Pharma Industry Analysis: Contract Manufacturing - From Cost to Counterfeiting

Pharma IQ

Pharma Industry Analysis: Contract Manufacturing Part 3


Outsourcing has been called “one of the greatest organisational and industry structure shifts of the century”. IQPC’s Pharma Industry Analysis has found that this is particularly relevant within pharma, where companies are outsourcing almost every stage of the value chain. This trend of course places a great importance on procurement – ensuring the contract manufacturing strategy is fixed with detailed and clear objectives; ensuring they contract with the right CRO or CMO to best fit the company’s requirements and on-going targets. A relationship with the contracting partners must be established and maintained and communication channels, especially in cases involving a language barrier, must be effectively established. This of course then becomes a large task in itself, and has led to a rise in the number of companies outsourcing the procurement process itself.


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One of the most popular stages pharma companies tend to outsource is research and development. The costs of R&D are continually increasing, and yet useful results returned from these processes are becoming rarer. Many companies have found that moving this part of the business overseas, taking advantage of the still emerging pharma markets, is an effective way to cut costs.

It is also relatively popular to outsource the supply chain operations to a third-party logistics (3PL) provider, allowing companies to retain competitive advantage and overcome the counterfeiting issue. The third party will have cold chain management specialists, so pharma companies do not have to train or hire in-house resources in order to ensure they will meet the requirements of the strict regulatory compliance and product control.

With procurement, production, R&D and the supply chain being outsourced, the question that then arises is, what is left to call pharma? What core competencies must be kept by a business in order to be acknowledged as part of the pharma industry? Unfortunately, it seems that it may yet still be too early to tell, and only future trends and patterns will determine the true answer.

To follow this debate further, to contribute to this discussion, or for detailed pharma industry analysis, please visit Pharma IQ.

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