Pharmaceutical Outsourcing Opportunities Post Launch: Contract Manufacturing, and Sales and Marketing - Market Research

Pharmaceutical Outsourcing Opportunities Post Launch: Contract Manufacturing, and Sales and Marketing
Kalorama Information
July 1, 2004
232 Pages - Pub ID: KLI962299
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After decades of sustained growth and profitability, the pharmaceutical industry has been positioned as one of the few recession proof industries based on its performance through multiple economical cycles. In recent years, there have been visible strains in the pharmaceutical business. With a downturn in fortunes, many pharmaceutical companies are searching for business solutions to streamline operations and cut costs as they strive to continue generating above-average shareholder returns.
Outsourcing has become an integral, ongoing element of pharmaceutical companies? business strategy. In the past year, Kalorama Information has conducted studies on pharmaceutical outsourcing in both the drug discovery and drug development phases. In this current study, we take a look at outsourcing even later in the drug life-cycle: contract manufacturing and contract marketing and sales.
The use of third parties to develop and manufacture drugs was confined to providing access to resources not available internally or to providing resources during peak times. Today, however, outsourcing manufacturing is a first-line decision. It is estimated that the U.S. market for outsourced pharmaceutical manufacturing is growing at the rate of 10 to 12% annually. Pharmaceutical companies will continue to fuel much of this growth as they outsource an increasing number of products and services. Biotechnology companies, which have almost doubled in number during the past five years, also contribute to this trend as they seek ways of bringing their products to market without making capital investments in their own manufacturing facilities. Biopharmaceutical manufacturing, a complex and expensive operation, is a major factor in this market. The use of outsourced expertise and capacity in biopharma was one of the major areas of study in this project.
Contract manufacturing can be categorized into three broad areas: biomanufacturing, primary, and secondary manufacturing. Biomanufacturing includes manufacturing of protein-based biopharmaceutical products. Process development in biomanufacturing is complex and involves expertise molecular biology, purification and advanced chemistry. Primary manufacturing involves the custom manufacturing of pharmaceutical ingredients. This sector includes fine chemicals, APIs, custom chemicals and intermediates. Secondary manufacturing, from the point of view of our report, is concentrated on sterile manufacturing, which produces sterile injectable drugs, and specific oral drugs, which require lyophilization.
Historically, pharmaceutical companies maintained their own sales and marketing divisions. However, pharmaceutical companies and especially smaller developers are increasingly turning to contract sales force organizations to provide the extra market muscle they need. The result has been a strong market for companies supplying these services. CSOs offer several benefits for clients. They allow companies to economically reach physicians they would not ordinarily be able to call on, providing additional sales coverage tailored to a specific need, whether it is territorial or market segment in nature. This is the first study to examine and analyze the market for contract sales.