The Pharmaceutical industry remains one of the fastest-growing markets. As medical research and pharmaceutics advance, manufacturers are under increasing pressure to fill a growing demand for pharmaceutical products. In order to fill critical gaps in the market, power further growth in the industry, and maintain industry standards, many large pharmaceutical companies choose to outsource drug manufacturing to third party organizations known as pharmaceutical contract manufacturers (CMOs). 

In this article, we’ll give you the lowdown on what pharmaceutical contract manufacturing organizations are, why they are used, and how they fuel growth and innovation in the pharmaceutical industry.

What Is A Pharmaceutical Contract Manufacturing Organization?

It’s estimated that just a third of pharmaceutical manufacturing is conducted in house. Drug companies in the United States and across the globe choose to outsource the manufacturing of pharmaceutical products–from diabetes drugs to cell therapy– to third party organizations with established facilities for large-scale commercial supply such as Avara Pharmaceutical Services. These organizations use their industry expertise to offer high-quality drug manufacturing to some of the largest drug companies in the world. 

Contract pharma has become a huge component of the pharma industry, driving research and development, reducing operation costs, guaranteeing regulatory standards, and developing processes to make the manufacturing process as efficient as possible.

There are several reasons why manufacturing outsourcing has become so commonplace in the pharmaceutical industry. Let’s take a look at the reasons why:

  • As the competition in the market grows, there is increasing pressure on pharma companies to reduce costs 
  • The huge growth in areas such as gene therapy and biologics has called for Pharma companies to restructure and 
  • The necessity to move operations away from certain markets such as those high labor costs or unprofitable drugs 
  • Shortages in technical talent in the pharmaceutical industry and skills gaps in the industry
  • High demand from tech giants into the pharma world

The United States currently faces a massive shortage of workers with the qualifications needed for the pharma industry. Many experts chalk this skills gap up to a lack of emphasis on (science, technology, engineering and math) in the American education system. According to studies by the Pharmaceutical Research and Manufacturers of America (PhRMA), by 2025 this shortage of skilled workers could mean that around 60% of American pharmaceutical industry jobs will go unfilled.

It’s not just the United States that is feeling the effects of this. Countries such as China and Australia are now putting the focus on STEM education in preparation for future demands. China has pulled ahead in this area. In 2016, 4.7 million people graduated from STEM programs, compared to just 568,000 in the States. 

What Types Of Drugs & Services Do Pharma Contract Manufacturing Organizations Offer?

Here are just a few examples of the types of services pharma contract manufacturing companies provide to drug companies:

  • The development of drugs
  • The manufacturing and commercial production of drugs
  • Proof of compliance with FDA regulatory requirements
  • The pre-formulation of drugs
  • Drug formulation
  • The conducting of pre-clinical and Phase I clinical trials
  • They provide materials for late-stage clinical trials
  • All pharmaceutical contract manufacturers must comply with FDA good manufacturing practices and adhere to FDA regulations. 
  • The management of pharmaceutical development, research and testing, and drug manufacturing

Other Organizations That Are Commonly Outsourced By Pharma Companies

Pharmaceutical contract manufacturers aren’t the only organizations that manage the outsourcing needs of pharmaceutical companies:

What Is A Contract Research Organization? 

You will often come across the term CRO in relation to pharma. Contract Research Organizations, or CROs, offer pharmaceutical companies support in a number of ways. They offer external professional research services to support drug companies with the drug discovery process which is an extensive process. They lighten the load and costs related to data research, research and testing, project management, and managing preclinical and clinical trials.

You may be wondering what the difference is between a CMO and a CRO. Let’s see.

CMOs specialize in manufacturing drug products for drug companies while CROs focus on carrying out research. Some larger outsourcing companies, known as CDMOs (contract development and manufacturing organizations) offer a full range of services, spanning everything from drug development through to manufacturing.

What is a Contract Testing Laboratory?

A contract testing laboratory, or CTL, is an organization that offers drug testing services to pharmaceutical manufacturers. CTLs provide a wide range of services, including preclinical testing services, clinical trials lab services, pharmaceutical dissolution testing services, bioanalytical services/bioanalytical testing services and drug development services.

What Exactly Is Third Party Manufacturing?

If you’re not familiar with the term, “third party manufacturing” is a contract manufacturing organization that makes products for drug companies. They make the drugs or other goods for the company, but they don’t actually own the inventory. By building a strategic partnership, both the manufacturing company and the drug company benefit and, most importantly, so do the patients. So how does it work?

The pharmaceutical contract manufacturers (CMOs) are contracted by drug companies to supply the materials, workers, and facilities to manufacture drug products owned by the client. This saves the pharma company costs and saves time.

Why Drug Companies Outsource Pharmaceutical Manufacturing

Pharmaceutical contract manufacturers (CMOs) offer drug companies a range of benefits. Here’s a closer look:

  • More flexibility
  • A greater range of manufacturing options 
  • Lower costs
  • They speed up the time to market
  • They create space for more emphasis on drug discovery and marketing
  • They reduce the costs associated with hiring and training workers 

Final Thoughts

As the pharmaceutical industry continues to grow, the pharmaceutical market is evolving and discovering new solutions to get more FDA approved pharmaceutical products to market in a timely and cost-effective way. Outsourcing the development and manufacturing of pharmaceutical drugs fills gaps in the process, fulfil client needs and objectives, and maintain a highly regulated manufacturing process. These strategic partnerships between pharmaceutical companies and pharmaceutical contract manufacturing organizations allow the industry to evolve quicker and deliver more. Thanks to this, outsourcing looks set to continue.