Global Pharmaceutical Contract Manufacturing Soars

Andrea Charles

Pharmaceutical companies are looking at global sourcing to improve their profits. North America is currently leading the overall contract manufacturing market. However, according to a recent report by RNCOS “Global Contract Manufacturing Market Analysis” , the most growth in this market has been seen in Asia in recent years. Popular pharmaceutical contract manufacturing destinations include India, China and Singapore, with Vietnam, South Korea and Bangladesh also emerging as candidates.

“The low cost manufacturing services are the major advantage that these Contract Manufacturing Organisations (CMOs) in Asia have gained over other regions,” said RNCOS.

Outside of Asia other emerging CMO destinations include Brazil, Ukraine and Mexico. This fast growing market is predicted to see double digit growth and is expected to grow at a CAGR of around 12% during 2010-2012”, said RNCOS. This is mainly due to rising cost pressures on pharmaceutical companies, as Government cut their healthcare expenditures in the current economic climate. 

The RNCOS report said: “Pharmaceutical companies are increasingly adopting the concept of ‘virtual pharma’, wherein they retain the marketing rights while outsourcing all pharma manufacturing activities and related processes. This allows companies to deliver goods at a faster rate than an internal plant would allow.”

Despite its benefits global pharmaceutical manufacturing does come with added complexity. Companies need to be prepared and implement a risk management strategy before signing on the dotted line.

Earl Sullivan, Chief Executive Officer, Landela Pharmaceutical, Inc, which he describes as semi-virtual pharma, shared some of his experiences working with international CMOs with Pharma IQ. He stressed the importance of a site visit:  “Look at the operations, the people the process. We are very observant of how they conduct themselves, of how the employees who are not of the tour conduct themselves, and just want to gain a sense of what their general culture of compliance is.”

When considering global contract manufacturing, pharmaceutical companies also need to be aware of the political situation in the region, the strength of unions, cultural obligations and travel costs.

“There are cultural differences that can pose a problem when meeting with FDA and CGMP requirements, as an example in China documentation of the process is not always present. If a number is recorded it is often assumed to be correct,” said Sullivan.  

Another challenge which still represents itself in a 24/7 world, is time zones. Sullivan said: “Time zone issues can be difficult, as you are typically talking at the beginning or end of a work day and that can pose problems for productivity.” He suggested setting up weekly meetings, using Skype and various online tools to improve collaboration and reduce feelings of disconnect. 

Looking at the ownership structure of CMOs when global sourcing is also vital. “This is really important in China, and in some of the Asian countries. Making sure that the ownership structure is stable, that the financial structure of the company is stable. In some cases you are not able to get that information very accurately, but you want to make sure you understand, who is controlling the facility,” said Sullivan.   

Pharmaceutical companies have the hard task of deciding whether manufacturing services should be sourced on a local, regionally or global level. The advantages of the global pharmaceutical contract manufacturing can be great such as, reduced costs and improved productivity, but the most important factor in choosing a CMO candidate must remain the product. Drug products will require different skills sets, machinery and transportation. What may first appear to be the cheapest CMO could result in, expensive transportation and supply chain costs in the long run.