contract manufacturing

IMS: Pace of outsourcing accelerating

Tracy Staton — Tue, 27 May 2008 09:39:45 -0400

Drugmakers are pulling out of manufacturing at an unprecedented rate, according to a new report from IMS Health. Four of the top 10 pharma players announced big new outsourcing programs last year. That's evidence that pharma execs are thinking in vastly different ways from their predecessors, who believed R&D and manufacturing had to work hand-in-glove, and that the skills required to make drugs couldn't be found in emerging markets.

This shift toward contract manufacturing has risks, IMS concludes. First, there are safety concerns. Just think of Baxter's heparin supplier Scientific Protein, which made crude heparin in partnership with a Chinese manufacturer whose plant was riddled with problems when the FDA finally inspected it after millions of doses of the blood thinner had to be recalled. Then there's Sanofi-Aventis, whose contract manufacturer went bankrupt, leaving Sanofi to deal with its manufacturing breaches. Secondly, in other industries, contract manufacturers have found ways to enter the market as competitors. Finally, there's economic implications of shipping work to emerging markets. Europe, for instance, counts 640,000 pharma jobs. If they are perceived to be under threat from outsourcing, politicians might intervene.

- read the story at Outsourcing Pharma

CMOs growing 14 percent annually

Mon, 12 May 2008 06:59:56 -0400

With Big Pharma cutting back, CMOs are picking up the slack. The worldwide market for biopharmaceutical contract manufacturing reached $2.4 billion in 2007, a year-over-year leap of 14 percent, and industry insiders are predicting an equal amount of growth for 2008. Some companies are even predicting more than 25 percent internal growth. "As big pharmaceutical companies look to cut costs, they have put some in-house...projects on hold, and likely they will increasingly rely on outsourcing," a custom manufacturing official for Lonza told Contract Pharma.

The only dark spot in the industry survey? Worries about the credit crisis and how it might affect funding for smaller companies and the value of the dollar.

- see the report in Contract Pharma

Related Article:
New companies flooding CMO market

AZ reaffirms whole-hog API outsourcing

Wed, 30 Apr 2008 06:59:54 -0400

Remember last fall when AstraZeneca EVP David Smith said the company was looking to outsource most of its manufacturing? And the ensuing outcry had AstraZeneca's PR operation backpedaling like crazy?

Well, after AstraZeneca settled its differences with Ranbaxy Laboratories, Smith's boss affirmed a big chunk of those outsourcing plans. In a conference call about the Ranbaxy deal, CEO David Brennan (photo) said that AstraZeneca wants to outsource all API manufacturing within 10 years. AstraZeneca, remember, agreed to hand over manufacturing of Nexium's active ingredient to Ranbaxy as part of the settlement. "This move is absolutely consistent with our supply chain strategy," Brennan said. "We have long-term plans to exit all API production over the next five to 10 years."

While that's not exactly "most" of AstraZeneca's manufacturing, it is a sizable shift. Stay tuned.

- see the article in Contract Pharma

ALSO: India's Dr. Reddy's laboratories agreed to buy BASF's contract manufacturing plant in Shreveport, LA, which focuses on turning out finished prescription and OTC liquids, tablets, and creams for the U.S. market. Terms weren't disclosed, but the business brought in $43 million for BASF last year. Report

New companies flooding CMO market

Thu, 17 Apr 2008 06:59:56 -0400

More evidence that biologic drugs are where it's at: Experts are predicting tough times ahead for contract manufacturers that focus too closely on Big Pharma's bread-and-butter small-molecule products. Contract biomanufacturers, on the other hand, are seeing stronger growth. Companies such as Kendle--which reported more than 40 percent revenue growth last year--and Icon Clinical Research are posting big gains.

Plus, here's a silver lining to the new caution among drug regulators: Contract research organizations that zero in on clinical-development manufacturing, on the other hand, are doing "quite well," with 20 percent or higher revenue growth--at least in part because watchdogs want longer, larger Phase III trials and post-approval monitoring, too.

Signs of potential hardship lie ahead, though. Big Pharma has been investing heavily in biologics capacity, which could cut into outsourcing of those products. And as more and more contract manufacturers enter the market--some by buying plants that Big Pharma has been offloading--price competition is rearing its ugly head. "This overcapacity is already leading to pricing pressure," Pharmsource president Jim Miller said at a recent trade show. "And this is before serious Asian competition has entered the market."

