Outsourced or own production?

The very rapid progress and constant change that the pharmaceutical sector is currently experiencing is posing a real challenge for companies to adapt to each new scenario. This situation of constant change is even being increased by the appearance of more and more biological products. The concept of medicine as a pill that can cure everyone’s ills has been left behind along with traditional medicine. Medicine is increasingly personalized. With high potency products and very specific targets that often make dedicating a production line to a single drug not viable. For this reason, the outsourcing of production through CMO (Contract Manufacturing Organizations) companies is increasingly common.

  • In the last 5 years, half of new drugs have been produced by CDMOs [1]
  • It is expected that, by 2024, 1/5 of prescribed medications will be orphan drugs (medicines intended to treat rare diseases, which are difficult for a pharmaceutical company to make profitable if they do not have help from government agencies) [2]
  • It is estimated that the revenue of the biologics market in 2024 will be $480 billion [3]

More and more clients are asking us for feasibility studies to check whether continuing to outsource the production of their medicines is really the best option. Or when faced with the possibility of starting the production of a new medicine, whether it is worth having its own production or it is better to outsource the process.

As is usual with any problem, the results of a feasibility study are not “black or white”. But there are a series of points that we like to assess and that greatly help our clients make the right decision.

Productive capacity and speed: it is the starting point. How much is expected to be produced and how quickly. These data help us to make a first approximation of the equipment and facilities required for the desired production. We also make a first layout proposal that helps us study the viability of the process and the costs associated with its implementation.

Production urgency: the design and construction process of a plant or pharmaceutical line is slow, and once completed it must be validated. Many times medicines are protected by patents, but for a limited time. Being able to start production as soon as possible is key to making the investment in the development of a medicine profitable.

Single use vs stainless steel: it is important to make a comparison of the technologies available for the process in question. The use of single use equipment allows us to evaluate new scenarios for products with small batches.

Prior availability: what equipment, spaces and utilities are available. Knowing the necessary elements that you already have is key, as it can save you a lot of costs. In addition, it is also important to assess whether the space intended for production is already being used for other purposes (for example, the production of another medicine), to assess whether the change is truly beneficial.

Trust: although one of the main characteristics of CMO plants is their versatility, there are times when the available facilities do not adequately adapt to the required process. It is important to select a reliable supplier and audit them before closing any type of contract to verify that they use correct manufacturing procedures. Being clear about what the CMO would be while carrying out the feasibility study of in-house production vs. outsourcing is an important help that allows for clearer conclusions to be drawn.

Experience: “experience is a degree.” And this can apply to either of the two possibilities. A pharmaceutical laboratory may not have experience in the production of a type of drug, but it may have a CMO that has already produced that type of drug. But there is also the other side of the coin. If a laboratory already has experience in a specific type of process, with trained personnel and skill in the most critical steps, it may mean taking a step back by outsourcing production. On the other hand, own production allows you to really understand the process and optimize it. It also makes it very easy to attack problems that arise in production, since contact with the production plant is direct.

Making the decision whether or not to outsource the production of a drug (or part of it) is a very critical decision in the future of a pharmaceutical laboratory. Evaluating all the elements and doing a good analysis to find the best solution requires a lot of knowledge and experience.

If you are interested in learning more about the feasibility studies of own production vs outsourcing and how we can help you, contact us:

[1] PharmSource, Trend Report: CMO Scorecard: Outsourcing of NDA Approvals and CMO Performance, 2018 Edition

[2] EvaluatePharma, Orphan Drug Report 2018

[3] Transparency Market Research, Global Biologics Market: High Profitability and Increased Profit Margins through Premium Prices Encourage Growth