Biopharmaceutical Contract Manufacturing: Contractor Selection by Market Segment - When a biopharmaceutical company pursues an outsourcing strategy, the choice of a contractor is a critical and strate

ADVERTISEMENT

Biopharmaceutical Contract Manufacturing: Contractor Selection by Market Segment
When a biopharmaceutical company pursues an outsourcing strategy, the choice of a contractor is a critical and strategic decision.


BioPharm International Supplements


How Important is Price?

As noted earlier, there are slight differences between large and small firms in the criteria used to choose a contactor. For small firms, experience and reputation are the most important, whereas large firms are equally concerned about quality and quality systems. Second, price is slightly more important to a large firm. For both market segments, price sensitivity becomes more important once the top-ranked criteria are met. In addition, price becomes more important once the product reaches commercial production with larger volumes and defined processes. Further analysis shows that price is a higher priority for pharmaceutical and biotechnology companies with multiple biomanufacturing sites. These firms have more in-house skills available to them, and therefore, they place a lower value on the capabilities offered by the contactor. In the final analysis, the importance of price may be a matter of simple economics. Pharmaceutical and biotechnology companies with multiple sites have greater bargaining power against the contractors because they have the option to keep the production in-house.

Other Criteria

Other essential characteristics sought by the directors include offering turnkey services, production schedule availability, capacity, intellectual property protection, and proximity. While a vast majority of the directors consider it an advantage to be near their contract manufacturers, it is not a major concern for them when choosing a contractor. In general, if all other characteristics are equal between two contractor, then the proximity of the contractor may be a deciding factor. In our study, the directors discussed the possibility of outsourcing their biologics production to other world areas, including outsourcing to Asia.

Changes in Attitude


Figure 3. As compared to 53% in 2005, 80% of the directors surveyed in 2007 stated that they would consider using a contract manufacturer located in Asia. The results show with 95% confidence that a change in attitude toward outsourcing to other world areas has occurred over the last two years.
The industry's attitude toward outsourcing biologics production to contractors located in other world areas, including Asia, is changing. In 2005, when the directors were asked if they would consider outsourcing to contractors located in other world areas, out of 49 responses, over half the respondents stated that they would consider it as an option. In our latest study, 80% of the directors stated that they would consider using a contract manufacturer located in Asia. In analyzing these responses, taking into account sampling error, the results show with 95% confidence that a change in attitude toward outsourcing to other world areas has occurred over the last two years. This change is significant, but subtle; the manufacturing directors will not dismiss a contractor from consideration simply because it is located in a different world area (Figure 3).


Figure 4. Potential benefits cited in the survey that motivate the directors to use an Asian contractor.
One of the primary reasons driving this change in attitude is the expected cost savings from using a contractor located in a low-cost geographic area. Seventy-one percent of the directors who see an advantage in outsourcing to a contractor in Asia cite cost savings as the primary benefit. Cost savings, however, is not the only benefit that the directors see in working with a contract manufacturer in Asia. Other benefits mentioned are shorter timelines, availability of capacity, and access to local markets. An overview of these results is shown in Figure 4.

Following are comments provided by the directors we interviewed on the advantages of working with a contract manufacturer in Asia:


blog comments powered by Disqus

ADVERTISEMENT

ADVERTISEMENT

AbbVie/Shire Deal Officially Off
October 20, 2014
Amgen Sues Sanofi and Regeneron over Patent for mAb Targeting PCSK9
October 20, 2014
EMA Works to Speed Up Ebola Treatment
October 20, 2014
Lilly to Close Manufacturing Facility in Puerto Rico
October 17, 2014
BioReliance Introduces New Predictive Assays
October 17, 2014
Author Guidelines
Source: BioPharm International Supplements,
Click here