CMOs specializing in APIs went through a similar technology arms race 10 years ago. They learned that a broad technology offering
was a necessary but not sufficient dimension for competitive success. Technology capabilities can often be duplicated, making
it difficult for CMOs to differentiate themselves on that dimension alone. While CMOs expand their technical capabilities,
they will need to maintain their focus on performance and serve a client base with increasingly global aspirations.
Globalizing the industry. It looks to us that the biggest challenge facing the CMO and CDMO industry is globalizing its offerings. Clinical research
organizations (CROs) have moved aggressively to create a global footprint, and their ability to support international clinical
trials is a big reason why the largest CROs such as Quintiles (Research Triangle Park, NC) and Icon Clinical Research (Dublin)
have come to dominate the CRO industry.
CMOs and CDMOs have been slow to attack the global development and manufacturing opportunity. Only a few Western API development
and manufacturing companies, including Lonza (Basel), Aptuit (Greenwich, CT), and AMRI (Albany, NY), have made a major effort
to establish their presence in emerging markets. In part, this slow pace reflects the relatively recent nature of the opportunity:
demand within emerging markets for services such as formulation, manufacturing, and clinical packaging is following the growth
of clinical trial activity in those countries. The slow response only reflects the fact establishing a presence in the emerging
markets requires significant investment in key business assets, including facilities, senior management and technical staff,
and knowledge about how to do business in those countries.
Interestingly, the CDMOs and CMOs that have been most aggressive in growing their global network of operations have been those
companies founded and headquartered in the emerging markets themselves, companies such as Piramal Pharma Solutions (Mumbai),
WuXi AppTech (Shanghai), and Jubilant Life Sciences (Noida, Uttar Pradesh, India.) Understanding the next steps these companies
will take to become truly large global players in the CMO and CDMO market is central to knowing where the industry is headed
Jim Miller is president of PharmSource Information Services, Inc., and publisher of Bio/Pharmaceutical Outsourcing Report, tel. 703.383.4903, fax 703.383.4905, firstname.lastname@example.org