Outsourcing extends the lifecycle of your Rx and OTC products:

  • Alternative sourcing becomes a valid option as volumes in the original sourcing plants decline or plants are reconfigured for new products.

  • Higher competitive threats require local solutions and tactics, such as quick response time and a high degree of demand volatility.

  • Established products and brands are leveraged with line extensions to defend market share.

 

When does it make sense to outsource commercial manufacturing?
  • Outsourcing is part of the global trend. At present, 50% of the production for active substances is outsourced. Commercial manufacturing is outsourced for approximately 20% of finished products - and this figure is swiftly increasing - as pharmaceutical companies continue to focus more on research and development plus marketing. Some predict that commercial manufacturing will reach an outsourcing ratio of 50% within a few years. Pharmaceutical companies increasingly commence their outsourcing process during the final approval phases for NCE.

  • Cost savings may be achieved through outsourcing manufacturing. Typically, processing costs, excipients and packaging materials comprise approximately 8-10% of the selling price of a pharmaceutical product. If these costs amount to more than 10%, then outsourcing will deliver a cost savings that can increase profitability, or, be re-invested into revenue building activities.

  • Lengthy lead times (longer than 2-3 months) or high minimum order quantities (more than 2-3 months of sales) can severely limit the flexibility of a local organization in responding to its marketing activities. Contract manufacturing is able to solve this issue by offering standard short lead-times. In Asia, many relatively old products are sold very successfully; however, headquarters may decide to discontinue an old product. We can continue to manufacture the product either under a license, or acquire the rights to the product. This secures a continuous supply of the product for the local business unit while eliminating the manufacturing complexity for our client.

  • Adapting products to the needs of a local market can support revenue growth. This is critical when building revenue and market share in segments shifting to OTC as products' success becomes more dependent on ever-changing consumer needs. Extending the lifecycle is imperative as many older products contribute a significant amount to the profits of a pharmaceutical company. A greater life cycle can be realized by developing new release forms, more modern packaging or introducing line extensions that shore up marketing momentum.