Productivity in biopharma has been so impressive in the past few decades. As a result, there is little room left for growth. That is until more complex problems surrounding the genome and other innovative approaches are solved. Yet, as biopharma returns flatten, reducing costs could reignite the industry’s move forward.

In the meantime, organizations need to adapt to manage the shift in the market. Margins are a good place to start, and lowering the cost of growth factors represents a potentially untapped solution that companies can exploit to propel their competitiveness.

In this blog we explore this further and present why growth factors could be a financial lifeline.

The financial landscape for biopharma

“Biopharma companies’ average TSR grew at a compound annual rate of 17% from 1990 to 2022. Now, however, revenue growth may be slowing, reducing TSR growth and marking the end of an era.” Bain & Company

The biopharma industry has been seemingly unstoppable. For the last 30 years it has experienced significant growth, taking advantage of technological innovation and producing new treatments at a rapid rate.

As we discussed in a previous blog, there have been huge breakthroughs in biotech in general over the same period. For example, using microbes and microbial fermentation to create medical products became standard. Then, scientists finally harnessed the power of the genome, opening the door to many present solutions as well as future possibilities.

However, recent studies from Bain & Company have shown that TSR isn’t as high as it has been. While trends are still very positive, the rate of growth has slowed. The past two years have seen average TSR grow at a CAGR of 13% compared to 17% CAGR from 1990 to 2022.

This indicates that the massive peaks in performance and productivity are set to flatten, and headwinds are expected to intensify. Biopharmas need to act now to mitigate this effect.

The challenges affecting biopharma growth 

Many of the accessible routes for R&D and new revenue have been exhausted, and only the more long-term achievements remain. Market pressures aren’t helping. There are increasing pricing restrictions from governments and a squeeze on margins from multiple directions, such as the cost of manufacturing and market saturation.

Altogether, these issues are making sustained competitive differentiation difficult. As a result, at least one of these problems needs to be solved if biopharmas wish to reinvigorate growth. 

Looking further down the chain, there is a key pain point which feeds into these challenges, and could represent a promising solution: the supply of growth factors.

Why growth factors are a potential source of margin 

The radically new innovations of the last 30 years rely on molecules that are produced through biological processes, such as growth factors.

These essential ingredients contribute to a wide number of use cases, from stimulating tissue growth in wound healing to enabling advanced therapies to regenerative medicine. Controlling cell growth and biological processes, they make up a fundamental part of life-saving treatments and research.

The issue is, manufacturing growth factors reliably, at an industrial scale, is not simple. It requires sophisticated technology and high accuracy to produce the right yield, quality and performance. In addition, many of the use cases mentioned require large volumes of growth factors.

“This sophistication comes at great cost. Large-scale biotech-manufacturing facilities require $200 million to $500 million or more to build, compared with similar-scale small-molecule facilities that may cost just $30 million to $100 million, and they can take four to five years to build. These facilities are costly to run, too, with long process durations, low yields, expensive raw materials, and, not least, the need for a team of highly skilled experts to operate them.” – McKinsey

As a result, growth factors have traditionally been extremely expensive. Combine this with the volume at which growth factors are needed, and it’s not surprising that affordability has been a long-standing problem. Originating at the manufacturing stage of the process, the cost of sourcing growth factors has had a trickle-down effect, slowing progress in biopharma innovation and presenting a serious barrier for end-consumer access.

However, new innovative breakthroughs in manufacturing processes could make this a lucrative area for biopharma companies to leverage in order to reduce costs and restore revenue growth to its former heights. Plus, companies linked with R&D spending have historically seen better TSR performance.

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The solution to reducing the cost of growth factors

Digitalization is the key to differentiation in biopharma. From data to supporting personalization to enabling operational efficiency with automation, there are many areas in which digital tools support better margins and growth.

“These digital tools will allow biopharma companies to personalize customer interactions, reduce the burden of transactional work, accelerate clinical development, and make other strides that will benefit revenue and margin…

Companies that take a digital-first approach and disrupt their operating models ahead of the pack will be productivity leaders…” – Bain & Company

For manufacturing growth factors, companies need to use tools to reduce operational costs. Cocoon has achieved this with our novel CrisBio® technology. Using cocoons as natural bioreactors, we have significantly reduced the cost and improved the effectiveness of expressing growth factors compared to traditional systems.

Our platform streamlines processes and can be rapidly scaled from milligrams to kilograms to meet different volume requirements, with little monetary or time investment. This means organizations can advance their competitive differentiation by speeding up innovation, significantly lowering costs, and harnessing complex growth factors that other systems fail to express.

As a result, organizations can reduce one of the most expensive elements of their production process. As a result, they will also improve their revenue opportunities.

By working with innovative partners, we aim to accelerate the progression of the biotechnology and biopharmaceutical industries. We aim to lower the costs of growth factors up to 90%. In doing so, we are helping to create more accessible solutions for companies and people alike.

Read more about our unique expression system for growth factors, and see how Cocoon is transforming the biopharma industry.