RedGage

Biotechnology and pharmaceutical industry giants from all around the world are slowly getting attracted towards contract manufacturing organizations (CMO).  They offer to manufacture medicine powders, capsules as well as tablets not just for commercial purposes, but in small quantities for clinical study and R&D purpose as well.  CMOs offer to manufacture liquid, solid and injectable forms of dosage.

According to the data published in “The CMO Market Outlook to 2017”report, during the next five years, the CMO industry is set to witness double digit growth. Currently, most of the revenue for this industry comes from the solid dosage formulation.

Initially, manufacturing was outsourced due to lack of adequate skilled workforce as well as manufacturing capacity. However, experts suggest that these days, many medicine manufacturers prefer to outsource manufacturing in order to reduce risks in drug development, reduce production cost, reduce R&D time, as well as to gain manufacturing expertise that is not present in the organization.

Outsourcing does offer multiple benefits

As mentioned earlier, upgrading manufacturing facilities requires a huge investment in hiring manpower, machinery as well as other facilities. Experts like Oliver Mueller suggest that a pharmaceutical company may end up spending around 23 percent of its revenue in manufacturing units. Thus, companies can simply outsource manufacturing and spend the money that the organization saves on other corporate activities.

Contract manufacturing can prove to be the best option for startups that have a lesser cash to invest. It also keeps such small companies away from risks involved in drug development.

So, there is no need to spend money on manufacturing facilities, no matter if the company's drugs are in the approved or pending stage. Plus, companies would be easily able to scale down or up the production as per their product's demand in the market. Not just capsules, but these days, firms like private label supplements offer to manufacture minerals and vitamins rich supplements as well. They have their tried and tested formulas to develop products that brands can sell under their label.

CMOs are benefiting due to generic drug makers as well

Factors like global health care reforms and rising drug prices have forced health care companies as well as insurance companies to control costs. Thus, patients are often asked to switch to cheaper, generic versions of costly medicines. This move is also supported by government agencies in some countries in order to make health care affordable for poor people. Besides this, several regulators from the Europe as well as the US have increased regulatory scrutiny. They are demanding drug makers to conduct more clinical trials as well.  This is making everything more painful and expensive for already struggling drug makers.

Unfortunately, this has caused drastic fall in revenues of many medicine brands. They are compensating such losses and are reducing costs of their medicines by outsourcing the manufacturing part. So, CMOs are benefiting.

Even generic medicine makers use services of CMOs to fulfill their manufacturing requirements without investing much of money in production.