Outsourcing production reduces costs
With drug producers under great pressure to reduce prices, one contract manufacturer argues that the industry should consider contracting out at least some of its production.
Downward price pressures, escalating drug development costs, stricter validation requirements and unpredictable market futures all affect pharmaceutical companies’ decision-making when it comes to investment in production facilities.
Apart from the high cost of new drug development, the expensive and time-consuming compliance with stricter GMP and/or FDA validation requirements make investment in new manufacturing plant prohibitive at times.
Other driving factors include rising energy prices, direct labour costs and other overheads. While both big pharma and smaller drug producers are affected by all of these factors, contract manufacturers can aid cost containment and help shorten lead times to market by taking responsibility for manufacturing technology, validation and packaging.
Findings published at the end of 2001 by the Tufts Center for the Study of Drug Development in Boston, USA showed that the average cost to develop a new prescription drug is $802m. Moreover, it still takes up to 15 years to develop a new treatment, from patenting the molecule to reaching the market.
Every pharmaceutical manufacturer and contract manufacturer is acutely aware of the need to comply with all the regulatory requirements for each product and every market served. At Cenexi for example, the company must comply with a large number of regional health authorities, all of which make regular inspections. It must also satisfy all the overseas authorities in the countries where its drugs are sold. There is also the good manufacturing practice (GMP) standard to which the company subscribes.
Finally, because veterinary medicines are also produced at the plant, there are veterinary standards to meet. All of these require documentation and time, which costs money.
All pharmaceutical companies are under competitive pressure. While everyone in the industry would accept that the time to market a new drug can be unbearably long, new treatments can still be copied by generic producers long before the development costs have been recovered.
One important factor is that development time for a new prescription drug can take up to 15 years and that of a typical molecule patent may last as little as seven years. Competition from generics can hit the original developer even as its own product reaches the market – driving down prices and lengthening amortisation of the development costs.
Contract manufacturers have convincing arguments for the service they bring to a changing pharmaceutical industry. To satisfy the needs of their clients and exploit the growth opportunities inherent in the market, contractors must embrace new production processes, take greater responsibility in the validation and transfer cycle, and undertake firm commitments for both product quality and delivery. If the industry fulfils these criteria, it has a very healthy future.
Company profile
Cenexi works for human and veterinarian pharma companies. In 2005, it had a turnover of e73m and it estimates that this will reach e80m this year. Cenexi has the capacity to produce 300 million injectable ampoules, from 1ml to 20ml; 1,300 tonnes of solids, hard-gelatine capsules S.1&2 and tablets; ten million units of syrups; 20 million units of suppositories and 120 million items of packaging.
The company offers a full service package and its customers’ products are sold in more than 115 countries. For more information, call Youmna Draghi at Cenexi on +33 1 43 94 88 37, email cenexi.contact@roche.com or visit: www.cenexi.com.
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