API Outsourcing is Mixed

Contract manufacturers of APIs and intermediates report gains, but express caution.
Mar 02, 2009


Patricia Van Arnum
Reduced expectations sum up the mood of contract manufacturing organizations (CMOs) of active pharmaceutical ingredients (APIs) and intermediates, according to a recent survey by the Synthetic Organic Chemical Manufacturers Association (SOCMA). SOCMA, the US-based trade association representing custom and batch manufacturers, released the results of its annual business survey at InformEX, which was held in San Francisco in late January. SOCMA conducted the survey Nov. 13–Dec. 22, 2008.

Although a majority of respondents (62%) reported that their companies had an increase in sales in 2008, this level was down from 2007, when 76% reported an increase, and 2006, when 79% reported a gain. And for 2009, only 61% of companies expect to realize a sales increase.

CMOs also had a slight decline in capacity utilization for 2008, when the survey reported an average capacity utilization among respondents of 72.7%. This level compares with 76.2% in 2007 and 75.7% in 2006.

The outlook for contract API manufacturing is still positive, but expectations are lower. Seventy-five percent of respondents expect more projects to be outsourced during the next three years. This level is down from the 80% in 2007 that felt that outsourcing was going to increase near term, but up from the 70% in 2006 that projected an increase.

So what is the bottom line? Despite downward indications, a majority of CMOs still expect sales gains in 2009, a fortunate development given the uncertain economy and difficulties other industries face.

Patricia Van Arnum is a senior editor of Pharmaceutical Technology. Read Patricia’s blog posts atPharmTech Talk