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.
Apr 02, 2008

The market for biopharmaceutical contract manufacturing services continued to expand in 2007. For the year 2007, HighTech Business Decisions estimates year-to-year market growth of 14%–15%. Fueling the growth in the biopharmaceutical contract manufacturing market is the growth in biologics throughout the product pipeline, and the increased use of contract manufacturers by the pharmacuetical and biotechnology companies. As these pharmaceutical and biotechnology companies pursue their outsourcing strategies, the choice of a contractor becomes a critical and strategic decision.

In the latest report by HighTech Business Decisions, Biopharmaceutical Contract Manufacturing: Quality, Capacities and Emerging Technologies, 41 biomanufacturing directors at pharmaceutical and biotechnology companies worldwide were surveyed regarding contractor selection. All respondents in the study said outsourcing is part of their production strategy. The directors discussed their criteria and the essential characteristics they look for when choosing a contractor.

Contractor Selection Criteria

In the study, the directors ranked the four most important characteristics that they seek in a contractor. Overall, the key criteria used to choose a contractor are a) the contract manufacturer's experience and reputation, b) price, c) customer service, and d) quality. These characteristics are a composite of all criteria mentioned, weighted by the directors' ranking of each criterion. While the macro view of the criteria for choosing a contractor provides a good overall view of the requirements needed by a contactor to win business, a deeper understanding of the specific needs of the market can be gained when the criteria are segmented by organization size. Therefore, for this analysis, the criteria for choosing a contractor are grouped by the size of the firm. We define a small firm as a biotechnology company with no manufacturing sites and a large firm as a biotechnology or pharmaceutical company with multiple manufacturing sites, that usually operates multiple international sites.


Figure 1. In this study, the selection criteria were ranked as high, medium, or low based on their importance. For example, experience and reputation of a contractor are the most important characteristics sought by smaller firms.
For smaller firms, the most important characteristic sought in a contractor is its experience and reputation (Figure 1). Experience includes both technical and process experience, as well as experience with similar products and projects. The contractor's experience and reputation is most important because it proves to the directors that the contractor has the quality, technical, and production capabilities in place to execute the project. Not only is the experience of the contractor company as a whole an important criterion, but also the experience of the contractor's staff is equally important. The staff's experience is critical to be able to provide the assistance and depth of knowledge needed to keep the project running smoothly. Some of the manufacturing directors surveyed pointed out the importance of experienced staff in dealing with the regulatory paperwork in particular.

Finding a contractor who has the requisite experience is especially important for small firms, because most of these companies are working with new products. With so many unknowns at the beginning of a project, from process development to scale-up and regulatory requirements, it is important to have a contractor who has experience with similar projects. A few of the manufacturing directors mentioned that they have encountered contractors who claim to have certain capabilities, only to discover later that the contractor lacked the capabilities or misunderstood the complete requirements needed for the project. One director cited a project delay caused by inexperienced staff dealing with regulatory paperwork issues.

Below are a few comments made by the manufacturing directors of pharmaceutial/biotechnology companies whom we interviewed.

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