How Can Contract Manufacturing Organizations Contribute to the...

How Can Contract Manufacturing Organizations Contribute to the Future of Pharma?

By Pharma Tech Outlook | Monday, February 17, 2020

Contract manufacturing organisations (CMOs) have seen massive uptake during the last decade and are deemed to continue their growth trajectory around 7 percent over the next five years.

Fremont, CA: The outsourcing of the manufacturing function enables biopharma companies to reach the market early, let loose their sources and facilities, and focus more on their core business, and all of this is done while reducing the costs of the drugs. The business model has also experienced a shift, and they no longer remain as just a one-off manufacturing option, they are considered to be an essential part of the supply chain of biopharma companies. An increase in the adoption of outsourced manufacturing practices in the pharma sector has been noticed. The CMO market was fragmented, with numerous players who are contributing to the industry's revenue and CMOs relying on a particular client for around 50 percent of their income. This would leave the CMOs with very fewer options to negotiate, as it increased the pharma companies' bargaining power.

Emerging Economies

More prominent biopharma companies prefer to outsource manufacturing even after having well-established GMP grade facilities to reduce costs. One of the strategies involves outsourcing the prevailing biopharmaceutical products like interferons, insulin, and growth hormones. These giants also partner with manufacturing companies in countries like China.

Biologics Manufacturing

The pharma majors continue to be substantial contributors to the growth of the contract manufacturing market, the biotechnology company's contribution will also increase. The demand for contract manufacturing will increase with more biotech companies coming up. This is because the outsourcing of manufacturing functions will allow the biotech firms to introduce their products in the market without the need to invest in building or upgrading their manufacturing units.

The key factor behind the growth of contract manufacturing services is an increase in the development of biologics. Biologics prefer to outsource the manufacturing part, as they focus more on drug development.

Outsourcing is preferred by the biopharma companies primarily to reduce costs and increase the focus on their core businesses. Additionally, the increased focus on the development of biologics and the use of biosimilars make outsourcing to CMOs the most practical and easy option.

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