US CMOs economy proof in the long term, says F&S

By Gareth Macdonald

- Last updated on GMT

Related tags: Pharmacology, Us

The US contract manufacturing sector is strong enough to bounce back from any short-term slow down caused by the credit crisis, according to a new report by Frost & Sullivan (F&S).

The study predicts that new technologies and process improvements introduced by US contract manufacturing organisations (CMOs) that improve efficiencies will prove irresistible for drug industry clients struggling to reduce production spending.

The authors argue that: “CMOs have been revamping their business models to suit the changing needs of pharmaceutical and biopharmaceutical companies by providing more upstream and downstream services​.

By opting for such services, pharmaceutical companies are able to reduce the number of supply chain participants, freeing up resources and lowering total fixed costs​.”

They go on to predict that demand for sterile manufacturing services will grow rapidly in the next few years on the basis that small and emerging specialty drugmakers do not have sufficient resources to carry out such production.

The report highlights services like lyophilisation, cytotoxic handling and manufacture and the production of small volume parenterals (SVP) as being among the most likely to be in demand and forecasts that CMOs will ramp-up investment in these areas.

A brief glance at the recent news headlines supports this idea with for example, contracting players Formatech, APC and Isogen all adding lyophilisation capacity in the US in last six months.

In addition, Cytovance Biologics, PharmaTek and SAFC are just three examples of firms that have increased their US cytotoxic and high-potency active pharmaceutical ingredient (API) handling capacity in the last year.

Partnership and broad offering is key

While the report authors are generally upbeat about the fundamentals of the CMO sector in the US going forward they do stress the importance of a partnership approach to working with pharmaceutical clients in the difficult economic climate.

They argue that: “For CMOs, the mantra for continued success and higher than average growth in a market that is currently under penetrated, is adopting a more strategic approach to partnerships.

Companies should look toward providing more value-added services that provide synergy with their existing offerings such as development, analytical and regulatory support, packaging, logistics and consulting services​.”

Related topics: Upstream Processing

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