Pharmaceutical Commerce - May/June 2017 - 13

Business/Finance

2

Catalent has an amazingly balanced
portfolio, with both clinical and
commercial work, with reasonable
proportions in the US, Europe and ROW,
and with a mix of branded, generic and OTC
products that it manages. On the one hand,
this offers clients a wealth of resources
and expertise; on the other, it trends
toward being "all things for all people,"
and perhaps not as deep in each area of
expertise as the leading innovators in that
area. How do you counter that claim?

While we do produce a well-diversified
range of products for our customers, our
offering portfolio is focused across about a
dozen core technology and service platforms.
In nearly every one of these, we have a market
leadership position, which we believe brings
important advantages to our customers-
and to us. We do not subscribe to the "onestop shop" model for pharma outsourcing,
as it most often doesn't represent what our
customers want, or how they buy.
To your point, we enjoy leadership
positions in many key offerings areas, such
as in liquid-filled capsules, Zydis orally
disintegrating tablets, and our blow-fill-seal
technology for complex unit-dosed sterile
liquid filling. In biologics, GPEx cell line
engineering and SMARTag antibody-drug
conjugate (ADC) platforms are the best in
their class. These leadership positions have
been earned through hundreds of product
launches, across the 7,000 stock keeping units
(SKUs) and the 70 billion doses we produce
annually. We deal with approximately 500
regulatory and customer audits annually,
and we produce several hundred thousand
clinical kits for clinical investigators
and patients. Ultimately, our value is
demonstrated in the 1-in-20 doses of Rx and
consumer health products we provide to the
patients around the world each year.
There is a strong theme among these
offerings that is very far from 'all things to
all people.' Our solutions are focused on
the needs of our customers to help develop
and supply the most sophisticated and
challenging treatments, overcome pipeline
or life cycle/line extension challenges, and
provide global supply solutions. We don't
focus on pounding out the simplest,
internally formulated white tablets at the
lowest cost per thousand. We focus on
delivering value for patients, by accelerating,
rescuing and improving products at all stages
of development, globally.

3

Today, Catalent's desire to "follow
the molecule"-with a business
strategy from preclinical, to
clinical, to manufacturing and the end-ofpatent environment-is a well-established
tenet in contract manufacturing. Most
bigger contract manufacturers want to
be known as contract development and
manufacturing organizations (CDMOs).
What's special about how Catalent handles
the clinical-to-commercial handoff?
How is tech transfer carried out?

The CDMO space has evolved over the 10
years since Catalent split out from Cardinal
Health, with a few emerging business
models. Pure-play contract manufacturers,
or CMOs, make up a majority of the
market participants, offering tech-transfer
driven commercial manufacturing but no
development. Traditional CDMOs add
product development services, tending to
participate in more product launches, while
still also focused on tech transfers, typically
for a limited range of non-proprietary dose
forms.
Companies like Catalent, while
participating in the CDMO space, bring
something extra-in our case, a range of
advanced formulation and dose form
technologies, supplemented and sustained
by extensive intellectual property-1,100
patents; trade secrets; extensive scientific,
operational, quality and regulatory knowhow; and optimized manufacturing assets.
Using these, we can produce differentiated
outcomes for our customers, their products
and ultimately for patients.
A lot of CMOs/CDMOs like to talk
about partnering with their customers from
development to supply, but few can actually
deliver the variety of sophisticated solutions
that a vast majority of today's complex
molecules require. At Catalent, we've focused
on making sure we have such technology
and capabilities available from development
to commercial scale. We actively reinvest
in our business to meet future customer
and industry needs, in new capabilities,
expanded capacity, in technologies, and
in our expertise-more than $1 billion
in the last five years. This includes our
recent acquisitions of Pharmatek, adding
to our preclinical, early development and
supply capabilities, plus spray-drying
expertise; Micron Technology's particlesize engineering; the SMARTag technology
and substantial expertise from Redwood
Biosciences, and our recent Accucaps softgel
addition. We have also actively reinvested
in capabilities and capacities across our 35
global sites-reinvesting more than $600
million in capital expenditures over the last
five fiscal years.
Finally, we have developed strong
tech-transfer protocols across our sites
that provide world-class expertise in their
respective fields of expertise. For example,
our San Diego, CA facility (formerly
Pharmatek) that I mentioned is a worldclass early development and clinical
manufacturing facility. Our Winchester, KY
facility was just upgraded and expanded
at a cost of more than $50 million, and is
now an even stronger center for oral dose
form commercial supply, especially in
specialty and controlled release products.
Our eight clinical supply facilities can
work seamlessly with all our other sites to
coordinate development and trials globally.
So, as you can see, we have thought through
and implemented the concept of helping
our customers navigate their path to patient
faster with access to the world's best expertise
and capacity where they need it.

