The pharmaceutical industry has undergone significant evolution within the past 15 years. Recently, biopharmaceutical companies have become increasingly reliant on outsourced contract services for various elements of their value chain. This is taking place in an environment where these companies face pressures to cut costs and accelerate time-to-market as they aim to meet the challenges of the pandemic and deal with resource and capital constraints—all while needing to comply with regulations.
Three essential types of outsourced contract organizations are at the core of the pharmaceutical and life sciences global ecosystem: contract manufacturing and development organizations (CDMOs), contract manufacturing organizations (CMOs), and contract research organizations (CROs). These outsourcer partners enable pharma and life science to cope and adapt to the dramatic increases in demand, rapidly changing expectations from global drug manufacturing partners, and increasing competition from startups looking to capture market share.
In addition, partnering with these outsourcers helps pharmaceutical companies more rapidly produce complex drug substances at lower cost by bringing new products or formulas to market without investing in additional infrastructure or high-cost equipment.
CDMOs: The First Step in the Outsourcing Value Chain
Many pharmaceutical firms find themselves turning to a partner for drug manufacturing because the equipment for mass production of some chemicals is very costly. It is more cost-effective to outsource than to invest in equipment costs, especially if a product fails in clinical research and further development and production are called off.
A CDMO handles the outsourced manufacturing of drug substances, along with innovation and development work that includes development, production, and analysis. Thanks to CDMOs, pharmaceutical companies no longer need to build and staff dedicated innovation and manufacturing facilities.
CDMO companies usually offer formulation, analysis, blending, coating, converting, packaging, serialization, and shipment services. CDMOs can start with a concept or a ready-to-go formula, with pre-formulation and formulation development services available, as well as clinical trials and commercial production.
When pharmaceutical firms find a suitable CDMO, they gain flexibility, collaboration, and innovation services to help increase speed to market and lower costs by gaining access to expertise and equipment they don’t have in-house. CDMOs can accelerate drug development and improve a pharma firm’s bottom line.
CROs and CMOs Complete the Value Chain
CDMOs can refer their pharmaceutical company partners to a trusted CRO as needed. A CRO is enlisted by pharmaceutical, biotech, and medical device manufacturers to handle clinical trials after a drug is developed by the CDMO and is ready for testing.
CROs plan, coordinate, execute, and oversee all processes in the development and operation of a clinical trial, including selecting a site, recruiting participants, monitoring the trial, and managing data. A CRO manages feedback and requirements from manufacturers, trial sponsors, ethical committees, foundations, researchers, legal staff, and regulators.
A CMO is contracted by pharma firms to manufacture drug substances. This may include emulsion and nano-suspension, liquid-filled capsules, aseptic filling, terminal sterilization, pre-filled syringes and vials, and tablets and capsules.
Benefits to the Bottom Line
Overall, by expanding their list of partners to fill in the entire value chain, pharma businesses can reduce infrastructure costs by eliminating investment in additional production and manufacturing spaces or equipment facilities.
Outsourcing also helps to meet production deadlines and increased demand, because it provides the flexibility to shift or allocate production volume, add a drug variation, or scale up quickly without the need to reconfigure internal facilities.
ERP Connects the Dots of the Entire Value Chain
Because they have lots of third-party partners to collaborate with, pharma firms and outsourcers need to connect seamlessly and automatically through the entire value chain, without needing to repeat the input of data or build fragmented processes across different parties, which create errors or delays in a new product.
The value chain of pharma needs a secure, open, and scalable framework for exchanging data among different parties. This requires a business technology platform such as cloud-based ERP that can connect pharma firms with third-party outsourcers that are located around the world.
Those outsourcers could deploy pre-built, cloud-based ERP designed specifically for pharma to help reduce customization, lower outsourcing costs, and comply with regulatory requirements.
ERP will act as the glue that connects and more deeply integrates data and processes from different parties, enabling seamless integration of the entire digital value chain and creating a holistic end-to-end view of drug discovery projects.
Consultants who specialize in specific ERP platforms and understand the nature of this complex industry can deliver a cloud-based ERP solution that is tailored for your organization. This will help minimize the possibility of implementation failure and ensure the success of this crucial digital backbone, which provides a path to innovation in a volatile world.
Explore ERP for CDMOs here.
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