What This Big News From Novartis Adds To The C&G Make vs. Buy Debate

By Anna Rose Welch, Editorial & Community Director, Advancing RNA

It was an eye-brow-raising headline: “Novartis Shutting Down Colorado Plant, Laying Off 400 Employees After Overestimating Gene Therapy Demand.”  

As Fierce Pharma reported:  

The company's abrupt move to close the site is evidence that Novartis might have overestimated the demand. Further, a spokesman said the company has made ‘process improvements’ that will enable it to operate fewer gene therapy sites in the long run. ‘At the time we acquired the Longmont facility, we anticipated that we would require all three sites to meet the needs of our business,’ a company spokesman wrote in an email. ‘Based on the evolving dynamics of the gene therapy landscape and progress we’ve made with process improvements, we now know that we can fulfill our long-term demand, including patients who may benefit from our next wave of gene therapies, with two commercial sites.’  

It's certainly a story that stands out in stark contrast to the steady buzz of celebratory announcements about new facilities, expansions, and acquisitions. But I dare say it’s an important story for the space as a whole to encounter these days, as well.  

While we’re hit endlessly with stories about great needs for capacity, skilled/knowledgeable talent, and technological advancements, so much remains in flux. As Novartis has exemplified, more sophisticated processes, technologies, and biological understanding over time could (and probably will) quickly challenge your original capacity needs and expectations.  

This story actually ties in quite nicely to a panel discussion I recently attended, during which an expert from GSK explained the company’s thinking around scale-up and build vs. buy. Questions about the sizes of the market opportunities, the speed at which those opportunities will be realized, and which type of facility construction strategy long-term would be best (retrofitted, greenfield, or brownfield) are currently keeping the company busy. As this expert shared — and as this Novartis news exemplifies — there are still a lot of questions to be answered biologically and commercially. So, GSK has chosen to stick with outsourcing partners until there is more commercial clarity. As this expert explained:  

We have a set of CDMOs who work with us on the viral vector supply and cell processing side, and we look at that as a way to help mitigate and test what we might want to build as we learn instead of trying to figure it all out at the beginning and ultimately find out that we’ve made the wrong investment…. It’s a little more costly and a bit more complicated [going the outsourcing route], but we think trying to learn along the way with our CDMOS to make the right investment is a measured and prudent way to go.   

I appreciated his level-headed approach to this discussion, especially his acknowledgement that the C&G therapy space is a very different supply chain model than what the company has been accustomed to in the small molecule and biologics space. But when it comes to the facility/capacity discussion, there are certainly some lessons that can be carried over from the biologics operations side of things. As he clarified:            

Have we made mistakes in the past [taking a measured approach]? I can say on our biopharma side there are instances in which we probably have because we’re now getting some really good readouts from our products and we didn’t make the proper investments. We’re carefully looking at these examples, so we don’t find ourselves in the same position in the cell and gene therapy space.