DCAT Week '17: Pharma Outsourcing: On the Rise or Not?

By Patricia Van Arnum - DCAT Editorial Director

February 8, 2017

Are pharmaceutical companies outsourcing more of their development and manufacturing activities, and what can be expected in 2017 and beyond? The DCAT Week '17 education program, Pharma Outsourcing: The Numbers, Trends and Partnership Strategies, examines the latest, including outsourcing levels, capacity utilization, and strategies for supplier differentiation for both drug substances and drug products.

Outsourcing: up or down
The level of outsourcing by pharmaceutical companies is a fundamental issue for the pharmaceutical companies themselves and for contract and development and manufacturing organizations (CDMOs), contract manufacturing organizations (CMOs), and other suppliers supporting biopharmaceutical and pharmaceutical development and production. Jim Miller, president of PharmSource, a GlobalData company and well-respected industry expert on pharmaceutical outsourcing, will address these issues at the DCAT Week ’17 education program, Pharma Outsourcing: The Numbers, Trends and Partnership Strategies. His presentation will examine trends in outsourcing overall and in key segments: active pharmaceutical ingredients (small molecule and biologics) and drug products and the factors impacting outsourcing activity. The presentation will also evaluate the impact of mergers and acquisitions of CDMOs/CMOsin on the market for contract services for development and manufacturing and on the business models for CDMOs and CMOs, including strategies for supplier differentiation.

In China, for China
The DCAT Week ’17 education program, Pharma Outsourcing: The Numbers, Trends and Partnership Strategies, will also examine an important issue: the role of China in the outsourcing strategies of pharmaceutical companies. Emerging markets were once seen only as a source for low-cost production, and outsourcing strategies were developed to leverage that cost advantage. As emerging markets become increasingly valuable as pharmaceutical end markets for multinational companies, however, a new paradigm is developing as pharmaceutical companies seek to partner for manufacturing to gain end-market geographic access.

This model is particularly important for China, which is the second largest pharmaceutical market behind the United States, according to a recent analysis by QuintilesIMS. In 2016, China’s pharmaceutical market was valued at nearly $117 billion, according to the QuintilesIMS report and is projected to reach approximately between $140 billion and $170 billion by 2021. On an overall basis, the global pharmaceutical market is projected to reach $1.5 trillion by 2021 and increase at a 4% to 7% compound annual growth rate (CAGR) during the next five years (through 2021). The United States is projected to account for 53% of forecasted growth over the next five years (through 2021) while China will continue as the second largest market, a position it has held since 2012, contributing 12% of that growth, according to the QuintilesIMS study.

At the DCAT Week ’17 education program, Bin Wang, PhD, director, strategic marketing, Boehringer Ingelheim Biopharmaceuticals GmbH, will provide first-hand knowledge of the key issues involved in doing business in China and the potential advantages of domestic production in the strategies of sponsor companies for external development and manufacturing. Dr. Wang works in Boehringer Ingelheim Biopharmaceuticals Contract Manufacturing Business Unit, where he is responsible for various marketing and business intelligence projects with a focus on China. Previously, Dr. Wang worked in Shanghai as part of the company's core leadership team and made important contributions in establishing the Boehringer Ingelheim Biopharmaceuticals China organization and operations. 

Technology-led outsourcing
Pharmaceutical companies’ decision to outsource is dependent on various factors, including capacity and technology-based needs. As new manufacturing technologies evolve, pharmaceutical companies face a fundamental question: should we build in-house capabilities, partner with a third-party provider, of pursue a combination of both strategies. If external partners are used, how may project scope, requirements, and expectations evolve in using this new technology? In a co-presentation, Shire and Patheon will address those issues as it relates to continuous manufacturing for solid-dosage products.

Technology is an important differentiator among CDMOs and CMOs, but what is an optimal business model for niche, specialized technologies? Should such technology be offered in a full-service CDMO/CMO or is it better to provide through a specialist company? What are the factors to decide if the technology is sufficiently differentiated and if it can reach critical mass in serving various customer bases? Offering the perspective of one company addressing those issues is Livius Cotarca, PhD, chief scientific officer, Synchro Morph Solutions SA, a Swiss start-up company developing innovative business models in pharmaceutical solid-state characterization and  outsourcing.

For further information, including how to register for this program, may be found here.