Strategy for growth

The dynamic market for contract manufacturing has seen low-cost countries take on more commoditised processes. Nycomed, a service provider operating in mature markets for many years, has refocused the top end of its market and succeeded through rapid growth.

In an increasingly global business sector, contract manufacturing organisations (CMOs) are being forced to readdress their strategic goals and business structure in order to carve out a bigger slice of the market. CMOs in mature markets like Europe face a challenge from countries where manufacturing can be done at a lower cost, but some still see opportunities to scale up and secure highvalue work.

Nycomed, which until recently was best known as a mid-sized company with operations focused on Europe, has since grown to become a global player, employing over 11,500 people in over 50 countries.

‘This immediate huge growth resulted in a big impact on existing business processes, including contract manufacturing,’ says Dr Herbert Pomper, associate director of Global Contract Manufacturing in Nycomed’s Strategic Operations division. ‘2007 was the year of integration. We started to consolidate a network of 18 manufacturing sites located in 12 countries. This was the birth of our global CMO, which consists of an established network of local managers and their operational teams, coordinated by a central function on a corporate level.’

Long-term partnership
Scaling up dramatically through its acquisition of Altana Pharma has created many synergies for Nycomed, which also revealed a significant amount of idle capacity, including a number of niche technologies to be assigned to long-term partnerships in contract manufacturing. ‘We recognised that these capabilities could be a key strategic issue for continuous growth, in combination with a high level of customer orientation and implementation of competence centres,’ says Pomper. ‘We provided dedicated capacity to serve business partners to whom trust, reliability, competence and versatility are more important than price.’

It has become clear that the services that are most in demand are in areas such as liquid sterile liquids or freezedried powders in vials and syringes, though Nycomed has also seen a lot of work related to sensitive APIs in solid dosage formulations for biotech startup companies.

‘Biopharma is growing fast, and often needs special expertise in formulation and packaging technologies,’ adds Pomper. ‘For example, there is a lot of tableting overcapacity in Europe because it is considered to be a standard technology, which is currently offered in China and India at a more competitive price. But when it comes to sensitive APIs, special packaging concepts or any other need for added value, we are a preferred full-service provider.’

Customer focus
What happened with Nycomed proves that there is significant value to be derived from developing more highly customised services.

‘Our customer-tailored approach means we offer a portfolio of technologies at full-service level,’ says Pomper. ‘For certain technologies, customers can even choose the location of the facility that serves their needs. A back-up site is optionally available as an advantage in this case.’

Market appreciation
The company’s progress also illustrates that some clients are increasingly aware of the benefits of engaging a company that markets its own pharmaceutical products as a partner for contract manufacturing. Nycomed markets a broad range of products for diverse clinical applications covering all stateof- the-art formulation technologies, prescribed medicines and OTC products. For Pomper, this means that clients can be confident that as a CMO the company has the necessary experience and quality standards. ‘We know how to take care of a product from development to registration, through to the end of its lifecycle,’ he says. ‘We treat our clients’ products as we would treat our own. Trust is important in this business, as much as process competence, which is a given.’

For CMOs in Europe, a successful strategy may need to focus on simplicity and high standards of customer service. ‘Versatility comes from our range of technologies,’ notes Pomper. ‘This gives customers the flexibility they need. They can access many technologies through one partner. We guarantee reliability by having the global supply chain of an international pharmaceutical company.’