Supply slide

Associated Press

VACAVILLE, Calif. — In a gleaming drug factory rising out of a California pasture, thousands of genetically engineered Chinese hamster cells multiply into the billions as they snake through 20 miles of pipes, tubes and giant brewers’ vats called "bioreactors."

Through a series of filters and chemical reactions, the human proteins created in these hamster ovary cells are sucked out, purified and turned into the blockbuster cancer drug Herceptin as well as two other protein-based therapies.

Combined with another factory in south San Francisco, the new plant gives Genentech Inc., the ability to brew in about a month nearly 200,000 liters worth of hamster cells spliced with human genes.

These hardy cells are the industry standard for manufacturing protein-based drugs because of their ability to multiply quickly.

And nobody brews more cells than Genentech, which controls half the world’s bioreactor capacity.

Demand for the 30 protein-based drugs now on the market far outstrips the industry’s production capacity. And with a good portion of the 99 protein-based drugs now in late-stage human trials expected to hit the market soon, the shortage will get much worse before it gets any better.

By 2005, the industry will need about four times the capacity it has now, predicts analyst David Molowa of J.P. Morgan Chase. He and other analysts aren’t optimistic that future demand will immediately be met.

Each factory costs an estimated $500 million and can take as long as five years to build — daunting hurdles for money-losing biotech companies even when they have promising drugs in development.

And even after the bioreactors are built, they need to be certified by the Food and Drug Administration — not an easy step given the need to ensure that only pure, uncontaminated human protein gets shipped out to patients.

No company knows this better than Seattle-based Immunex Inc., which also has facilities in Snohomish County’s Canyon Park.

Immunex is losing more than $200 million a year because it can’t meet the overwhelming demand for its rheumatoid arthritis drug Enbrel, approved in late 1998.

As Immunex was developing Enbrel, it had no idea how popular it would ultimately become and was unwilling to build its own factory. Instead, it contracted with Germany’s Boehringer Ingelheim, which has about 75,000 liters of capacity.

Boehringer also serves several other companies, and Immunex doesn’t always get the capacity it wants, exacerbating the company’s supply problems.

Even during the best of times, Immunex can’t make enough of its drug.

"We had no notion how the drug would be accepted," said Peggy Phillips, Immunex’s chief operating officer. When the FDA approved Enbrel in November 1998, the company hoped to achieve annual sales of $500 million within three years, she said — instead, sales surged to $650 million in two years.

The company could have sold as much as $1 billion worth of Enbrel last year, Molowa said. Instead, it rang up sales of $762 million.

All those lost sales robbed momentum from the once high-flying company. Immunex shares traded as high as $80 in 2000, but by late last year, its stock was languishing and Amgen was able to gobble up Immunex for about $25 a share.

Amgen’s takeover is expected to win regulatory approval in the next month, but its dominant position in the industry won’t help it immediately solve the Enbrel supply problem.

The shortage is so bad that Immunex recently notified doctors that many of their 82,000 patients on Enbrel would experience delays of "several days to a few weeks" in April and May in getting prescriptions filled.

Immunex is racing to complete construction of a new $500 million factory in Rhode Island, which it hopes to have operating by next year. But even that new factory won’t be enough for Immunex.

Despite all the construction, Immunex and Amgen still need Genentech’s assistance. Starting in 2004, Genentech will help manufacture Enbrel, which Amgen estimates will garner up to $3 billion in sales within three years.