The study found that the most significant action taken in the past 12 months was the "implementation of programs to reduce operating costs," indicated by 69.2% of respondents, down from 80.7% in 2012 and 73.1% in 2011. Various other activities, such as negotiating harder with vendors to reduce costs, implementing lean manufacturing programs, and accepting single-use systems into clinical manufacturing operations, were undertaken by at least one-third of respondents. Outsourcing to reduce costs, however, was not a key priority (1). Of the 19 cost-cutting actions examined in the study, the five actions relating to outsourcing occupied the bottom spots in the survey results, an indication that when it comes time to tightening the reins, calling a CMO is not the first option. In fact, it is one of the last.
The relatively low priority assigned to outsourcing as a cost-cutting tool may reflect companies viewing these activities more as means to fill temporary gaps in capacity and as a way for biopharmaceutical companies to focus on their core competencies. Another explanation may be that although outsourcing is seen as a useful cost-reduction tool, it does not compare as favorably with other cost-cutting tactics. Biopharmaceutical companies are not alone in this result; in previous BioPlan surveys, few vendors approached cost containment by outsourcing.
The data from 2013, however, show that outsourcing is increasingly considered as a cost-cutting mechanism. This trend may be related to CMOs expanding their manufacturing competence through novel technologies, single-use/disposable bioreactors, and other differentiated bioprocessing services. These expansions result in increased adaptability, lower costs, faster turnaround, and higher yields. These trends create greater competition among CMOs and more choice for biopharmaceutical companies. Increased competition that results in downward pricing pressures among CMOs might lead clients to more heavily figure cost into the equation when making a decision about outsourcing. When bio/pharmaceutical companies were asked about critical issues when considering outsourcing biomanufacturing to a CMO, 42% said that it was "very important" that the CMOs demonstrate the cost effectiveness of their services. That percentage is the highest level of response to this factor since 2007, when it was also cited by 42% of respondents. In 2012, only 29% of respondents cited this factor as such.