Willingness to invest in infrastructure is determined, in large part, by revenue potential. For example, in big countries where the economics make sense, cell and gene therapy (CGT) firms build plants. In countries with smaller populations, they are less inclined to do so.
As a result, it can be harder for patients in smaller markets to access therapies, say the authors of a new study, who argue that novel technologies, regulatory support, and collaboration are needed to encourage infrastructure development.
Lead author Logan Germain, a researcher at Queen’s University in Canada, tells GEN, “Small markets and individualized products make achieving return-on-investment harder,” citing his own country as an example.
“The risk-adjusted returns in Canada’s smaller market may be insufficient to justify manufacturing investments,” he says, adding, “Current CGT demand may not yet justify the substantial infrastructure investment required.
“The chicken-and-egg problem requires coordinated intervention to bridge the gap between limited current demand and the minimum viable scale for manufacturing facilities.”
Another reason smaller markets can struggle to develop CGT infrastructure is that tech innovators are often focused elsewhere. Germain says, “Critical knowledge and intellectual property remain concentrated in the United States and China.
“Canada faces a pattern where domestic innovations are acquired by larger international firms before reaching manufacturing maturity, as seen with Octane Biotech’s Cocoon platform being acquired by Lonza Group.”
Smaller markets also often lack clear regulations on the development and production of CGTs, which can discourage manufacturing investment, Germain says, again citing Canada as an example.
“Unlike the United States and the EU, Canada lacks both a distinct CGT regulatory definition category and orphan drug incentives. This creates uncertainty for sponsors and weaker financial incentives compared to jurisdictions offering tax credits, extended market exclusivity, and fee reductions.
“The Advanced Therapeutic Products pathway, introduced in 2019, remains underutilized with no CGT designations to date, highlighting the need for clearer regulatory frameworks,” Germain says.
Building capacity
Encouraging development of CGT capacity in Canada, and small markets in general,will require collaboration, Germain says, citing InvestOntario and OmniaBio’s partnership, and the investment arm recently set up by CCRM, as examples.
“There is already momentum here, signaling a viable path to expand domestic development and manufacturing capacity—these partnerships should be continuously strengthened, especially as they attempt to raise new funds.
“For example, CCRM Enterprises is the relatively new venture investment arm of CCRM that seeks to invest in early-stage ventures in the CGT field. This kind of public-private partnership and targeted investment thesis is critical for driving innovation to market and filling the capital gap for early-stage ventures seeking fundraising in a field that might otherwise be deemed too risky by other typical VC firms,” he adds.
Clarifying the regulations that cover cell and gene therapy manufacturing would also help in Germain’s view.
“Establishing a distinct CGT regulatory category with clear submission requirements, harmonizing approval timelines with FDA and EMA to enable simultaneous global submissions, and expanding the ATP pathway to include meaningful financial incentives such as clinical trial or R&D tax credits, would help,” he says.
Decentralization
The emergence of decentralized manufacturing, where therapies are produced in hospitals in modular production systems, may also prove to be a good fit for the needs of smaller markets.
“Point-of-care manufacturing could significantly reduce distribution costs and supply chain complexity. However, initial capital costs for deploying these systems across multiple sites may be substantial, requiring coordinated planning and potentially shared infrastructure cost models.
“The technology already exists, but large-scale deployment success is still to be determined. Specific regulatory guidance for distributed manufacturing would likely need to be developed to ensure robust, standardized automation with end-to-end quality control check marks is used,” Germain says.
