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Pharmaceutical Outsourcing Part 1: Contract Manufacturing Strategies

Offshoring is not the only option to drive productivity and efficiencie

Publication Date   June 2006
Publisher   Datamonitor
Product Type   Strategic Report
Pages   117
ISBN Number   not applicable
Product Code   DAT524
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Price £4,350.00

approximately: $8,728 | €5,461

Summary


Introduction

The dynamics of the contract manufacturing landscape in the pharmaceutical industry are changing. With the increasing globalization of the contract manufacturing market, particularly regarding on-patent biologics and APIs, companies need to position themselves to be able capture the cost savings Asian countries have to offer.

Highlights

While traditionally companies have opted to use contract manufacturing tactically to meet internal shortfalls in capacity or a lack of internal capability, many are overlooking the benefits that strategic contract manufacturing has to offer.The contract manufacturing market is becoming increasingly globalized, with the shift of services from the West to the East. With intellectual property protection and the business environment improving in India and China, these are expected to become popular locations for on-patent biologics and API manufacturing over the next few years.Contract manufacturing agreements often to fail to live up to expectations; however, there are steps that companies can take to minimize the risk of this, such as designing a suitable manufacturing strategy based on your company's requirements and effectively managing the relationship with a vendor.

Scope

  • Case-study based evaluation of best practice contract manufacturing strategies used by small and large pharma and biotech companies
  • In-depth country profiles examining the suitability of key Asian offshore contract manufacturing locations, including China, India, and Singapore
  • Recommendations on how companies can avoid the common pitfalls in contract manufacturing
  • Expert opinion from drug manufacturing executives from pharma and biotech companies

Reasons to Purchase

  • Identify the best way to tackle the common reasons behind contract manufacturing agreements failing to live up to the customer's expectations
  • Assess the commercial implications of the increasing globalization of the API contract manufacturing market
  • Understand how to optimize your manufacturing strategies to capture the maximum benefit

