How a CDMO Can Improve The Competitiveness of Your Product
After 1990, the pharmaceutical industry saw a shift mainly because of the increased R&D spending, changes in the health insurance system, and the competition from the new drugs. As a result of this shift, supply chain operations also witness an increase in their complexity.
The demand for smaller production scales and shorter fulfillment times has been increasing. As a domino effect, this situation caused changes in product prices, regulatory uncertainty around new product development, and some inefficient collaboration in the supply chain operations.
Current challenge
Pharmaceutical contract manufacturing companies continue to search for cost efficiencies due to these changes.
Simple manufacturing outsourcing services no longer meet the financial and environmental protection requirements of even French Pharmaceutical companies.
In the current environment where specialization of the pharmaceutical industry supply chain is increasing, Pharmaceutical contract manufacturing companies can undertake more functions such as:
- Research and Development as well as product refinements
- Deliver innovative technical services
- Help decrease costs and risks
- Enhance R&D efficiency
- Consider environmental issues
High-tech, value-added process development and industrial application represent the future development trend of the pharmaceutical industry.
Pharmaceutical companies everywhere, especially the pharmaceutical companies in France are trying to find ways to boost revenue by reducing costs.
Also, due to cost considerations, outsourcing to low-cost countries such as India, China, and Taiwan has become a popular option.
About 30% of the total cost in the pharmaceutical industry belongs solely to the cost of the goods sold or COGS and it includes:
- Raw and packaging materials, including freight charges
- Finished product storage and shipping costs
- Labor costs
- Overhead expenses
Increasing R&D costs in the development of new drugs have become a crucial part of the pharmaceutical industry.
However, utilizing limited resources and reducing the cost of the goods sold has become the key to business.
Why do you need a Contract Development and Manufacturing Organization (CMO/CDMO)?
The core competencies of a Contract Development and Manufacturing Company (CDMO) must be more comprehensive than that of an R&D company, whose value and unique selling points lie in invention and innovation.
A CDMO must have the ability to take a molecule and, irrespective of disease target, develop and progress it towards becoming a treatment.
The journey will be unique for each molecule, but the experience of other projects, and a wide range of cross-functional skills offered by a CDMO, are crucial for the successful development of a drug product.
Let’s see why you need a Contract Development and Manufacturing Company (CDMO) to improve the competitiveness of your product.
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To reduce the cost of goods (COGS)
Capital Expense
Pharmaceutical contract manufacturing companies invest a large number of finances in building and maintenance of their manufacturing operations.
Many production facilities of pharmaceutical companies are particularly built to manufacture certain products, that over time or after the product goes generic, decrease in volume.
As the volume decreases, CMO/CDMO can aid pharmaceutical companies by taking over the manufacturing permitting the large facilities with high fixed costs to be repurposed for other products.
As the manufacturing cost is converted into variable costs, this allows the pharmaceutical companies to invest more financially in their core development area.
Vendor Management Cost
GMP policies have ensured that the quality of raw material and the finished product remain a top priority.
CDMOs are professionals at vendor administration, new vendor sourcing, and material bargaining that otherwise could be time-consuming and costly for the pharmaceutical innovator.
Inventory Management Cost
Purchasing and storing expensive API and inactive substances can affect budgeting and forecasting. CDMOs are experienced in managing stocks.
Sourcing materials during the Covid-19 pandemic impact timelines and the drug supply to patients. Manufacturing needs can now be balanced because CDMOs manufacture many products for various pharmaceutical companies.
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To Control The Supply Risk
Long-term production planning is a challenging task. Many unpredictable natural disasters, diseases, political interests, and other issues are rapidly changing human life.
With the ongoing Covid-19 pandemic, market leaders are at risk of losing their market share or facing shortages with fines for failing to supply.
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Capacity For Flexible Needs
Due to products shift, manufacturers’ production line requirements continue to change.
During the 1980s and 1990s, market demand for products developed in the form of tablets or capsules was huge. As a result, Big Pharma expanded its solid dosage production lines.
With the development of new dosage forms (inhalation, skin absorption, liquids, etc.) and new dosage design (ER, CR), Big Pharma shifted its production, and this significantly reduced the volume of mass-produced solid dosage.
During the same time, many small Pharmaceutical contract manufacturing companies did not have manufacturing sites like Big Pharma, so they needed to turn to CDMOs for their manufacturing needs.
CDMOs had to improve to enhance the efficiency in the manufacturing of these products while keeping the cost low and providing better value to their customers.
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Rising Demand For Generics in Emerging Countries
Patents for innovative drugs continue to expire, this causes many pharmaceutical companies to explore the generic market and break the monopoly of pharmaceutical companies in France, Europe, and North America.
Outsourcing providers have a lot of process research, development, and large-scale production experience in the field of innovative manufacturing.
Pharmaceutical contract manufacturing companies in emerging countries are eager to cooperate with professional CDMO companies to break through pharmaceutical process barriers.
How CDMO can improve the competitiveness of your product
Since the reduction of the cost of goods sold is the key to increasing core competitiveness, finding a trusted CMO/CDMO partner can significantly improve the competitiveness of your products.
Relying on CMO/CDMO services has the following advantages:
- Global material vendor sourcing
- Robust material bargaining power
- Efficient sourcing team
- The flexible and efficient supply plan
- Strong collaboration with global logistics service providers
- Business Continuity Plan (BCP) to reduce supply risk
- Competitive production unit cost
- Efficient Inventory management
The competition in the pharmaceutical industry has become more intense. A Contract Development and Manufacturing Company (CDMO) can help increase the competitiveness of your product whether it is generic or brand.
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