What Role Do CMOs Play in the Pharma Manufacturing Industry?

By CIOReview | Thursday, November 21, 2019

Contract Manufacturing Organizations (CMOs) and drug manufacturers partner to increase manufacturing efficiency and profit.

FREMONT, CA: Contract manufacturing organizations (CMOs) have seen tremendous growth over the past decade and are expected to continue growing at about 7 percent over the coming few years. Outsourcing the manufacturing functions allows biopharmaceutical companies to come to market early, free up resources and services, and put more emphasis on the center business lowering drug costs.

In fact, there was a major shift in the business model of CMO. They no longer just a one-off production option, but they are also an integral component of the biopharmaceuticals supply chain.

Biologics Manufacturing

As the big pharmaceutical companies continue to be significant contributors to the development of the contract manufacturing industry, contributions from biotechnology companies will enhance as well. There will be a higher demand for contract production with more biotech companies emerging. This is because the outsourcing of the manufacturing function will allow biotech companies to market their products without investing in building and upgrading their production units.

The improvement in biologic development is a key reason for the significant expansion of contract manufacturing services. As developers of biologics also rely on the development of drugs, they rather outsource manufacturing.

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Upcoming Economics

Contract development in China is rising, primarily because biosimilars and emerging medicines are entering the medical pipeline and approaching a commercial scale. Many popular biopharmaceutical companies prefer to outsource production, in spite of possessing good manufacturing practice (GMP) services to reduce costs. One tactic is to outsource current biopharmaceutical products such as interferons, insulin, and growth hormones. On the other hand, these biopharmaceutical companies also sometimes collaborate with manufacturing organizations in countries such as China.

Closing Thought

Biopharma companies primarily choose to outsource production in order to reduce costs and concentrate on their core business. New biotech companies are not financially sufficient to set up GMP-grade facilities and therefore tend to partner with CMOs.

Considering the US-China trade conflict and low labor wages, India is the most preferred partner nation for pharmaceutical companies looking to outsource manufacturing. Therefore, the emphasis on biologic development and the use of biosimilar products is the most feasible option to outsource to CMOs.

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