4

Another clinically oriented
question: Catalent has invested
substantially in being a clinical
trial materials provider, with logistics
and related services in addition to
manufacturing finished clinical products.
Last year, you introduced the FastChain™
brand to capitalize on this investment.
How does FastChainTM work, and what
benefits does it provide to pharma R&D?

Our customers' plans are increasingly
global, and this extends to clinical trials
which are also becoming more complex,
and are an ever-more expensive part of
the overall cost of drug development. Add
to that the cost pressure and increasingly
expensive drugs, including biologics, and
we see an imbalance between sponsors'
demands for speed, flexibility and efficiency,
and traditional clinical supply models that
are reliant on accurate forecasts, stable
demand, and that assume little will change
once a trial commences.
It is obviously vital that the right drug
reaches the right place on time, and with
traditional models, it is often the budget
that's stretched to make sure that happens
with overstocking and intermediate stockholding used to mitigate the risk of a
stock-out, and ultimately, that a patient
will be lost through not having their
medication available to comply with the
study protocol. We've made significant
investments, especially over the last two
years, in the infrastructure and facilities to
make FastChain a reality. It differs from
traditional models in that it is demand-led,
and so is more dynamic. It combines the
benefits of primary packaging at a central
location, and delayed secondary packaging
and customization, which is conducted
regionally, and for specific countries and
groups. Sponsors benefit from the efficiency
of volume primary packaging of their
Investigational Medicinal Products, and
the flexibility of finishing and distribution
from regional GMP secondary packaging
facilities, which are strategically located
where more trials are taking place, hence
our investment in clinical supply facilities
in China, Singapore and Japan, as well as
ongoing strengthening of capabilities in
other parts of the world.
Demand-led supply isn't a perfect fit for
every study, but FastChain offers strategic
benefits when sponsors need to deploy a
more flexible supply chain, and it removes
many of the costly, intermediate stockholding buffers that can run to 200% of
actual demand within the so-called 'just-intime' models. For example with FastChain,
applying countr y-specific labeling is
possible at the point of secondary labeling,
eliminating the need for multilingual
booklet labels that have, by necessity, been
produced in large numbers and according
to the trial protocols at the start of the
study. The flexibility of having decentralized
bright stock is that it is not committed until
there is an actual clinical site or patient
need, and that can reduce clinical waste to

less than 20%. And single-language labels
are also a significant benefit to the patient,
allowing them to see only relevant, clear
trial instructions.

5

In commercial biologics production,
it looks as if Catalent has positioned
itself for smaller volume biologic
production in combination with its variety
of proprietary biologic-development
technologies such as GPEx. Lots of industry
experts are offering opinions on how a
new era of genetically driven, cellulartherapy-based, personalized medicine
is going to become a reality. What path
does Catalent see the industry taking?

We see a continued growth in biologics
too, with a rapidly growing share of
molecules in the pipeline. That's why we
are continuing to invest in the development
of truly differentiating technologies such as
SMARTag, and why we are expanding our
Madison, WI biomanufacturing facility for
the third time.
Biologics make up about 40% of the
compounds in research and development,
with innovator products making up the
vast majority. We're forecasting that the
increased focus on specialty indications
and targeted subpopulations, continuing
improvements in titers, and single-use
bioreactor efficiency will drive demand
toward small-scale manufacturing, so that
more than two-thirds of today's pipeline
will require less than 5,000 liters of capacity
annually.
I'd add that we've accrued a lot of
expertise in difficult-to-express proteins,
and we continue to leverage our GPEx cellline technology and analytical experience
from Madison, WI, as well as other sites
with specialist large molecule analytics
capabilities in Kansas City, MO and
Research Triangle Park, NC, to develop,
optimize and manufacture proteins and
antibodies for diverse treatments, from
personalized cancer therapies to malaria
vaccines.
The value of our SMARTag technology,
and specifically its unique linker chemistry,
which allows for more precision in
conjugating toxins, is in helping our
partners to develop novel antibody-drug
conjugates (ADCs) with the potential
for better tolerability and an expanded
therapeutic index.

6

How is Catalent approaching
biosimilar production? There's
been lots of discussion about
FDA's approach to biosimilarity and
interchangeability, but relatively little about
developing manufacturing techniques
to produce biosimilar products. Is this
an area of development for Catalent?

We don't have a separate business
unit for biosimilars as, in our view, the
development and production of biosimilars

May | June 2017 Visit our website at www.PharmaceuticalCommerce.com 13


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