Pharmaceutical Contract Manufacturers – The New Reality!

pharmaceutical contract manufacturersPrior to the year 2000, the business model for biotech drug development was to assemble a team of talented researchers to experiment with numerous compounds till they discovered a handful that showed some promise as drug candidates. Once a drug candidate was discovered, the company would typically go out on a “road show” to raise piles of cash to scale out the necessary team to push these compounds through the development process. This process included pre-clinical testing, additional testing in a series of animal models, and finally, if all went well, testing in humans. According to a variety of sources, the average time from discovery of a novel compound to market approval could take 10-15 years. In addition to hiring scientists and other personnel, these companies were also required to build out specialized manufacturing facilities, laboratories and large office buildings. This worked in the 1980’s and early 1990’s because VC firms loved biotech. Then, in the spring of 1992, the biotech bubble burst occurred and the “BTK” index took a plunge, costings investors billions. Much of this was due to biotech management convincing investors that they needed their own manufacturing plants, which were expensive to build and maintain. However as time went on, and the industry matured, it turned out they didn’t need a manufacturing plant. As equity markets tightened, equity raised on successful results became very expensive and investors didn’t want this cash going into bricks and mortar, but into clinical trials.  Outsourcing became a more efficient way to utilize capital at a point the development risk was the highest.  Biotechs could not depend on the public markets anymore until very recently.  Now, virtually no biotech will build a manufacturing plant.  On a more macro stage, outsourcing has become a way of life.  Very few companies remain vertically integrated.

So today, with the cost of clinical failure being catastrophic, the business model has changed. The business model now is to assemble a small “virtual team” of finance, legal, project managers, and business development professionals and outsource the rest to numerous pharmaceutical research organizations and pharmaceutical contract manufacturers (CMOs). The goal now is to keep the team lean and the cash “burn rate” as low as possible, and only spend cash for services when you need them.

Pharmaceutical Contract Manufacturers – A Growth Industry

This new business model is beginning to show promise, by creating numerous smaller virtual companies that can move quickly. In addition, “Why have expensive to operate and maintain pharmaceutical manufacturing facilities that are operating less than 50% of the year?” Sure the argument for internally-owned facilities can be made for increase flexibility and better control of the development timelines, but usually these arguments are made by those with a lot to lose in the form of continued employment. And this is hard argument to defend when a company has no revenue. A stronger argument can now be made that a contract manufacturer can do it faster and better. In addition, I’ve seen on numerous occasions, that once a company is acquired, these expensive facilities are often mothballed, with no future buyer in sight.

Pharmaceutical Contract Manufacturers – The Need to Understand Occupational Hazards Rapidly

Prior to the acceptance of a compound for manufacturing, one of the key questions that a pharmaceutical contract manufacturer must answer is, “Do we have the necessary facilities and controls to protect our employees?” To answer this question, either the innovator company or the pharmaceutical contract manufacturer must have a review of the compound to determine its appropriate exposure control band. These reviews are typically performed by experts that specialize in potent compound safety evaluations. With everyone awaiting an answer so that a selection of a pharmaceutical contract manufacturer can be made, time is of the essence. This is one of the reasons why OEL Fastrac was created – to accelerate the process of obtaining an OEL and control band assignment for common APIs. Other reasons for OEL Fastrac include what I like to call the “Four A’s”:

  • Provide Access to high-quality OEL monographs to companies that would otherwise have a difficult time obtaining them. For example, most pharmaceutical manufacturing companies in developing countries don’t want to deal with the complexities of negotiating consulting agreements and terms. With OEL Fastrac, you simply search our ever growing catalog of OEL monographs, order online and receive the document instantly.
  •  Affordability. With OEL Fastrac, these high-quality occupational exposure limit monographs are one-tenth the price that you would normally expect to pay.
  • Accelerate the process. As previously mentioned, pharmaceutical contract manufacturers live by tight timelines. Any delay in the decision-making process can kill a pending project. With OEL Fastrac there is no delay.
  • Authoritative. All OEL Fastrac monographs are created by occupational toxicologists and EHS professionals with advanced degrees, professional certifications, and decades of industry experience.

So, what’s the new reality for pharmaceutical contract manufacturers? It’s do more, faster, better, and less expensive. OEL Fastrac is one way to assist pharmaceutical contract manufacturers achieve this reality.

About Affygility Solutions

Affygility Solutions provides EHS software, occupational toxicology services, and potent compound safety services to pharmaceutical contract manufacturers all over the world. For more information go to:




About Dean Calhoun

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Dean is the President and CEO of Affygility Solutions. Affygility Solutions provides environmental, health and safety software, potent compound safety, industrial hygiene, containment validation services to the pharmaceutical, biotechnology, and medical device industry. "Dean's Google+ Profile"

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