MUMBAI: The global pharmaceutical industry is seeing rapid advances in
processes and technologies and mounting cost pressures are forcing
companies to look at alternate means such as outsourcing to achieve
greater efficiency and productivity.
In this highly competitive industry, it is vital that companies ensure the quick commercialization of new drugs by accelerating the time to market for their products.
As a result, pharmaceutical companies are increasingly looking to retain
their internal focus on research and development (R&D) and marketing while
outsourcing their manufacturing processes, thus fueling a growing demand
for the manufacturing capacities of contract manufacturing organizations
(CMOs).
New analysis from Frost & Sullivan, Global Pharmaceutical Contract Manufacturing Markets, reveals that revenues in this industry totalled $12.38 billion in 2004 and can reach $25.70 billion in 2011.
CMOs are revamping their business model and providing more
value-added services such as development, logistics, packaging, and
marketing. By opting for such services, pharmaceutical companies are able
to reduce the number of supply chain participants and make optimum use of
their internal resources.
"CMOs have been building and acquiring state-of-the-art facilities that
rival those of pharmaceutical companies and are constantly upgrading them
to enable novel manufacturing processes," explains Frost & Sullivan
Research Analyst Barath Shankar S. "The anticipated influx of
biopharmaceuticals is likely to create a huge demand for specialized
manufacturing technologies that are not available with pharmaceutical and
biopharmaceutical companies."
However, the constant changes in regulatory requirements mean that
contract manufacturers are at a high degree of risk when investing in
manufacturing plants and technologies.
CMOs will need to develop risk-sharing strategic partnerships, instead of engaging in providing one-off contract services. This would result in a shift to the "virtual pharma" model with pharmaceutical and biopharmaceutical companies concentrating primarily on R&D and marketing, thus freeing up internal resources and turning more competitive.
"Asian countries, especially India and China, are continuing to draw a
significant share of outsourced work from developed nations and the region
is expected to show strong growth owing to a large manufacturing capacity
and competitive cost proposition," says Shankar. "While solid
dosage forms continue to lead revenue contribution, liquid dosage forms
are likely to lose significant market share to injectables that mainly
include sterile products and biopharmaceuticals."