Contract Research and Manufacturing Services

Contract Research and Manufacturing Services

By Team Molkem

How often do we hear of companies not actually manufacturing the product that they eventually sell to the end consumer or distribute to a B2B specialist who then goes on to sell further down the line? Very often, in fact the business world is more and more reliant on outsourcing manufacturing skills and processes leaving them with enough time and without the added hassle to just visualize and help grow the business model.

Contract research and manufacturing is a process under which the parent company of the product does not actually manufacture the product themselves. Instead, the company chooses to outsource all production activities to contract manufacturers who have a better know how and infrastructure to manufacture the best version of that product at the lowest possible costs. Contract research manufacturers are those who manufacture other company’s products on a contract basis as the name suggests. Contract research manufacturers obviously need to have a specialized expertise in the production process of the product that they are aiming to manufacture upon contract. Parent companies then put their own label and packaging on the products manufactured by contract producers and have their own sale and distribution channels and networks to eventually reach the product to the end consumer.

The parent companies provide complete details like appearance, impurity profile, assay, specifications etc. of the product that it wants to the Contract research and manufacturing service provider. Sometimes the company even provides the raw materials to the outsourcing manufacturers and take back the finished product. There are some set quality standards decided and explained to the outsourcing producers by the companies. These quality standards are used as benchmarks for inspection of goods manufactured by another manufacturer. This is a crucial step because these products are required to pass certain manufacturing standards set by respective regulatory authorities of the country. Contract research manufacturing is beneficial for the company as it helps in minimizing cost and focusing on more functional areas.


A Number’s Game

Contract research organisations are essential to the pharma, biotech, and MedTech industries. They tend to support clients’ efforts to test, refine, and market the latest pharmaceutical/healthcare products and medical devices. The global CRO market value has already reached $39 billion in 2018 and is expected to exceed $44 billion by 2021 even with the advent and ill effects of Covid-19. This will happen due to patent expiration, proliferation of generic medications, and technological innovations like mHealth and big data influence product development. All of these phenomena eventually lead to greater outsourcing of work to CROs and hence the range and growing rise of the market.

At the same time, the CRO marketplace is becoming increasingly competitive because of a trend of mergers and acquisitions that enhance the capabilities of larger companies to endeavour towards full-service and international reach. Even the mid-sized and smaller CROs are focusing on niche sectors and a more personalised approach to their sponsors. This incredible growing market for Contract research and manufacturing also creates a wealth of new clinical research jobs for candidates and clinical recruitment agencies in major hubs. This is a global occurrence and has suitably spread throughout Europe, the USA, and emerging markets in the Asia Pacific.

With expansion, consolidation, and innovation continuing to surge throughout the Contract research and manufacturing industry, 2021 is sure to be another year of change progress and excitement for both large and small CROs. The year will hopefully entail the boosting of employment through increased demand for Clinical trial assistants and clinical research associates in the pharmaceutical sector and elsewhere as well.


Advantages of Contract Manufacturing

Bulk Manufacturing

Contract manufacturing helps in minimizing the cost of production for the company. Under this, the company does not manufacture its products itself. Rather the production activities are outsourced to other manufacturers. Manufacturers produce large amounts of products for different customers. This helps because they acquire cheap materials in bulk and take advantage of the concept of economies of scale. This works simply on the principal of higher production, lower costs.


Sales. Sales. Sales.

By having outsourced the modalities of the manufacturing process Contract manufacturing helps companies in paying attention to functional areas like sale and the bottom line. Selling of products is an important task for the businesses. Almost all products today face tough competition in the market to survive and hence need the extra sales effort and time. Companies, through outsourcing of its production activities, get more time to focus on these activities.


Product Quality

Under contract manufacturing, products are not manufactured by the company itself. Companies basically outsource their production activities to contract manufacturers. These manufacturers are highly skilled and expert in production activities ensuring the best possible standard of manufacturing at the lowest price point possible. They produce high-quality products at lower costs which helps companies to provide good quality products to its customers without having to make the product inexplicably expensive.


Cost Savers

Contract manufacturing helps parent companies in saving huge capital costs usually required for setting up and sustaining the manufacturing and production process. This means that companies are free of the burden of investing large amounts in production plants and several other types of equipment along with the specialized labour needed to help them function at optimum. It saves the company cost of labour involved in paying wages and training. This is why companies are happy to outsource their production activities to low-cost countries.


Easy Market Entry

There are various trade barriers in many countries to perform business there. Companies cannot enter and sell their products there. Under contract manufacturing, it becomes easy for companies to enter into different countries. They give the contract to the manufacturers in different countries producing their products. It helps in entering different markets.


India: A Contract Research and Manufacturing Player of Note

The global pharmaceutical market in terms of outsourcing has been estimated at USD 115.7 billion, of which 49% is accounted for by contract research and manufacturing organizations. Within India itself, the contract research and manufacturing market has seen a sharp growth from approximately USD one billion in to USD 1.97 billion by 2023 as per the findings of a 2018 market research report.

There is little question that India has managed to consolidate its stronghold on the global contract research and manufacturing industry especially after the global debacle of Covid 19. India is already catering to 40% of the global drug demand in in terms of volume and is set to significantly magnify this number thanks to a varied set of Government reforms. According to the Secretary General of the Indian Drug Manufacturers Association, he expects the overall growth rate for contract research and manufacturing services to be even higher than the average growth rate of the overall pharmaceutical industry in the next few years to follow.

Because India has shown greater willingness and acceptance towards meeting and adhering by international guidelines policies the future has begun to look brighter for the contract research and manufacturing industry. India has also respected global intellectual property rights while the global community as always continues to recognize the potential of India’s educated, accessible and low-cost workforce. Noticeably, this also creates a large collection of ethnically diverse patients who can be beneficially used for clinical trials.

The initial triggers for faster exports for Indian pharma companies were supply and production disruptions and associated shortages across global markets. By becoming more self-reliant across multiple spheres, India has managed to cross over these obstacles efficiently and effectively.

Even Covid 19 has not been able to stop or for that matter even slow down India’s contract research and manufacturing abilities. India in 2020 successfully delivered 40% returns, despite the early disturbances to operations and supply chains. It could do so because of the backing of immediate and appropriate policy measures, which catered to more than normal domestic and global pharmaceutical demand during the pandemic.

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