Ahead of CPHI North America held at the Pennsylvania Convention Centre (May 7-9th), experts forewarn that US based domestic CDMOs — particularly those in the mid to small size range — need to invest throughout 2024 if they are to maximise the benefits from the significant uptick in contract services funding predicted for 2025.
Improving supply chain resilience, exploring pilot scale manufacturing of new technologies, and ‘friend shoring’ were also identified as key trends in 2024.
Focusing on operational efficiency
“I see 2024 as still a holding pattern year, where funding is gradually returning to biotech, and this is beginning to filter through again to the outsourcing community. However, it’s not just a case of waiting for the market to return… if US-based smaller and medium sized CROs and CDMOs are to benefit from the likely resurgence in 2025, they need to be focusing now on operational efficiencies and commercial effectiveness.”
“This means investing in manufacturing process improvements, like continuous and titer reductions, as well as other areas of the business that could bring overall efficiencies, from enhancing quality management to areas like AI to enhance/accelerate process development and quality trend analysis. Any area that drives more efficiency in CDMO operations, even streamlining and enhancing effectiveness in new business development using AI enabled tools.” Commented CPHI expert, Brian Scanlan, Operating Partner - Life Science Edgewater Capital Partners.
Utilising AI
One application that will be discussed during the event is using generative AI to analyse requirements for pharmaceutical drug manufacturers and distributors to comply with the impending Drug Supply Chain Security Act, which will come into effect this November (2024).
The advice comes at a timely moment, as rumours swirl that the larger Indian CRO/CDMOs appear to be the most immediate beneficiaries of geopolitical outsourcing – i.e. a move away from China – rather than domestic and near shored options.
Bikash Chatterjee, President and Chief Science Officer at Pharmatech Associates - A USP Company who will be chairing a session at the event on ‘restoring opportunities versus realties’, added: “What you are seeing in the USA – and in some ways it’s not a new trend – is a much more considered approach to sourcing. Companies are looking to ensure they have alternative supply and potentially also in different geographic locations from their primary options…. What’s driving this? Well, we have seen a white paper come out from HHS earlier this month on preventing drug shortages and in the next few years we could see companies even scored on their supply chain resilience. So we might be entering a period when companies are willing to pay more for extra resilience in their networks.”
Chatterjee suggests that the next six months will see many companies looking to prepare for 2025, with much more detailed planning for supply side resilience and potentially a greater short-term focus on ‘near’ or ‘friend shoring’ options – as opposed to domestic US sites – as these countries are better set, at present, to pick up resources and build ingredients and starting materials networks.
