PHARMA SPECIAL made . This is very time-consuming and requires considerable discussion internally even before the business is won , but it key to “ becoming an embedded part of their supply chain ”.
Despite the recent news that a Big Pharma company ( Novo Nordisk ) had acquired a CDMO ( Catalent ) in order to shore up its supply chain in the booming obesity / diabetes market , speakers largely agreed , the general trend is still for Big Pharma to divest sites and outsource manufacturing . Thus there is plenty more growth in the pipeline for CDMOs as a whole .
Yu and Molyneux agreed that buying a former pharma site is only the start of the battle . More business has to be won rather than relying on legacy contracts . Plus there is the familiar issue that so many ex-Big Pharma sites are asset-specific and need re-engineering to be made ready for multi-purpose use . The site culture also needs to be changed to make them more flexible .
Dyke added that some cGMP pharma factories are also active in other industries . “ One thing to consider is that , across all chemistries , there ’ s a rapid acceleration in the advanced material space ,” he said . Major markets will need staff and chemistry capabilities
Keay – Days of ‘ make at any cost ’ are over to support demand in areas like electronics and energy storage . There may be more competition in M & A transactions going forward .
Regulatory differences will come into play if so , said Molyneux . “ If you have to maintain your assets to GMP , you ’ re never going to be pricecompetitive with facilities that don ’ t have that regulatory burden .” It is hard for a GMP facility to compete on non-GMP registered starting material ( RSM ) synthesis , though sometimes that might be outweighed by the advantage of keeping production in a single site or network .
Yu observed that , although the cost of an FTE chemist in China and India has grown substantially in the past 20 or so years , they are still only about half the cost of those in the US or Europe . They now have equivalent years of experience of working with partners – and there are many more of them . This , in her view , is one reason why development is now the fastest-growing part of the outsourcing market .
Need for speed
Another reason , said Dyke , is that small and emerging pharma companies , who rely on outsourced services from the early phases , need
Spaene – Siegfried customers wanting to collaborate earlier development to be faster so that they can be acquired or license out their product that much earlier . Some larger companies are also adopting this model and becoming more aggressive in their timelines . “ Regardless of the price , if you have more chemists you have more capabilities to do development and other disciplines ,” Dyke said . “ Some companies in the West have been a little remiss in understanding that dynamic .”
PHT ’ s goal in acquiring a CRO , Yu noted on this point , was because they “ wanted an engine ” in the form of more chemists . The aim was to be able to participate from Phase I and thus feed more into the pipeline for the later stages . There was no thought of having a separate CRO company like some very large players have .
Although Sterling intends to remain fully Western-based , Molyneux said he could see the attractiveness of acquiring non- Western based assets . To date the traffic has been more in the opposite direction , with Indian and Chinese firms buying Western assets , but he expects that to change in response to cost pressures . A CDMO that can operate across all geographies could ultimately end up being what Big Pharma companies used to be .
That , however , might run up against the drive to reduce companies ’ carbon footprints and the advantage of physical proximity to customers , Spaene observed . Dyke echoed that . “ If you can deliver service locally , with the appropriate quality , quickly , that can be part of the total cost of ownership discussion ,” he said .
“ It ’ s important that companies have faith that putting in development resources and technical staff is going to pay off – not just put an EBITDA ticket on the heads of their development staff and say ‘ Unless you are generating profit today , it ’ s not worth doing ’. I think Western companies have been very remiss in holding R & D resources .” ●
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