The contract services and outsourcing industry: a small molecule CDMO perspective

The pharmaceutical outsourcing industry has seen major growth during the past decade; but, with an ever-changing regulatory system and pressure to invest in more advanced technologies, it faces more challenges than ever before

Both CDMOs and CMOs are now looking to make strategic investments to vastly expand the services they can offer clients. For example, the pharma industry is increasingly looking for, and the contract services sector is moving towards, providing a one-stop-shop for both APIs and finished forms in development and commercialisation. The major advantage for a pharma company is that being able to source both drug substance and product development from a single vendor will minimise the cost and complexity of the overall product, potentially reducing the time to market. From the CDMO perspective, being well equipped to help maximise the value of the complete drug package allows for more strategic partnerships with shared objectives and forward thinking development plans that take predicted volumes and manufacturing requirements into account from an early stage.

Supply chain integration

Another notable trend is an increasing reliance on contract services with, at the same time, a reduction in the overall number of providers. As a result, CDMOs not only need to be capable of developing the more complex compounds now coming through the pipeline — but are also facing pressures to integrate as much of the supply chain across all development stages as possible. With this in mind, we are seeing a number of medium and large CDMOs making acquisitions to achieve both scope and specialist technologies.

Early stage-focused companies may look to merge with late-stage and commercial providers, whereas equal sized medium-tier firms may opt to merge while larger companies acquire smaller ones. Some CDMOs are investing in building their own special facilities ... and this comes with the advantage of bringing the latest and most advanced technologies. Of course, this doesn’t take into account the spate of pharma companies spinning out their manufacturing assets into CDMOs. Basically, in response to the market need for a one-stop-shop and strategic partnerships, consolidation will play a big part in the future of outsourcing as mergers and acquisitions will lead to a more efficient industry.

Biotech’s back

Another notable trend is that CDMOs without a global footprint are increasingly looking for ways to secure at least part of the manufacturing base in more than one of the industry’s major markets. Recently, there has been a resurgence in the small biotech sector, which is more or less entirely dependent on the contract services industry for development. The biotech hotspots such as Boston, San Francisco and San Diego are growing; but, interestingly, newer hotspots are emerging rapidly in China and Europe. This rise in the number or of virtual companies is feeding into another trend — the aforementioned integrated CDMO. Essentially, it’s much easier to work with and manage just one outsourced provider as if it were an integral part of the virtual team. This reinforces the need for the integrated CDMOs to have sites located in multiple major markets to be close to the virtual teams.

In response to the growing Chinese biotech sector and the introduction of the new Market Authorisation Holder (MAH) pilot programme, which enables biotechs to outsource their development work to a registered CDMO in the country, we will see the emergence of a larger contract services sector within China. Overall, biotech and pharmaceutical companies are working on more and more novel drug modalities; hence, demands to outsource drug development and clinical trial supplies related to these novel drug modalities — such as oligonucleotides and antibody drug conjugates — will continue to increase.

Ramping up development

Finally, industry wide, coming from both pharma and CDMOs, there is a growing effort to make API manufacturing processes more efficient and commercial-ready earlier in development, with new technologies such as high-throughput route scouting, biocatalysis and flow chemistry all being utilised and explored much earlier in the development cycle. The more advanced one-stop-shop CDMOs will be better equipped to realise these efficiencies.

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