Next Steps in Outsourcing Relationships

Published on: 
BioPharm International, BioPharm International-11-01-2015, Volume 28, Issue 11
Pages: 6

Biopharma and contract providers must tread carefully amid changing market dynamics.

In an industry where change is the norm, biopharma companies must learn to successfully navigate the financial, business, regulatory, and scientific ups and downs of the market. In the fourth part of the 2015 CPhI Annual Industry Report, Looking beyond the Global Pharma Horizon (1), industry representatives commented on dynamics in biologics development and the contract services market, and how challenges and strategic approaches in the two sectors may direct the industry moving forward.

Increased funding in the emerging bio/pharma sector, changing customer attitudes and business practices, regulations, a global supply chain, niche technology offerings, and untapped markets will shape the contract services market, writes Gil Roth, president of the Pharma and Biopharma Outsourcing Association. Most critical, however, is the ways in which contract manufacturing organizations (CMOs) and contract development and manufacturing organizations (CDMOs) learn from the industry’s past.

In “CMO/CDMO Challenges and Opportunities,” Roth notes that recent acquisitions in the contract services market were motivated by the desire to integrate service offerings, or acquire niche technologies to attract earlier phase clients with the goal of retaining that business through commercial manufacturing. At the same time, the improving economy has enabled more capital investment in facilities at biomanufacturing firms, with a resulting shift of some operations in house. In addition, a focus on orphan drugs with smaller batch sizes may shift technology requirements and outsourcing relationships.

Hedley Rees, managing consultant at PharmaFlow, highlights differences in the manufacture and supply of large-molecule biologic products versus small-molecule drugs-potential pitfalls in the drug development process-in “What Does the Future Hold for Biopharmaceutical Outsourcing?” 

Rees cites the effects of even minor changes in the production process, challenges in sourcing raw materials, analytical methods to detect changes during manufacture, product sensitivity to environmental factors, and the current model of pharmaceutical distribution as potential opportunities for failure. In addition, advanced therapy medicinal products-gene therapies, somatic cell therapies, and tissue-engineered products-will demand closer ties between the manufacturer and healthcare system versus the one-size-fits-all batch processing traditionally used with current blockbuster therapies.

In the present fee-for-service outsourcing model, projects are directed by a contract; changes must be negotiated, with both cost and time implications. The risk for the contract service provider is low, versus a risk- and-reward-sharing model. 

“The banana skin waiting for the unsuspecting pharmaco is that this new era of biologics needs a different approach to outsourcing,” Rees warns. 


Contractors can offer technical expertise that biologics companies need; however, some biopharma companies are considering more in-house operations. A move away from outsourced operations may drive the contract service market to think more about a risk-sharing model.

Rees identifies factors that will drive discussions between drug owners and contractors including the use of a quality-by-design approach; supply chain reporting and control; patenting of process knowledge; the cost in of commercialization; and the availability of qualified personnel.

For both parties, a careful eye on market changes and development needs, as well as some strategic hand-holding, may avert some nasty slips or falls. 

1. CPhI, Annual Report 2015, Part IV, Looking beyond the Global Pharma Horizon, accessed Nov. 2, 2015.

Article DetailsBioPharm International
Vol. 28, No. 11
Page: 6

Citation: When referring to this article, please cite it as R. Peters, “Next Steps in Outsourcing Relationships,” BioPharm International 28 (11) 2015.