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Shortfall Happens

Executive Summary

The dark side of outsourcing is coming into view: worldwide capacity for biological manufacturing is currently maxed out. Firms with biological products still in clinical development could find their progress to market delayed, if they can't make enough protein for trials. Others unable to meet demand for approved products will have to reconcile themselves to lost sales. Demand will likely exceed capacity for several years to come--putting companies that do have manufacturing capacity in strong bargaining positions.

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Cytovance Biologics Inc.

Cytovance intends to make the outsourcing of clinical-stage protein manufacturing easily accessible to small firms, so they don't have to invest their precious cash in this sort of infrastructure. The worldwide scarcity of biological manufacturing capacity is of growing concern to development-stage companies all too aware of the misfortune that Immunex Corp. suffered through inability to adequately meet market demand for its rheumatoid arthritis drug etanercept (Enbrel).

Amgen Moves Beyond Proteins

Amgen's revenue stream depends largely on just two molecules. It has spent loads of money on the search for replacements, but as yet has relatively little to show for it--at least, little that's been visible to those outside the company. To enlarge its opportunity set, Amgen is moving beyond its macromolecule-only heritage. A fresh cadre of executives, many from Merck, aim to add small-molecule capabilities and leverage corporate understanding of proteins and pathway biology. Amgen is also tapping into a host of other organizations whose technologies, targets, assays and very ways of thinking promise to make the firm more competitive than it could be on its own. While some investors think Amgen is making all the right moves, others are still concerned about the company's ability to bring enough new drugs to market, fast enough, to fill in behind its blockbuster proteins.

Amgen Moves Beyond Proteins

Amgen's revenue stream depends largely on just two molecules. It has spent loads of money on the search for replacements, but as yet has relatively little to show for it--at least, little that's been visible to those outside the company. To enlarge its opportunity set, Amgen is moving beyond its macromolecule-only heritage. A fresh cadre of executives, many from Merck, aim to add small-molecule capabilities and leverage corporate understanding of proteins and pathway biology. Amgen is also tapping into a host of other organizations whose technologies, targets, assays and very ways of thinking promise to make the firm more competitive than it could be on its own. While some investors think Amgen is making all the right moves, others are still concerned about the company's ability to bring enough new drugs to market, fast enough, to fill in behind its blockbuster proteins.

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