Is Big Pharma still actively engaging in outsourcing?

Posted: 19 February 2014 |

Allen L. Burgenson, Manager – Regulatory Affairs, Lonza Walkersville, Inc answers the question “From a vendor perspective, do you conclude that Big Pharma is still actively engaging in outsourcing of the activities that you have expertise in?”

Yes, absolutely. It has been estimated that the cost of bringing a new product to market has grown from USD 300 million in 1987 to exceed USD 1.3 billion today. These rising development costs have been attributed to the cost of performing clinical trials, regulatory compliance, manufacturing operations and the drug candidates that enter clinical trials never reach final approval which must be rolled into the development cost of successful pharmaceutical candidates. To offset the increasing development costs, pharmaceutical companies have been increasingly outsourcing these activities for the last two decades, and will continue to do so for the foreseeable future. These outsourcing activities include using Contract Manufacturing Organisations (CMOs) to manufacture their products in a cGMP-compliant manner.

CMOs are used by Pharma to address industry capacity and experience. Mergers have caused the number of large pharmaceutical companies to dwindle. Loss of patent protection and revenue for Pharma’s best-selling products, as well as reductions in R&D spending have caused these companies to rethink the development process, and look outside of their current structure in order to bring new products to market. This strategy may mean acquisition of a smaller company to obtain their development pipelines. Many of these potential acquisitions are either virtual or smaller companies that may not have the facilities or experience to produce a cGMP-compliant drug candidate for clinical trial use. These smaller companies look to outside firms that have the facilities and expertise to help develop their products, and usher them through the clinical trial phases, ultimately to licensure with the regulatory authorities. This is where the experienced and capable CMO comes in.

Companies may also wish to outsource the production of their Active Pharmaceutical Ingredients to a CMO, leaving the final formulation and fill/finish operations of their approved products to their in-house facility, thus maximising their production capacity.

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