Changes Underway for Biopharmaceutical Outsourcing - Pharmaceutical Technology

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Changes Underway for Biopharmaceutical Outsourcing
More crucial biomanufacturing operations are expected to be outsourced.


PTSM: Pharmaceutical Technology Sourcing and Management
Volume 7, Issue 3

Future of outsourcing


Figure 3: Respondents identifying biomanufacturing outsourcing activities likely to be done at significantly higher levels during the next 24 months (1).
Many service vendors insist that outsourcing can improve organizational efficiency for their clients and that service providers can often offer better quality and more efficient services. And these services are not just for repetitive, low-value activities, or for testing, or fill–finish work. The 2011 study tends to confirm this claim in its measurement of trends in usage levels for the top 23 biopharmaceutical operations commonly outsourced. We asked respondents which activities they expected to outsource at "significantly higher levels" during the next 24 months. Surprisingly, the 2011 data show that upstream and downstream operations are going to be outsourced at a much higher rate than in previous years. The growth in other, less crucial operations were virtually flat. For example, the percentage of respondents indicating fill–finish activities would be outsourced at a higher rate, was 24.6% in 2011 compared with 24.8% in 2010.

Areas such as product testing and other assays continue to grow at double-digit rates. For example, nearly 20% of respondents indicated they would be outsourcing significantly higher levels of their product-characterization testing over the next 24 months. Tim Lee, deputy director of bulk manufacturing at Sanofi-Pasteur, notes, "The outsourcing of analytical test methods used in product characterization is a big trend as in-house testing labs become fully loaded with their manufacturing tests to release product. Also, many outsourced labs have specific expertise that industry doesn't have internally."

Conclusion

The economic recovery has been slow, and uncertainty continues to restrain hiring, which means the pressure to outsource and offshore operations has yet to abate. The BioPlan study also indicates that many contract manufacturing organizations and service providers have been experiencing much greater pressures from their clients to keep costs in line, reduce nonessential services, and otherwise trim budgets. This pressure, in turn, has forced service suppliers to run leaner operations and curtail some of the value-added services that might have otherwise been provided. While the industry will continue to see growth among emerging contract biopmanufacturing providers in India and other Asia-Pacific locations, providers in the US and Western Europe will see more modest improvements.

The economic uncertainty also makes shorter-term contracts more popular, and clients are increasingly expecting work to be done on short-term cost-and performance milestones, rather than on long-term commitments and partnerships. The price cuts and shifts toward more transactional, short-term business is likely to damage long-term relationships and reduce the potential strategic value that outsourcing can bring to clients. As long as global economic uncertainty remains, outsourcing will continue to be used as a buffer for cost cutting, and hiring of costly operations staff may continue to be delayed. This change may, in the end, result in strategic shifts in how companies are valued if their core capabilities and institutional knowledge in manufacturing, process development, and R&D continue to be delegated to external providers.

Eric Langer is president of BioPlan Associates, tel. 301.921.5979,
, and a periodic contributor to Outsourcing Outlook.

Reference

1. BioPlan Associates, Preliminary data from the 8th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production, Publication for April 2011 (Rockville, MD), http://bioplanassociates.com/publications/bmcp.htm.


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