Contract Manufacturing Organizations, also called trusted strategic partners, are currently in the limelight in the pharmaceutical industry. With the increase in sophisticated technology and to fulfill the demands of the latest trends in the industry, many pharmaceutical companies are shifting their manufacturing to contract manufacturing organizations. As a result, the global contract manufacturing organization (CMO) market size valued at USD 92.42 billion in 2018 is projected to reach USD 188.07 billion by 2026, exhibiting a CAGR of 9.4% during the forecast period.
Further, the pandemic has been a turning point for the Indian CMO market in recent years. As a result, the Indian contract manufacturing organization market is expected to register a CAGR of 13.3% between 2021 and 2026.
With the complex manufacturing procedures and regulatory controls, the pharmaceutical companies seek long-term relationships with the CMO for more beneficial strategic deals. (For detailed insights on the selection of the contract manufacturing organization, kindly refer to our blog “How To Choose The Right CMO And CDMO Partners” on our website. However, we will focus on some key benefits of contract manufacturing organizations here:
1. Utilize their expertise, innovation, and insight to set new trends in the market
The time frame for developing a new medicine through product launch can take up to 15 years. In addition, research and clinical trials demand a lot of investment and specific involvement from many personnel. On the other hand, the CMOs have expert personnel handling the business of many companies for years. Hence, pharmaceutical companies can use their expertise, innovation, and insight to increase their business by outsourcing these activities to CMO. Further, companies also get an avenue for entering emerging markets which is a wiser choice for the unapproved products in the pipeline. New products are crucial for a company’s future. Teaming up with a strategic partner gives an advantage over R&D. Still, they can get their potential revenues.
2. Access to the latest equipment and facility
Buying and running a piece of new expensive manufacturing equipment for the mass production of pharmaceuticals is very burdensome. To keep up with this demand, outsourcing manufacturing to CMOs is convenient. They have the latest equipment, qualified workforce, and facilities to carry out larger productions swiftly.
3. Leverage their high capacity framework
When the companies get regulatory approval for their drugs, large quantities of products are required for marketing and distribution. Unfortunately, many companies do not have adequate facilities and equipment to meet more extensive demands. Thus, contract manufacturing organizations can be helpful in this kind of scenario. Companies can use higher capacities of CMOs and focus on other core profit-making activities.
4. Superior control over quality and regulations
Contract manufacturers have robust control over quality management. In India, most contract manufacturers follow best manufacturing practices as per India’s Good Manufacturing Practices, under Schedule M of the Drugs and Cosmetics Act, 1940. Therefore, higher quality products give a competitive advantage in the market. In addition, CMOs have their niche in manufacturing practices with better regulatory checks in place. Consequently, the pharmaceutical companies get high-quality products from the contract manufacturers.
Researching and developing a new product can exceed $1 billion. In addition, the manufacturing costs account for roughly one-quarter of the company’s overall costs, which is considerably high. However, the CMOs have advanced manufacturing techniques that save time, cost and reduce wastage. Further, contract manufacturing can help reduce costs in other areas, such as equipment, facilities, operators, product designs, machine maintenance, and labor work. As a result, with comparatively fewer capital assets relative to its operations, a company has more resources to respond to market trends and generate more remarkable recoveries on investments.
6. Increasing the scale of the business
Improved scalability is an additional benefit to the CMOs because they have long-term relationships with the vendors and thus can produce bulk material at competitive prices. As a result, companies can increase the scale-up of their business without paying any extensive amount.
7. Risk Mitigation
The contract manufacturers help ensure a constant business flow, and thus, it becomes easy to respond to the varying market demands. It is challenging for the pharma company to commercialize extra capacity if the expected volume does not go well. In contrast, a CMO co-investing with a pharma company can reduce its exposure by marketing excess capacity to other customers and mitigating the risk.
8. Acquiring a competitive advantage in the market
CMOs can help gain pharmaceutical companies easy access to the local markets. In addition, they can get fast tract marketing organizations with their practical strategies as they have an admirable reputation of years with local government. Hence CMOs can help the companies get a competitive edge for entering a new market.
Pharmaceutical companies can cost-effectively provide quality products and increase overall productivity and efficiency by partnering with contract manufacturing organizations. The bottom line is that CMOs offer an extensive array of value-added services and preferred partners in current times.
At NEWEDGE Overseas, we offer solutions that are standardized and tailored as per your specific needs and requirements to become your trusted collaborators in the field of contract manufacturing. In addition, with our capability to handle multi-ton synthesis, we can help you reduce the turnaround time and the quality of your supplier portfolio. With all these, we become your one-point solution for all your requirements, reducing your outsourcing qualification interventions for superior supply chain management.
- We provide API and advanced intermediate synthesis exclusively complying with the latest regulatory requirements as per the highest quality standards and cGMP.
- We also manufacture early-stage intermediates and building blocks with our non-GMP capabilities and expertise.
- From start-ups and MSMEs to globally established corporations, we cater to all.
- Leveraging the latest technologies, we are innovative in our research and chemical experimentation.
- From grams to tons, our production scale exceeds volumes of your expectations.
- Our scientifically driven project management team evaluates, manages, and implements different projects per the client’s expectations.
- For FDFs, we provide every kind of contract manufacturing service irrespective of the dosage form.