Own or externalized production

The rapid progress and constant change that the pharmaceutical sector is currently experiencing is posing a real challenge for companies to adapt to each new scenario. This situation of constant change is being increased by the appearance of new biological products. The idea of a pill that can cure everyone’s illnesses has been left behind along with traditional medicine. Medicine is becoming more and more personalized. With high-potency products and with very specific targets that often make it unfeasible to dedicate a production line to one single drug. For this reason, it is increasingly common to outsource production through CMO companies (Contract Manufacturing Organizations).

To contextualize the situation with some data:

• In the last 5 years, half of the new drugs have been produced by CDMOs [1]
• By 2024, it is expected that 1/5 of prescription drugs will be orphan drugs (drugs intended to treat rare diseases, which are difficult for a pharmaceutical company to make economically profitable without help of government agencies) [2]
• It is estimated that the revenue from the biological market in 2024 will be $480 billion dollars [3]

More and more customers are asking us for feasibility studies to see if externalizing drug production is really the best option. Or when facing the possibility to start producing a new medicine, if it is worth having their own production or it is better to outsource the process.

As with any problem, the results of a feasibility study are not one extreme or the other. There are some points that we like to value, that help our clients a lot to make the right decision.

• Productive capacity and speed: they are the starting point. How much is expected to be produced and how quickly. These data help us make a first approach of the equipment and facilities required for the desired production. We also make a first layout proposal that allows us studying the viability of the process and the costs associated with its implementation.
• Production urgency: the design and construction process of a pharmaceutical plant or line is slow, and once completed it must be validated. Medicines are often protected by patents, but for a limited time. Being able to start production as soon as possible is key to get a return on investment in drug development.
• Single use vs inox: it is important to make a comparison of the technologies available for the process. Single use equipment allows us to evaluate new scenarios for products with small batches.
• Previous availability: what equipment, spaces and utilities are owned. Knowing the necessary elements that are already available is key, as it can save many costs. In addition, it is also important to assess whether the space allocated for production is already being used for other purposes (for example, the production of another drug), to assess whether the change is really beneficial.
• Trust: although one of the main characteristics of CMO plants is their versatility, there are times when the available facilities are not adequately adapted to the required process. It is important to select a reliable supplier and audit them before signing any contract to verify that they use correct procedures in manufacturing. Knowing which CMO would be hired while doing the feasibility study is an important help that allows to draw clearer conclusions.
• Experience: “experience is a plus”. And this can be applied to either of the two possibilities. A pharmaceutical laboratory may not have experience in the production of a type of drug, but a CMO may already have produced that type of drug. But there is also the other side of the coin. If a laboratory already has experience in a particular type of process, with trained personnel and skill in the most critical steps, it may mean taking a step back outsourcing production. On the other hand, own production allows to really understand the process and optimize it. It also makes it very easy to attack problems that arise in production, since contact with the production plant is direct.

Making the decision to outsource or not the production of a drug (or part of it) is a very critical decision that can strongly influence the future of a pharmaceutical laboratory. Evaluating all the elements and doing a good analysis to find the best solution requires a lot of knowledge and experience.

If you are interested in learning more about the feasibility studies of own production vs outsourcing and how we can help you, contact us: klinea@klinea.es

[1] PharmSource, Trend Report: CMO Scorecard: Outsourcing of NDA Approvals and CMO Performance, 2018 Edition — http://www.pharmsource.com/trend/cmo-scorecard-outsourcing-of-nda-approvals-and-cmo-performance-2018-edition/

[2] EvaluatePharma, Orphan Drug Report 2018 — http://www.evaluate.com/thought-leadership/pharma/evaluatepharma-orphan-drug-report-2018   

[3] Transparency Market Research, Global Biologics Market: High Profitability and Increased Profit Margins through Premium Prices Encourage Growth — https://www.transparencymarketresearch.com/pressrelease/global-biologics-market.htm