In January and February, staff from Nutraceuticals World and Contract Pharma solicited feedback from subscribers to better understand the contract manufacturing market for pharmaceuticals and dietary supplements.

To qualify, participants must have worked with a contract manufacturer (CM) in the last five years. We received responses from 163 qualified individuals; of that total, 85% said they are currently working with a CM.

Based on responses to our online questionnaire, working with a qualified contract manufacturer largely offers companies time and flexibility to focus on core areas likes business development and innovation by creating efficiencies.

Results of our survey are presented via a series of graphs in the following pages.

More than a third (39%) of people who responded to this survey work with large companies employing more than 200 people, while about a quarter (24%) work at small businesses with less than 25 employees. (See Figure 2.)

In terms of the types of products companies market, 63% said pharmaceuticals, 53% said dietary supplements, and 17% said food/beverage. (See Figure 3.)

About a third (34%) of respondents said they have been working with their current or most recent contract manufacturing partner(s) for 1-5 years; 32% between 5 and 10 years; and 27% said the relationship has been more than 10 years. Another 7% said they have been working with their contract manufacturer for less than 1 year. (See Figure 4.)

A lack of resources/expertise continues to be the most cited factor in deciding to outsource manufacturing (28%), followed by the ability to focus on other business priorities (26%), supply chain stability (20%), and cost savings (20%). (See Figure 5.)

About 85% of those surveyed said they conducted an onsite inspection of their contract manufacturer’s facilities within the past 5 years (55% within the past year); Eleven percent said they have never conducted an onsite inspection of their contract manufacturer’s facilities. (See Figure 6.)

Overall, quality certification continues to be the most important factor respondents cited when deciding which contractor manufacturer to partner with (31%), the same found in last year’s survey. Perhaps suggestive of the impact inflation is having, price (21%) overtook industry reputation (15%) for second place, followed by turnkey services (13%), facility inspection (9%), reliability of raw materials (9%), and location (2%). (See Figure 7.)

As for dosage forms respondents said were most important to their business, tablets (61%) and capsules (58%) remain at the top, followed by powders (39%) and softgels (39%), food/beverage (20%), and gummies (18%). (See Figure 8.)

Nearly half of survey respondents (45%) said they value contract manufacturing more today than before COVID-19, while 47% said their perspective has not changed. (See Figure 9.)

When asked to explain how working with a contract manufacturer improved or affected their business, most of the responses we received were positive. Many businesses said their contract manufacturing partnerships allowed for efficiencies that benefited quality, reliability, and at the same time spurred further innovation. Common pain points included supply chain issues, communication breakdowns, and production delays from raw material or
component shortages.

Here are a few of the anonymous responses in their own words. Some have been slightly edited for clarity:

•  We work with a variety of contract manufacturers (CMO) and the supply chain issues that have surfaced illustrate the competence and excellence (or lack thereof) of certain CMOs to adapt and overcome challenges. How communication is provided and their ability to respond to shortages and delays directly impacts our ability to provide products to market. The ability to overcome challenges to acquire raw materials or packaging has made our relationships stronger in many cases, but has highlighted some other weaknesses.

•  Our contract manufacturer is viewed as a strategic business partner and has allowed us to focus on other business areas that are a core strength of ours to further grow the business.

•  The best contract manufacturers play a role beyond a supply chain vendor. They are brand advocates and treat your products as if they were their own. They are thorough in their operations and diligent about quality and capital.

•  Contract manufacturing allows us to focus on our core competencies and not be involved in the granularity of supply chain and production. Moreover, outsourcing manufacturing alleviates the pressures of regulatory and
certification issues.

•  Before gaining scale it is good to outsource so that your own plants can run on big uninterrupted runs of successful products and brands. Outsourcing low volumes and new products reduces the burden on in-house resources.

•  We look at certifications, branded ingredients, award-winning ingredients, technology, and turn-key services. So we look for the best value with the most services, but we also work with specialized contract manufacturers.

•  It’s been very challenging. Some companies continue to be vague regarding expected dates for the availability of backordered ingredients.

•  We have worked with numerous contract manufacturers over the years. This allows us to focus on the manufacturing that we do best, while still offering our clients a large product list to choose from.