Meets the Pill

In response to this need in the biologics field, DSM has built a number of proprietary process platforms that significantly reduce costs, reduce risks, and enhance the reliability of pharma production. The first is its XD technology, which is a process improvement that enhances the environment for cell growth and protein expression, thus allowing for gains in the productivity of batch production. DSM contends this technology can boost yields from five to 10 times against conventional applications. (In biologics production, use of smaller-liter reactors to synthesize materials is optimal; XD technology helps to facilitate it.) "The gains from this tool alone are enormous," says King. "We can produce enough active ingredient from a single batch to create product for a full Phase II clinical trial—safely, at lower cost to the sponsor."

Another is the Rhobust technology, which avoids the traditional large-scale cell harvesting approach with a tailored, targeted process for capturing/clarifying the proteins/antibodies required for biologics composed from living material. This results in less handling and a shorter processing time, which saves on costs.

The newest of these is what DSM calls the "Kremer Method," a purification measure that reduces the materials used and the number of steps in downstream production. DSM has applied for a patent on this method.

Taken together, the company says its technology platform is 40 percent more cost effective than currently available technologies.

Each of these tools are being licensed to partners and applied at the company's own biopharma production sites. DSM's new biologics production facility currently being built in Australia will employ these state-of-the-art technologies and is being supported through funding provided by the Commonwealth of Australia and Queensland governments.

Overall, the aim here is to strengthen DSM's CMO franchise by incorporating use of the company's own technologies rather than having to rely on externally derived assets. But there is a more practical element as well: DSM cannot easily compete on cost alone with nimble local CMOs in growth markets like China and India. Hence its ability to differentiate depends on providing something new around innovations that customers will pay that extra margin for.