Pharma companies look to CMOs for a competitive edge in the shifting industry landscape
As Western economies have started to emerge from the recession that impacted most industries in recent years, pharmaceuticals companies remain under pressure to fill their pipelines with innovative therapies. Many pharma and biotech companies are now operating post-recession with leaner company structures, tighter budgets and more results-focused cultures. One sector of the pharma industry – contract research, development and manufacturing – has enjoyed rapid growth in recent years as pharma companies looked initially for more cost-effective manufacturing in China and India. With this growing trend for outsourcing came a boom in expectations of contract service providers, from early stage R&D, consultation and testing, right through to delivery of finished products. In this article, the author considers the changing outsourcing needs of pharma and biotech, and how contract providers might now be expected to help customers improve their competitiveness amid rising threats from niche players and generics.
A decade ago, many pharmaceutical companies regarded contract manufacturing suppliers as low-cost, commodity options. The main driver behind pharma companies’ decisions to outsource, and the subsequent choice of supplier, ultimately came down to price. Some of the larger innovator pharma companies that had resources available in-house chose to outsource certain key steps in their development cycles in order to speed up their cycle times. Budgets for outsourcing have generally remained robust in recent years, and in certain areas such as biopharmaceuticals and improved manufacturing, budgets have continued to grow post-recession (1).
However, the industry has undergone many changes of late. There has been a considerable amount of merger and acquisition activity throughout the p