Contract manufacturing organizations (CMO’s) have witnessed tremendous growth during the last decade and are expected to continue their growth trajectory at about 7 percent over the next five years. Outsourcing the manufacturing function ensures the pharmaceutical companies to hit the market early, free up their facilities and resources, and focus more on their core business — all while reducing the costs of their drugs.
CMO’s business model has also undergone a paradigm shift. They are no longer just a one-off manufacturing option but are considered to be an integral part of the supply chain of biopharma companies. According to an ISR report — Contract Development and Manufacturing Outsourcing Models — only one-third of manufacturing activities which include commercial and developmental stages are conducted in-house. This point to the increased adoption of outsourced manufacturing practices in the pharma sector.
Earlier, the CMO market was partitioned with numerous players contributing to the industry’s revenue and Contract Manufacturing Organization relying on a single client for almost 50 percent of their income. This would increase the bargaining power for other pharma companies, leaving CMO’s with little chance to negotiate. However, later that period, a wave of consolidation is being witnessed among CMO’s. This will not only result in reduced competition among CMO’s but also will increase their bargaining power while negotiating with pharma companies.
Benefits of using a contract manufacturing company
Here is a list of the advantages of using a contract manufacturing company.
- Cost savings: A contract manufacturing company offers a significant cost advantage over the internal production facilities of an organization. The factors that take part in reducing the cost are skilled labor, reduced errors, bulk purchases and much more. As the CMO’s will specialize in developing certain kinds of products, it can start a high-volume production line while implementing all of its cost-saving measures.
- Operational advantages: By using a contract manufacturing organization, your business gets a significant operational advantage. If the demand for the specific product is high, the contract manufacturing organization provides additional production capacity to satisfy your business with a sharp increase in short-term demand. To add more, a business that desires to develop its new products can use the Contract Manufacturing Organization to test the market before implementing full-term production facilities for the new product.
- Required flexibility: One of the greatest advantages of using Contract Manufacturing Organization is its flexibility. The complete business model of a Contract Manufacturer is built on providing the customers with the precise product that they need. Designing, testing and revising are day-to-day operations of this organization which lends to their expertise and ability to adapt to specific product needs. This expertise means that your product will hit the market at the earliest, and with higher quality than the same product developed without the help of CMOS.
- Increased productivity: An experienced Contract Manufacturing Organization will ensure to increase the production rate of your business. They help your product to get into the market quicker with a superior working condition when compared to other products.
Thus, seek the help of the Contract Research Organization to improve your business to the next level.