How Outsourcing is Changing the Pharmaceutical Industry

By  //  January 13, 2022

The past years have shown dynamic changes in the pharmaceutical industry. With technology pushing the boundaries of collaborative work, the role of contract research organizations (CROs) and contract manufacturing organizations (CMOs) is becoming more crucial.

Outsourcing has been one of the straightforward solutions of pharmaceutical companies to improve their operational efficiencies and reduce the cost of routine processes while still being able to increase their expertise over their growing scope of geographical presence. 

Given the increasing demand to develop and manufacture at a shorter turnaround time, it may be perhaps a good idea to look at how outsourcing is changing the pharmaceutical industry today.

 New Motivations For Outsourcing

One of the most significant factors why companies outsource is to reduce their operational costs. The R&D journey from research to the final drug approval is inherently complex, lengthy, and costly. With the increasing demand for more targeted, highly potent drugs manufactured and distributed at a quicker time-to-market, companies are now looking into streamlining their supply chain processes by outsourcing. 

Hence, the birth of contract development and manufacturing organizations (CDMOs), which offer end-to-end services to pharmaceutical companies.  The consolidation of services in this industry gives way to level up the quality of service and patient care, such as more accessible specialized medicine like what offers their clients. 

 Consolidation of Services

As mentioned above, the disruption in the pharmaceutical industry happened with more players offering consolidated solutions.  Partnering with CDMOs guarantees pharmaceutical companies that their product pipelines don’t get dry. 

Imagine working with only a handful of entities who will work with your company from R&D to the manufacturing process.  Not only will this strategy shorten your time-to-market, but it will also be an excellent way to scale up your operations as you gain access to more experts and specialists from different time zones who can work with you; thus, making it seem like you’re operational 24/7.

■ Broader Portfolio of Services

With more pharmaceutical companies outsourcing, it is observed how many of these firms are offering broader sets of services and products. In fact, for over a couple of decades, there has been a growing trend in boosting the amount of discovery, development, and manufacturing by outsourcing.  

Access to CDMOs allows businesses to manufacture more personalized drugs, tap into clinical and manufacturing of active pharmaceutical ingredient (API) and drug products, in addition to having the capacity to offer a wide range of ancillary services covering chemistry, manufacturing, controls (CMC), distribution, clinical logistics, and regulatory support, amongst others.

■ ‘True Partnership’ 

Another thing pharmaceutical industry players should recognize is the value of collaborative partnerships.  Recent experiences show proof of how leveraging ‘true partnerships’ can help shape a company’s future. 

Industry players of various sizes are now more selective with the vendors they sign on. Compared to the earlier business models where partnerships with hundreds of CMOs and CROs are normal, present market players prefer quality, long-term partnerships with only a handful of CROs and less than 50 CMOs or just a couple of CDMOs.  This new type of collaborative model aims to increase efficiency in the value chain while reducing the cost of implementation. 

■ Bundled Solutions  

Current situations in the market require phasing out the old business models in order to scale.  It used to be that pharmaceutical brands were only known for their products and nothing else. In the current landscape, studies show that eight in ten vendors in this niche offer complementary services along with their products. This is one of the advantages pharma companies enjoy because of outsourcing. 

With more resources available, pharma companies can now take advantage of riding healthcare marketing trends like patient education thanks to CDMOs who can take care of their supply chain processes and other ancillary services such as pre-clinical trials, risk management, and regulatory support are now offered to pharma companies.

Final Words

Harnessing the power of science through outsourcing can give many industry players, including small brands, the opportunity to offer a broader range of services and products.  Outsourcing is a solution that can address the gaps in-house teams for pharmaceutical businesses can’t resolve due to lack of workforce, limited technological capacity, or higher operational expenses.  

Remaining competitive in the pharmaceutical industry means continuous research, development, and manufacturing of drugs in the quickest possible time without sacrificing quality and potency.

Gone are the days when outsourcing was seen as a backup plan.  With the growing pressure to keep up with global demands for high potency drug manufacturing or more specialized manufacturing, businesses fared better financially when they tap outsourcing companies.