European CMOs Hit North American Shores
As I was preparing for the INTERPHEX trade show in New York next week, I was really struck by the number of European Contract Manufacturing Organizations (CMOs) attending that don’t have North American facilities. There are at least six including CMOs with a strong recent FDA approval track record such as Rottendorf and Pierre Fabre. There are also two more with a single US site but an extensive European network, Fareva and Unither. One Eurocentric Contract Development and Manufacturing Organization (CDMO) that is not attending Interphex, Aenova, has built up a significant North American sales presence despite no longer having a North American manufacturing or development facility.
The lure of the US market is not a surprise: the US is where the money is, both for development activity and commercial products. Venture capital and other external financial support for bio/pharma companies is 2-3 times greater than in Europe, so the US has a much greater number of CDMO/CRO-dependent companies. Further, because drug pricing is more favorable to bio/pharma companies in the US, the number of product opportunities and potential manufacturing margins are much better.
European CDMOs without North American facilities face a number of significant challenges, including distance and time zone, which make coordination more difficult for development projects and logistics more expensive for manufactured goods; exchange rate fluctuations; largely undifferentiated capabilities; and in some cases, lack of FDA regulatory compliance experience. One of the biggest challenges is in the European understanding of US selling practices: North Americans tend to be more aggressive and are willing to cold call prospects, while Europeans are often not comfortable with cold calling. Europeans depend on trade shows and events to make initial introductions, but contract services-oriented trade show attendance has been falling off in the US for years.
Despite the challenges, the European CDMOs are wise to get themselves known here. North American capacity for some capabilities, like injectables development and manufacturing, is tight, so North American bio/pharma companies may be more open to working with European CDMOs, especially those with considerable FDA experience like Rovi. In addition, the North American market will probably offer more opportunities than Europe for a long time to come, and a trade show is a relatively inexpensive (but not cheap) way to build exposure and name recognition.
I will be giving an overview of the contract services market at INTERPHEX 2016 on Wednesday, April 27 at 10:30 AM on the INTERPHEX Innovation Stage. For more information click here.