Surveys Examine Outsourcing Trend

As more pharmaceutical manufacturing, quality, and development functions are outsourced, it has become difficult to get specifics on who is outsourcing to whom and why. Within the past few years, research firms have sprung up to specialize in this niche, and to shed light on trends. That’s Nice published results of its research in January 2016 (1), while Industry Standard Research (ISR) released findings early in 2016 (2,3) and in the last quarter of 2015. ISR uses a “Consumer’s Reports” type style to rank contract development and manufacturing organizations (CDMOs) and contract manufacturing organizations (CMOs) in various specialties, based on reported user experience. 

Some of the two firms’ research is available only to subscribers, but they shared other data with Pharmaceutical Technology. Here is a sampling of trends that they found.

Small-molecule manufacturing outsourced
In its 2016 small-molecule outsourcing survey, ISR found that, out of 199 respondents, most are outsourcing nearly all of their manufacturing to CMOs, according to market research director Kate Hammeke.

More than half of respondents (54%) reported using a preferred provider list, she says, and the greatest proportion of small-molecule projects were outsourced to preferred providers (36%). There was not much difference, however, between the percentage of projects outsourced to preferred providers versus tactically (33%) or strategically (30%).

For small molecules, outsourced activities ranked in order are as follows:

• API manufacturing

• Packaging and labeling

• Distribution

• Holding and storage

• Drug product manufacturing (finished dosage)

• Chemical synthesis

• Analytical testing and other lab services

• Cold chain management.

For biopharmaceutical manufacturers, 158 of which responded to ISR’s survey, nearly all report using CMOs to augment internally manufactured supply, Hammeke says. Roughly half (51%) report using a preferred provider list of CMOs, yet the distribution of projects to preferred providers (34%) was close to the percentage outsourced tactically (35%). Slightly fewer large-molecule projects were outsourced strategically (31%)

That’s Nice’s research into outsourcing to CDMOs found that 22% of new biological entity (NBE) manufacturers were outsourcing to CDMOs, 21% of small-molecule new chemical entity (NCE) manufacturers, 20% of generic pharmaceutical manufacturers, 20% of biosimilars manufacturers, and 18% of manufacturers of over-the-counter pharmaceuticals.  

Outsourcing budgets
According to That’s Nice’s research, 43% of biopharmaceutical and pharmaceutical manufacturing respondents said that their outsourcing budgets were $50 million to $100 million, with 28% saying that they outsourced more than $100 million to CDMOs.  Seventy-five percent of respondents expected their outsourcing budgets to increase.

Regarding timing for outsourcing, 63% of respondents said they outsource at Phase II and 54% at Phase III. Of emerging companies, 71% indicated that they outsourced to CDMOs at Phase I, with 70% of mid-sized companies outsourcing to CDMOs at Phase II.

The top three drivers, overall, for selecting a CDMO are quality, reliability, and innovation, according to That’s Nice research. Companies surveyed by That’s Nice showed a receptiveness to strategic partnerships.

Eighty-three percent said they felt that it was likely for a preferred provider to become a strategic partner, while 81% said it could be likely for tactical service providers to become preferred partners.  

References
1. That’s Nice, CDMO Buying Trends, online, accessed Feb. 8, 2016.  
2. ISR, Small Molecule API Contract Manufacturer Quality Benchmarking report, online, accessed Feb. 8. 2016.
3. ISR, Biologic API Contract Manufacturer Quality Benchmarketing report, online, accessed Feb. 8. 2016. 

Article DetailsPartnerships in Outsourcing Supplement 
Vol. 40, No. 13
Pages: 32–33

Citation:
When referring to this article, please cite it as A. Shanley, “Surveys Examine Outsourcing Trend," Pharmaceutical Technology Partnerships in Outsourcing Supplement 40 (13) 2016.