Outsourcing biopharmaceutical manufacturing is now a movement with momentum. Diverging and diversifying competencies within biopharma and adjacent sectors is a major reason for this shift.

What are the outsourcing trends, and how fast is this new segment growing? What are the benefits of outsourcing? Here are the things worth knowing.

How much and how fast?

Researchers quantified the growing outsourced biopharma segment in the widely referenced 19th Annual Report and Survey of Biopharmaceutical Manufacturing Capacity and Production published in 2022 by BioPlan Associates.

The report notes that 86.9% of respondents outsourced some biopharmaceutical manufacturing that year, compared to 82.6% the previous year. Respondents also indicated higher spending on such activities over time.

Which activities in biopharma are being outsourced?

Most of the areas of biopharmaceutical manufacturing specialization being outsourced are considered low-value-adding. These include:

● Filling and finishing
● Testing and analysis
● Cleaning and sterilization
● Validation and compliance
● Plant maintenance
● Other routine tasks or protocols

The most commonly outsourced activities at the time of the report’s publication were:

● Analytical testing (other bioassays): 86.9% of respondents outsourced
● Toxicity testing: 79.4% of respondents outsourced
● Validation services: 75.7% of respondents outsourced

Which activities are not being outsourced?

The authors of the aforementioned report differentiate these activities from “higher-value-adding” upstream and downstream bioprocessing and manufacturing.

They also note that activities relating to process development are among those higher-order specializations not seeing outsourcing. These have more to do with corporate responsibilities. In other words, higher-order design, and primary manufacturing and enterprise-planning tasks, remain in-house.

The report named 26 specialization areas—nearly all of which saw at least some outsourcing of biopharmaceutical manufacturing. The 2020 report showed traction in just 18 specialization areas.

Why is the outsourced biopharmaceutical manufacturing segment growing this quickly? What are the circumstances and benefits of outsourcing at this time?

What are the benefits of outsourcing?

The first factor impacting decisions to outsource biopharma specializations is the ongoing COVID-19 pandemic.

Manufacturers experienced widespread supply-chain and labor-supply challenges during the worst of the lockdowns. The companies that could afford to open their doors safely and offload some of their labor requirements to relatively wealthy third-party providers did so. This began the recent wave of outsourcing in biopharmaceutical manufacturing from the top earners down.

Why are more biopharmaceutical manufacturers outsourcing parts of their value chains today? What are the benefits?

Maintaining high quality

Consumers trust drug developers and biopharmaceutical manufacturers to design and fabricate the best product possible and maintain compliance with all applicable laws.

Consumers may not be aware of the networks of vendors, suppliers and contract manufacturing organizations (CMOs) that make this possible, nor appreciate why pharmaceutical supply chains are becoming so complex.

Where in these value chains can outsourcing positively impact the consistency of the final product?

One place to start is API manufacturing. APIs in this context are substances used in finished biopharmaceutical products. The benefit of using them is that primary manufacturers don’t have to expend resources maintaining the quality of ingredients if it doesn’t directly profit from manufacturing. It’s more cost-effective in many cases to outsource that work.

Biopharmaceutical companies have an ethical mandate that informs some outsourcing decisions. Legal aspects are also a concern since this industry doesn’t operate on the honor system alone.

Ensuring compliance

The FDA has published guidance documents outlining best practices for expectation-setting and working with CMOs. Some in the industry have noted that they “create more work” for CMOs and their partners—but the result is a safer industry overall, including more consistent compliance.

Adhering to the sky-high expectations of governing bodies like the FDA and the Medicines and Healthcare Products Regulatory Agency (MHRA) becomes more demanding and complex by the day. The rate of technological innovation means designing a biopharmaceutical product and testing it completely and compliantly have become too differentiated and demanding for many biopharma manufacturers to be able to conduct 100% in-house any longer.

The relatively higher outsourcing rates for toxicology, analysis and validation services support these observations.

Keeping pace with new technologies

When biopharmaceutical manufacturing companies face the decision to outsource or not, the “make vs. buy” dilemma is always part of the conversation. The time and cost involved in building a new manufacturing, finishing or testing apparatus in-house is only the beginning. There are also risks associated with bringing those technologies aboard—including the fear of critical machines becoming obsolete quickly.

Outsourcing can unlock manufacturing capacity and design potential for pharmaceutical companies by granting access to new technologies.

Manufacturing-as-a-service includes specializations, such as robots-as-a-service, IoT-as-a-service and other technologies-as-a-service. IoT alone is a beneficial but pricey investment for biopharmaceutical companies. Outsourcing technologies that serve lower-value-adding specializations makes sense for many.

For a reasonable ongoing contract fee, clients receive access to the most advanced industry technology without the costs of building, maintaining and upgrading it. Some of these specialization areas include:

● Machine-vision inspection hardware and software
● IoT-driven facility maintenance
● Robots and cobots
● Automation for consistency in testing

Understanding outsourcing trends in biopharma contract development and manufacturing

Businesses within the contract development and manufacturing organization (CDMO) industry are expected to continue buying smaller, even more niche-focused companies to diversify their portfolios and revenue streams.

Where does this leave the primary biopharmaceutical development and manufacturing company? What work is left to do? The answer is higher-order design and primary manufacturing tasks. The steadily rising demand for greater quantities of biopharmaceutical products, more diversification and customization within product categories, and faster times to market mean the most value-adding tasks—design and primary manufacturing—require the majority of a modern biopharma company’s available cash and time.

The future of outsourcing biopharmaceutical manufacturing

The overriding outsourcing trend is leaner operations, globalization, diversification, longer supply and cooperation chains, and more clearly defined niches within biopharma manufacturing. More players and specialized roles are needed. No matter the client needs or the CDMO specialty, opportunities are abundant in this segment and will continue to be so for the foreseeable future.

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Emily Newton is the Editor-in-Chief of Revolutionized. She’s always excited to learn how the latest industry trends will improve the world. She has over five years of experience covering stories in the science and tech sectors.