IN HOUSE OR OUTSOURCE?

Over the last decade, the discoveries and ensuing results from revolutionary cell and gene therapy research have led to the rapid growth of biotech companies taking these immunotherapy treatments into early-stage development and clinical trials. Significant capital has been raised to support these start-ups that have spun out of the institutional research environment and into the clinical development process. In the life cycle of these companies, they are inevitably faced with a critical operational decision that will significantly shape their future and may determine the success or failure of the enterprise. The decision: whether to manufacture in-house or outsource to a third-party contract development and manufacturing organization (CDMO).

This decision point comes at different times for different companies but typically will occur either in advance of one of the clinical trial phases or upon FDA approval during the transition from trials to commercial-scale manufacturing. There is no universal “right decision” as each company’s decision will be viewed in the context of its product/therapy type, requirement for control of intellectual property, available capital, ability to raise additional capital, competing requirements for capital, timetable for delivery, in-house capabilities and business strategy.

This paper addresses five considerations that should be carefully explored when these pre-clinical and clinical drug development companies make their manufacturing decision. These considerations are:

(1) Control. (2) Cost/Available Capital. (3) Time to Market. (4) Leverage. (5) Business/Monetization Strategy.

Joseph Fetterman is a member of Colliers Life Sciences Practice Group. Working together with Michael Brown and Clifford Brechner, the team advises pre-clinical, clinical and mid-sized drug development companies with their real estate and facilities requirements at critical transitions, including initial commercial research and development, clinical trial production, commercial-scale manufacturing, facility disposition and lease restructuring.