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Mar 1, 2011 (Vol. 31, No. 5)

Demand for High-Tech Outsourcing Growing

Technically Complex Areas Becoming the Latest Frontier for Contract Manufacturing Organizations

  • Strategic Planning

    Hiring a CMO can provide a strategic advantage, particularly if the task requires specialized expertise, equipment, and infrastructure maintained by the contractor. For small companies, outsourcing the manufacture of biologics may be the only way to get their drugs to market. In some areas adoption of the use of biodisposables has expanded CMOs’ capabilities to provide advantages and options not available in-house. Therefore, drug manufacturers are tending to view contract manufacturing and outsourced services more as an asset to drive strategic decisions than as simply a way to save money.

    The rise of outsourcing has resulted in many companies establishing centralized contracting groups to handle the complex and time-consuming business of selecting and managing partners. This allows a greater consistency in evaluating the progress on projects and reduces start-up times. As the use of outsourcing partners becomes more embedded into the strategy of companies, effective management of the contract by pharmaceutical companies will become a more critical issue.

    Companies are increasingly turning to outsourcing to control costs and to manage their internal staff and resources. Although economic conditions today are easing, organizations continue to evaluate their core competencies and decide how they will direct their R&D and manufacturing resources.

    The outsourcing of processes enables focus on the company’s skill base and its core competencies, and yields economic benefits. As CMOs offer expertise, tools, and capacity that biopharma companies don’t have in-house—or they elect to outsource as part of their strategic planning—it will increasingly become less about direct cost savings and more about doing things better and more competitively.

  • Incentives that point to more technical outsourcing include:

    • Need for access to enabling technology (e.g., expression systems, downstream processing
    • Lack of internal expertise (available staff or specialized expertise)
    • Need to control budgets and funding
    • Increased capacity needs
    • Response to competitive pressures
    • Urgency: time-to-market (smaller companies)

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