Global Bio/pharma Plays Favorites with CMOs

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Global bio/pharma companies don’t outsource the drug product manufacture for their new molecular entities (NMEs) very often, but when they do there are only a few select CMOs they appear willing to work with.

That insight was revealed in PharmSource’s just-published Trend Report, CMO Scorecard: Outsourcing of NDA Approvals and CMO Performance. The report does a deep-dive into the bio/pharma industry’s propensity to outsource drug product manufacture using data from 10 years of NDA and BLA approvals by the FDA. It breaks down propensity to outsource by company type, nature of the API, dose form, and API type. Because most EMA-approved products are approved first by FDA, it also provides insight into outsourcing for dose manufacture for the European market.

One particularly interesting finding from our analysis is the propensity of global bio/pharma companies (aka “Big Pharma”) to favor certain CMOs on the rare occasions when they outsource manufacture of drug product for NMEs. Over the 2010-2014 period, global bio/pharma companies received 88 NME approvals, of which just 20 (22%) were outsourced to CMOs, including CMOs used as second sources of supply. 80% of those outsourced NMEs went to just 5 CMOs, including Patheon (now incorporating DSM), Catalent, Vetter, Baxter Biopharma Solutions and Hospira (see graph below). The same five CMOs accounted for 60% of all NDAs received by global bio/pharma companies for which drug product was outsourced.

The tendency to favor a handful of CMOs is not surprising. Those five CMOs are among the largest in the industry in terms of revenues, are financially strong, and have good compliance records (including Hospira at the facilities where its CMO business is concentrated) so they represent secure sources of supply.

The concentration of CMOs serving global bio/pharma companies stands in contrast to the industry overall, as our analysis shows that at least 146 CMOs have benefitted from at least one NDA approval in the past 10 years. However, the deeper dive we take in CMO Scorecard: Outsourcing of NDA Approvals and CMO Performance shows that the CMO industry is actually more consolidated than it may appear from the outside.

More information on CMO Scorecard: Outsourcing of NDA Approvals and CMO Performance is available here or by calling PharmSource at +1-703-383-4903.

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Jim Miller is the founder and president of PharmSource Information Services, Inc. A preeminent expert in bio/pharmaceutical outsourcing, Jim established and presides over the industry’s principal resource for serious consumers of information on contract drug development and manufacturing, PharmSource STRATEGIC ADVANTAGE. He is editor and publisher of Bio/Pharmaceutical Outsourcing Report and Emerging Markets Outsourcing Report.

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