Content


  • Chapter 1 Overview Of Contract Manufacturing
    • Outsourcing provides an opportunity to boost productivity and efficiencies in an increasingly difficult environment
    • Overview of small molecule and biological manufacturing over the lifecycle of a drug
    • Manufacturing of chemical-based drugs
    • Manufacturing of biological drugs
    • Current and future trends in contract manufacturing
    • The globalization of the contract manufacturing market is shifting from the West to the East
    • Biotechnology evolution is driving growth of contract manufacturing market
    • Biogenerics are likely to have limited impact on contract manufacturing for the time being
    • Regulatory changes are influencing the contract manufacturing market
    • New regulations have lifted restrictions on outsourcing by Japanese companies
    • New EU legislation has introduced more stringent regulations governing manufacturing
    • Strategies that pharma and biotech companies should use to optimize the value of contract manufacturing
  • Chapter 2 Making The Decision To Outsource Manufacturing Functions Or Keep Them In-House
    • Introduction
    • There are three approaches pharma and biotech companies can use to manufacture their drugs
    • Pharma and biotech companies use contract manufacturing either tactically or strategically
    • Traditionally, companies have used contract manufacturing tactically
    • Lack of funds and expertise often drive small pharma and biotechs to use outsourcing tactically
    • Unexpected rises in demand have driven companies to outsource manufacturing
    • Strategic use of outsourcing can provide additional benefits
    • Key drivers and resistors of contract manufacturing from the customer's perspective
    • The balance of critical factors varies depending on the stage of manufacturing
    • Key drivers of contract manufacturing
    • Contract manufacturing can offer substantial cost savings and offset the high capital investment required for building in-house manufacturing capabilities
    • CMOs can provide manufacturing capacity quickly
    • Access to additional expertise and state-of-the-art technologies
    • Focus on core competencies
    • Flexibility is another advantage
    • Key resistors of contract manufacturing
    • Customers are required to invest resources in managing outsourcing
    • Reduced opportunity to develop internal manufacturing expertise
    • The loss of control of manufacturing is a common cited concern of customers
    • Concerns about the confidentiality of proprietary information
    • Contract manufacturing strategies - case study analysis
    • Manufacturing of biologics is more commonly outsourced than small molecules
    • Major pharma companies should streamline internal manufacturing capacity and supplement with strategic outsourcing to maximize efficiencies
    • Big Pharma companies still have substantial in-house manufacturing capacity
    • Established pharmas commonly use a mixture of in-house manufacturing and outsourcing
    • Large companies should use a smaller network of internal plants and more contract manufacturing
    • Focusing on core manufacturing capabilities is key
    • Some pharma and biotech companies offer contract manufacturing services themselves
    • Some small pharma and biotech companies also offer contract manufacturing services
    • Small pharma and biotech companies typically outsource clinical and commercial manufacturing
    • Case study: US pharmaceutical company operates a completely virtual model with respect to API manufacturing and process development
    • Some companies break the trend and manufacture clinical supplies in-house and outsource manufacturing post-Phase III only
  • Chapter 3 Process Of Selecting The Right Cmo
    • Introduction
    • Companies should use a screening process to identify a suitable outsourcing partner
    • A good, realistic set of selection criteria is required to evaluate potential suppliers
    • Key tangible indicators include cost and location
    • Cost considerations should be secondary to critical factors such as regulatory compliance and quality
    • The location gives rise to a number of factors companies need to consider
    • Key factors to consider about the location
    • Recommended approaches for nearshore and offshore locations
    • India - cost advantages and stronger IP protection makes it an attractive location for API manufacturing
    • China is too risky for the contract manufacturing of on-patent APIs
    • Singapore is a highly suitable location for contract manufacturing
    • South Korea is a relatively safe location to outsource API and biological manufacturing
    • Intangible factors require more resources to assess
    • Evaluating a CMO's reliability and trustworthiness is based on its experience and reputation
    • Synergies between the customer and vendor are integral to a win-win relationship
    • Complementary corporate cultures contributes to building a strong partnership
    • High priority for project is desirable but not always realistic
    • Contractual terms that are satisfactory to both parties need to be negotiated
    • Objectives and goals of the agreement need to be clear from the outset
    • The degree of customer control is dictated by the contract
    • Contract renewals at regular periods
    • Relationship management
  • Chapter 4 Technology Transfer And Managing The Relationship
    • Introduction
    • Technology transfer is simple in theory, but difficult in practice
    • At least one of the parties involved needs prior technology transfer experience
    • Technology transfer should be managed as a project
    • The right information in a suitable format needs to be given to the CMO
    • Strong, open communication is key
    • Effective management of a relationship with a CMO is key to successful contract manufacturing
    • The customer needs to devote resources to managing an outsourcing contract
    • The resource the customer dedicates will vary on the size and importance of the project
    • Strong, open communication is a fundamental element
    • There should be a degree of flexibility in managing the relationship
    • Both parties should view the agreement as a partnership
    • Achieving an effective partnership takes time and energy
    • Companies should make plans to manage disputes
    • Monitoring the relationship is a key tool for quality control
    • There has been a shift from a responsive to a preventive approach in monitoring
    • The customer should conduct periodic assessments
    • Case study: Wyeth uses metrics to improve CMO performance
    • Audits are the most efficient means of quality control
    • Audits are a regulatory necessity
    • Audits are an efficient means to evaluate a CMO's conformance
    • Once the partnership is established, it is usual to audit a CMO every one to five years
    • There are three common approaches used for routine audits
    • Audits can damage a customer's relationship with a vendor
    • Renegotiating and terminating contract manufacturing agreements can be tricky
    • Provisions for renegotiating or terminating a contract should be included in the contractual agreement
    • Renewal periods in long-term contracts can facilitate renegotiations
    • Customers need to pay a penalty or compensation to a CMO when an agreement is prematurely terminated
  • Appendix: Supporting Data
    • Glossary of terms
    • Methodology
    • References
    • Conferences attended
    • Publications and online articles
    • Useful online resources
    • Exchange rate
  • List of Tables
    • Table 1: The advantages of outsourcing can be considered as tangible and intangible benefits
    • Table 2: Serono's outsourcing strategy
    • Table 3: Examples of key parameters that companies should use in their preliminary assessment of potential vendors to identify a suitable one
    • Table 4: Examples of key parameters that companies should use in their detailed assessment of potential vendors to identify a suitable one
    • Table 5: Exchange rates*, 2004
  • List of Figures
    • Figure 1: Companies are increasingly using a 'networked pharma' operating model to improve productivity and drive efficiencies
    • Figure 2: Secondary core and non-core functions are suitable functions for pharma and biotech companies to outsource
    • Figure 3: There are three key stages of manufacturing during the lifecycle of a product
    • Figure 4: Key steps in manufacturing chemical-based drugs
    • Figure 5: Contract Pharma's 2006 Outsourcing survey showed that companies
    • Figure 6: Relative importance of cost, speed and quality with respect to different stages of manufacturing
    • Figure 7: Variable costs allow companies to adapt more easily to fluctuating demands in manufacturing
    • Figure 8: Process of identifying outsourcing partners
    • Figure 9: Comparative model of running costs of a 70,000 square foot, independent production facility across eight major countries for manufacturing compared with the US
    • Figure 10: Type of manufacturing that is most suitable for key contract manufacturing locations globally
    • Figure 11: Key indicators for contract manufacturing in India
    • Figure 12: Key indicators for contract manufacturing in China
    • Figure 13: Key indicators for contract manufacturing in Singapore
    • Figure 14: Key indicators for contract manufacturing in South Korea