Stability Reigns in Contract Services - Pharmaceutical Technology

Latest Issue

Latest Issue
PharmTech Europe

Stability Reigns in Contract Services
The PharmTech/PharmSource annual outsourcing survey results suggest that CDMOs may be getting complacent.

Pharmaceutical Technology
pp. s8-s14

Visage/Getty Images; Dan Ward
A sense of relative calm seems to have overtaken the bio/pharmaceutical contract services industry in 2013. Bio/pharmaceutical companies say that their spending on contract services is still growing, but at a pace in line with the growth in their overall budgets. Service providers state that 2013 has been a good year, but it is not exceeding their expectations the way 2012 did.

Those are the impressions gained from analyzing the results of this year’s PharmSource Pharmaceutical Technology Outsourcing Survey, administered during June and July 2013. PharmSource and Pharmaceutical Technology have been conducting the survey for more than 10 years.

Figure 1: How will your contract services spending change this year? (All figures are courtesy of the author.)
Modest spending growth
Responses from professionals at bio/pharmaceutical companies indicate that spending on contract services is up in 2013, but at a more modest rate than last year (see Figure 1). Just 30% of buy-side respondents indicated that spending this year will increase by 10% or more; in 2011 and 2012, 43% expected spending growth of 10% or more. Further, the number of respondents indicating that spending year-over-year will remain flat jumped from 27% in 2011 and 2012 to 37% in 2013.

The modest spending growth appears to reflect the overall growth in R&D spending. Approximately 40% of bio/pharma company respondents indicated that contract services spending is growing at the same pace as total R&D spending while those answering that services spend is growing faster or slower than total R&D spend are evenly split. These results are consistent with past years’ responses.

Figure 2: What will business be like for your company this year?
Contract service providers appear to have come into 2013 with high expectations and while most haven’t been disappointed, those high expectations have left little room for upside surprises. Among sell-side respondents, 22% said they expect their volume of business in 2013 to be “very good” or “extremely good,” which is down sharply from the 39% in 2012 (see Figure 2). Further, 15% said business in 2013 was “not very good;” only 5% were so pessimistic in 2012.

Those subdued assessments of business conditions may reflect expectations more than actual performance. Only 28% of sell-siders view business in 2013 as “better than expected” while in the 2012 survey 49% were pleasantly surprised. Clearly, many service providers went into 2013 expecting strong performance while their expectations going into 2012 were more tentative.


blog comments powered by Disqus
LCGC E-mail Newsletters

Subscribe: Click to learn more about the newsletter
| Weekly
| Monthly
| Weekly

Which of the following business challenge poses the greatest threat to your company?
Building a sustainable pipeline of products
Attracting a skilled workforce
Obtaining/maintaining adequate financing
Regulatory compliance
Building a sustainable pipeline of products
Attracting a skilled workforce
Obtaining/maintaining adequate financing
Regulatory compliance
View Results
Eric Langer Outsourcing Outlook Eric LangerBiopharma Outsourcing Activities Update
Cynthia Challener, PhD Ingredients Insider Cynthia Challener, PhDAppropriate Process Design Critical for Commercial Manufacture of Highly Potent APIs
Jill Wechsler Regulatory Watch Jill Wechsler FDA and Manufacturers Seek a More Secure Drug Supply Chain
Sean Milmo European Regulatory WatcchSean MilmoQuality by Design?Bridging the Gap between Concept and Implementation
Medicare Payment Data Raises Questions About Drug Costs
FDA Wants You!
A New Strategy to Tackle Antibiotic Resistance
Drug-Diagnostic Development Stymied by Payer Concerns
Obama Administration Halts Attack on Medicare Drug Plans
Source: Pharmaceutical Technology,
Click here