CEO Insights and Trends: The Future of the Sterile Filling CDMO Industry
Denis Johnson, CEO, explores developments in the CDMO sector and reveals how GRAM is gearing up for its latest phase of growth in sterile filling.
Denis Johnson, CEO of GRAM, sat down to discuss the next three years in the CDMO industry, emphasizing a segmented approach and the importance of consistency during growth, among other topics.
First, a bit of background.
Denis is the CEO of Grand River Aseptic Manufacturing (GRAM). He brings 25 years of experience in Good Manufacturing Practice (GMP) manufacturing, including 6 years in sterile filling, which is GRAM’s area of expertise.
Denis’s journey in sterile filling began at Catalent, where he played a key role in ramping up a large sterile filling site. Following that, he worked with Biogen, where he managed all manufacturing operations, including sterile filling and drug substance. After his tenure at Biogen, Denis joined Kindeva, which also focused on sterile filling and other modalities, before becoming CEO at GRAM.
In addition to his specific experience in sterile filling, Denis has over 20 years of experience in other GMP areas, including medical devices and various operations.
The Next Three Years
It’s going to be an exciting time in the CDMO (Contract Development and Manufacturing Organization) space. Increased demand for available capacity, driven by what Denis calls capability segmentation, is anticipated.
In the CDMO sector, demand continues to rise, yet significant capacity has been taken offline. Several larger sterile filling CDMO players have been acquired, alongside smaller acquisitions that have reduced industry capacity.
There’s also a shift from Restricted Access Barrier Systems (RABS) to isolator and Annex 1 technology, with increasing preference for isolator technology among our clients.
Additionally, the industry is trending toward reshoring manufacturing to the U.S. The U.S. market continues to grow, as sterile fill-finish capacity is limited. Given the demand for sterile filling within an isolator and the recent acquisitions, there is currently a genuine shortage of capacity for quality sterile-filling CDMOs in the U.S. This sets a favorable stage for GRAM, especially with the recent installation of several new lines, providing available capacity in the U.S. during this high-demand period.
Denis believes it is essential to align your CDMO with the appropriate target. There are different types of targets in the market. For instance, both COVID medications and GLP-1s are produced at extremely high volumes but with low variety. A low-variety mix requires a different manufacturing approach than high-volume biologics, which typically involve greater variety and lower per-molecule volume.
Having specialized capabilities for tech transfer and the expertise to launch new products is crucial. This skill set differs from simply running the same product day in and day out. GRAM focuses on excelling in high-variety, high-volume biologics in the marketplace.
Segmentation and Specialization
Pharmaceutical companies are increasingly adopting a segmented approach when selecting a CDMO. Market segmentation involves dividing a broad target market (e.g., CDMOs) into smaller, more manageable subsets (e.g., specialized CDMOs) to enhance profitability. While some companies previously preferred to operate outside the United States, there is now a growing demand for a balance between domestic and international capabilities, as clients seek to launch new products and bring production back to the U.S.
Instead of aiming to be a one-stop shop for everyone, GRAM’s strategy emphasizes specialization in sterile filling and its related adjacencies. GRAM is committed to being a world-class leader in this specific area.
Primary barriers to this approach lie in the need for human expertise, particularly in compliance knowledge and support for product launches, rather than just in acquiring new equipment. Having the right personnel with the necessary expertise is crucial. Personnel experience will be the main limitation for production, rather than the capacity of the filling lines themselves.
Remaining Consistent Throughout Growth
One of the key aspects of GRAM’s approach is its ability to bring drugs to market quickly, supporting clients. However, it’s equally important to do this correctly. The standards for compliance continue to rise, which is absolutely justified. Utilizing equipment that meets the latest regulatory guidelines is immensely beneficial when handling drugs during the sterile filling and finishing processes for vials, syringes, and cartridges.
Improving patient treatments is a necessary goal, and to achieve this, specialized CDMOs must evolve their capabilities within their expertise. This requires the right equipment, the right people, and the right processes. If a CDMO operates at the edge of its capabilities, particularly concerning staff, it will ultimately face challenges.
To succeed in this industry, you need to make significant investments—not just in equipment but also in personnel. GRAM is rapidly expanding its aseptic manufacturing equipment capabilities. The latest investment includes installing GRAM’s high-volume, high-speed syringe and cartridge filling line in GRAM’s second sterile filling facility.
To ensure effective delivery for clients, it’s crucial that when lines are operational, personnel are properly trained and ready. GRAM starts hiring staff six to nine months in advance to undergo an intensive training program. In this business, that’s the best approach to manage rapid growth successfully.
Investments and Capital Projects
GRAM has recently made a significant capital investment in its fifth building, located in the Grand Rapids area. The facility spans 150,000 square feet and has its certificate of occupancy. The first filling suite is currently being built out and prepared for the installation of a Groninger ten-headed filler for syringes and cartridges.
This facility is designed to accommodate four commercial production lines. Space is strategically allocated to accommodate three additional lines in the future, supporting growth over the next three to four years.
GRAM has invested substantially in both equipment and facility design, and hiring personnel to staff this new value stream is in-process. Planning ahead ensures our team can meet clients’ needs as they move forward.
Focused and Flexible
Denis describes the GRAM team as both focused and flexible.
The team is very focused on manufacturing processes and compliance, and that’s especially important in sterile fill-finish. That focus allows GRAM to stay ahead of evolving regulations and contamination-control strategies, ensuring products are effective and safe.
It’s important to provide specialized services while also avoiding bureaucracy. Flexibility is essential when working on numerous new products simultaneously. CDMO clients often bring unexpected needs, which require investments in flexibility—whether by adding personnel, equipment, or processes. In line with flexibility, spare capacity must be maintained to accommodate additional batches from clients as needed.
Focus is crucial to building long-term capabilities, and flexibility helps meet clients’ unanticipated needs and ensure their success.