How Contract Manufacturing in Pharmaceutical Industries Scaling Up Company’s Profit
A Contract Manufacturing Organization (CMO) is a company that manufactures a pre-formulated drug, whereas a Contract Development and Manufacturing Organization (CDMO) is a company that handles everything from pre-formulation and formulation development to clinical trials and production. The pharmaceutical manufacturing process is demanding. Research and testing take years and manufacturing safe and stable drugs is an enormously costly venture.
In the current scenario, many businesses have sought to outsource contract manufacturing (CM) to avoid unforeseen demand hikes as in the case of COVID-19. The turmoil resulted in the growth of the CM market from $934.8 billion in 2017 to $1.17 trillion in 2021 marking the exponential boom in the industry, although the actual figures could be much higher due to better healthcare becoming a global priority in 2020. Thus, outsourcing ensures a continuous supply of quality products in a cost-effective way, while allowing businesses to increase their overall productivity and efficiency to improve their bottom line.
As the focus shifts towards globalization for pharmaceuticals to save human lives, there has been a major transformation in the papers of pharmaceutical CM in India. Medical drug producers have found ways to tackle the complications in pharma contract manufacturing. Some of the market leaders in CM for the pharmaceutical industry in India include Lifevision Healthcare, Zoic Bioterch, and Sigma Softgels and Formulations, and those around the world include Catalent Pharma Solutions, Gerresheimer, and Akums Drugs & Pharmaceuticals Ltd.
Benefits of Contract Manufacturing in Pharmaceutical Manufacturing
One of the biggest benefits of pharmaceutical contract manufacturing is cost savings. Outsourcing production to a third-party manufacturing company can help pharmaceutical companies save on the cost of equipment, labor, and overhead expenses associated with production. Additionally, contract manufacturers can leverage their economies of scale to produce large quantities of products at a lower cost than would be possible for the pharmaceutical company to produce in-house. The in-house production also involves the cost of equipment and technological update and the outsourcing of the production to contract manufacturers considerably reduces this cost as it is their core business. This also cuts down the maintenance cost of the equipment and other facilities.
Another benefit of hiring a contract manufacturer is increasing the scalability and flexibility of the production capacity. A Contract Manufacturing Organization (CMO) helps the business to respond to the market instead of taking a huge gamble on it, by providing the right product, at the right time in the right quantities. This can be achieved by excess capacity. Additionally, CMOs are well-versed in compliance, so you don't have to sacrifice safety for scalability. Contract manufacturers also offer flexibility by producing products in smaller quantities, which is particularly beneficial for companies with niche products or those in the early stages of product development. They can also quickly scale up production to meet increased demand, which is important for products with short shelf life or those that experience sudden spikes in demand.
CM also eases out supply chain issues if any. CMOs are better equipped than startups to handle a supply chain crisis. They have inventories already built up and longstanding relationships with suppliers and can predict issues within the supply chain. They also have the advantage of being able to shift production to another facility in the event of supply chain disruptions. This helps in unforeseen circumstances when production hits a slowdown or stoppage.
One of the greatest benefits of CM is that it allows the management to focus on the core competencies of the business. It enables the shift of focus from manufacturing and distribution to other important tasks such as marketing the new drug, researching, or working on drug discovery. This could also lead to a shorter time to market for new items.
CMOs in the pharmaceutical industry can contribute significantly to the development of precision or personalized medicines for small-batch productions. By this, they put an end to the one-size-fits-all treatment options for individuals who face particular illnesses or diseases. Being able to fulfill these medical requirements requires the pharma manufacturing process to adapt to small batches of products. This also has benefits in allowing pharmaceutical products to be manufactured and distributed with urgency, such as when a sudden order is needed for an out-of-stock medicine in a particular location. In some cases, such as Ebola outbreaks in Africa, diseases pop up out of nowhere and the minimum demand for medicine fluctuates depending on the cases. This not only necessitates constant backup production but also the capacity for small batch productions to avoid the risks of expired medicines.
Estimated Future Developments in Contract Manufacturing
Many CMOs are incorporating artificial intelligence (AI) and other technological innovations to become more cost-effective and speed up production considerably cutting down on time and effort. Digitization of the services will lead to greater efficiency in delivering products. Data points for the industry are mainly driven by incorporating advanced technologies, such as machine learning to classify digital images of cells, or automated data gathering and analysis to find solutions to complex diseases. Further, these technologies enable better risk detection thus improving the quality of the products.
The technological advances in the field have also enabled real-time remote tracking of the development process. Conventional audits are increasingly being replaced by real-time tracing enabled by the use of the Internet of Things (IoT). This allows the companies to effectively manage the pharmaceutical supply chain to share data and immediately respond to any issues or events.
Other technologies making contract manufacturing safer include blockchain and other cybersecurity mechanisms. Using blockchain’s ledger system, companies in the pharmaceutical supply chain, including CMs and pharmaceutical firms, will be able to scan and record barcodes every step of the way, creating an audit trail that can be tracked by all parties involved. Blockchain can also be used to incorporate sensors into the supply chain, factors like temperature and humidity can be recorded in the ledger system, which is particularly important for temperature-sensitive medicines like insulin. Thus, blockchain allows for a smoother flow of operations and helps prove the authenticity of a drug ensuring safe product handling and distribution.
CM allows for late-stage customization, when the production of a particular good is only pre-assembled, meaning that it can be processed at any time depending on market demand. This reduces the chance of errors and creates a more efficient production process by freeing up storage space and requiring fewer stored materials. However, the biggest benefit of late-stage customization is ensuring that all labels and packaging are compliant with up-to-date legislation.
This is particularly pertinent to the pharmaceutical industry, where serialization legislation is used to safeguard against counterfeit medicines. Now that more pharmaceutical CMOs are offering late-stage customization, labels, and packaging can be tweaked right up to the last second with variable data, depending on the market, region, or customer to which the medicine is being supplied. This ensures that all pharmaceutical labels and packaging are compliant with the most recent regulations.
In a nutshell, contract manufacturing in the pharmaceutical industry is beneficial for both the CMO and the pharmaceutical company. It helps to keep up with the demand for the drug without being burdened with high financial performance, especially when it comes to buying and running expensive equipment for the mass production of pharmaceuticals. To combat this, many companies have begun outsourcing their manufacturing to CMOs who have the equipment, facilities, and labor force to carry out a more cost-effective production while they focus on marketing and research. Also, the developments in the AI industry will be a game changer in the arena, making drugs far more affordable for consumers.