Competing in the Global Contract Manufacturing Market

  • October 2013
  • -
  • Frost & Sullivan
  • -
  • 219 pages

What Pharmaceutical and Biotechnology Companies Want and How to Compete for their Business

The overall objective of this study was to provide contract manufacturing organizations (CMOs) a sound basis for formulating an effective strategy to compete in the market, including areas of opportunities and threats. As far as the market dynamics and CMO selection are concerned, overall satisfaction and likelihood of contract renewal are in the 40–50% range across all product types, indicating opportunity for CMO vendor switching in the future. Of all parameters used in CMO agreements and selection, “volume commitments” ranks as the most important while “capacity and site transfer” ranks second. Overall, pharmaceutical and biotechnology companies prefer to outsource to CMO companies which possess operations in the same region.

Research Objectives

Overall Objective:
To provide contract manufacturing organizations (CMOs) a sound basis for formulating an effective strategy to compete in the market, including areas of opportunities and threats. Specific objectives are as follows:
Objective 1: To calculate pharmaceutical and biotech companies’ current and future strategy and capacity needs.
Objective 2: To understand pharmaceutical and biotech companies’ outsourcing priorities and trends.
Objective 3: To understand pharmaceutical and biotech companies’ perceptions/attitudes toward CMOs.
Objective 4: To determine pharmaceutical and biotech companies’ CMO selection criteria.
Objective 5: To measure pharmaceutical and biotech companies’ price perceptions toward CMOs.
Objective 6: To understand the decision-making dynamics within pharmaceutical and biotech companies. Specifically, to identify key parties involved in outsourcing initiation, evaluation, recommendation, approval, and CMO performance evaluation.
Objective 7: To identify pharmaceutical and biotech companies’ business models.
Objective 8: To compare pharmaceutical and biotech companies’ regional capabilities.
Objective 9: To identify preferred areas related to informational marketing of CMO services (such as information sources, trade journals, and conferences).

Methodology

Methodology
A mixed methodology was utilized for this customer research, with the use of telephone interviews as the primary method (n=X) and a Web-based survey as a secondary measure (n=X).

Sample
A total of X global decision makers of the final drug form contract manufacturing (non-API) process within biotechnology (biotech) or pharmaceutical (pharma) companies were surveyed from November 2012 to January 2013.

Executive Summary

Market dynamics and CMO selection is as follows:
• Overall satisfaction and likelihood of contract renewal are in the X-X% range across all product types, indicating opportunity for CMO vendors switching in the future as the majority of respondents are dissatisfied and do not have intentions to renew.
• Of the top X CMOs, Baxter Biopharma Solutions, Boehringer Ingelheim, and Pfizer CentreSource are rated as having the highest degree of premium pricing which also correlates with these companies having the highest ranking for full service offerings or a broader number of services available.
• Overall, pharmaceutical and biotechnology companies prefer to outsource to CMO companies that possess operations in the same region (i.e. European biotech companies are more likely to select European CMOs).
• Overall, X% of respondents indicated they are likely to partner with a CMO that functions as an external consultant, specifically for manufacturing process consulting expertise.
• Of all parameters used in CMO agreements and selection, volume commitments, ranks as the most important criterion, and capacity and site transfer ranks as second.

Criteria for business that is most or least likely to be outsourced to CMO companies:
• The most prevalent service capabilities being outsourced to CMO companies are packaging, logistics, and clinical trial supply.
• The most prevalent service capability being planned for outsourcing to CMO companies is drug delivery technology services.
• The least likely service capability to be considered for outsourcing is research and development—likely due to concerns regarding competitive intelligence and an inability to select and hire key staff.
• Within the next 5 years, it is expected that the largest proportion of lot sizes for pre-clinical, clinical, and commercial phase manufacturing will remain the same. However, X% expect that commercial phase manufacturing will get larger.

Preferred CMO marketing exposure outlets are defined as follows:
• The most preferred methods for learning about CMO services are tradeshow and conference booths and word of mouth recommendations from colleagues.
• The top trade journal read is Pharmaceutical Outsourcing but other journals closely behind in ranking include Pharmaceutical Manufacturing, Contract Pharma, BioPharm International, and Pharmaceutical Technology.
• The top 2 trade shows attended or planned to be attended are BIO Annual Meeting and AAPS Annual Meeting.
oThe BIO Annual Meeting and Bio Europe ranked the highest for the virtual and emerging category.
• The top 2 e-newsletters read worldwide are Outsourcing Pharma and Fierce Biotech.
• Baxter Biopharma Solutions and Boehringer Ingelheim are the most preferred CMO companies, earning the largest share of preference (X%).
• No single CMO company was able to achieve the highest preference across regions:
oBaxter Biopharma Solutions is the most preferred CMO by US respondents.
oBaxter Biopharma Solutions and AAl Pharma Services are the most preferred CMOs by European respondents.
oDSM is the most preferred CMO from APAC respondents.

CMO prevalence by company and product type:
• Abbott is the most prevalently used company for basic oral solids due to its personnel background and expertise, indicating the high importance of a positive reputation.
• Baxter is the most prevalently used company for injectables due to their overall quality highlighting the importance of quality assurance for injectables which have the highest standards of quality.
• Abbott is the most prevalently used company for liquid dosage compounds, with the core reasons related to manufacturing capacity and personnel background and expertise.

CMO prevalence by company and product type (continued):
• Catalent is the most prevalently used company for advanced oral solids, with overall quality being the core reason.
• No single company dominates mammalian product manufacturing, indicating opportunity for manufacturers with interest in the space.
• Lonza is the most prevalently used company for microbials, with overall quality being the core reason.
• Abbott is the prevalently used company for dermatological formulations, with the core reason related to overall quality.
• GlaxoSmithKline is the most prevalently used company for inhalation therapies, with overall quality and personnel background/expertise being the core reasons.
• GlaxoSmithKline and Sanofi are the most prevalently used for nasal sprays.

Table Of Contents

Table of Contents

1. Research Objectives and Methodology
2. Executive Summary
3. An Overview of the Global Contract Manufacturing Market,
4. Now and in the Future
5. Impact of Attitudes and Perceptions on CMO Outsourcing
6. Preferred CMOs and Drivers of Selection
7. The Outsourcing and Manufacturing Markets: Assessing Growth Opportunities and Threats
8. Areas of Marketing Opportunities
9. Appendices
10. The Frost and Sullivan Story

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