- see the story at Outsourcing Pharma

SPOTLIGHT: Hikal wins Pfizer manufacturing deal

Mon, 07 Jan 2008 06:59:52 -0500

An Indian contract manufacturing company is jumping for joy after Pfizer chose it as a supplier of active pharmaceutical ingredients. Hikal will make the APIs at its FDA-approved manufacturing plant in Bangalore. Interestingly, the Indian company had been considering a buyout of Pfizer's Ireland operations, but dropped out of the bidding. Release

Pharma feeds contract manufacturing

Wed, 02 Jan 2008 06:59:56 -0500

Big Pharma announced thousands of layoffs in 2007. Companies have already started passing out pink slips. But a flurry is still to come as Bristol-Myers Squibb, Novartis, GlaxoSmithKline and others push forward with their restructuring plans. Look for hundreds of millions in charges against earnings as these companies lower the ax. BMS has said it expects $1.3 billion in costs associated with its restructuring, for instance.

As staff goes out the doors carrying boxes of their personal effects, entire plants are being shuttered or sold off. Does that mean drug makers won't be making drugs anymore? Well, they won't make all their meds themselves. In a word, outsourcing. AstraZeneca plans to farm out a big chunk of its manufacturing--perhaps all of it--within 10 years. Pfizer aims to double its contract manufacturing to 30 percent from 15 percent.

So pharma will definitely be a slimmer sort of business by year's end. Will it be meaner as well as leaner? We'll see.

- see our special report on the top layoffs of 2007
- here's more on BMS's leaner future in the Star-Ledger
- take a look at this report on AstraZeneca's outsourcing plans
- read the article on Pfizer's intent to move drugmaking to Asia

Related Articles:
AstraZeneca to outsource manufacturing. Report
Pfizer plots big outsourcing push. Report
Chinese outsourcing poses new risks. Report

ALSO NOTED: JHP takes over King Pharma plant; AstraZeneca expands giveaway program

Thu, 04 Oct 2007 06:59:50 -0400

> King Pharma sold off its Rochester, Michigan, manufacturing plant to JHP Pharmaceuticals for $93 million in cash; JHP will take on the plant employees and contract manufacturing there. Release

> AstraZeneca is adding 150 more facilities to its list of healthcare providers that get free AZ drugs for low-income patients. Report

> A new study shows that flu shots do benefit patients 65 and older, adding fuel to the argument over the efficacy of the vaccines in the elderly. Report

> The Irish pharmaceuticals distributor United Drug says its year-end profits will beat market expectations, with double-digit year-over-year sales growth. Report

> Three of Europe's biggest drugmakers have teamed up with the British government to launch Stem Cells for Safer Medicines (SC4SM), a non-profit that will develop stem cells for safety testing of new drugs. Report

And Finally... Oh, the tangled web of intellectual property claims woven by stent makers since the devices were born in 1994. With $6.5 billion in annual sales at stake, no wonder so many companies are fighting over who owns what. Article

AstraZeneca to outsource manufacturing

Mon, 17 Sep 2007 06:59:58 -0400

How many drugs would a drugmaker make if a drugmaker didn't make drugs? More, says AstraZeneca, or at least more profitable ones. The company is planning to outsource its manufacturing--all of it--starting with the basic, active ingredients in its products and then fanning out from there. Contract manufacturers in China and India are most likely to get the business, company officials told the Times of London.

AstraZeneca now has 27 manufacturing facilities in 19 countries, but the company already has been whittling away at them. Most of the company's previously announced job cuts--7,600 so far--have hit manufacturing and supply-chain operations. In the end, AstraZeneca aims to be simply an R&D and marketing organization.

Will other drug makers follow suit? Big Pharma has been fairly conservative about handing over manufacturing to others, but several companies have jumped on the outsourcing bandwagon lately. Perhaps there's more to come.

- read this article on AstraZeneca's outsourcing decision
- see this report for more on the trend

Related Articles:
AstraZeneca cuts 7,600 jobs. Report
AstraZeneca announces restructuring and buyout. Report
AstraZeneca to continue ambitious deal-making. Report
AstraZeneca lays out road map for recovery. Report