BIg Pharma's Shift from R&D Opportunity for CDMOs, Says Expert

With small companies and biotechs increasingly discovering new products, there are big opportunities for contract development and manufacturing organisations (CDMO), says ex-GSK expert.

Quoting Charles Darwin at yesterday’s GPCM (Global Contract Pharmaceutical Manufacturing) in London, UK, ex-Director of External Supply at GlaxoSmithKline Jim Browne told participants contract manufacturing organisations (CMOs) must adapt to the dynamic pharma industry in order to survive and prosper.

The industry is very different now to how it was in the eighties and nineties when CMOs began to expand, he said, and though big pharma is seeing lower profits, expiry of patents and less products approved, there are still plenty of opportunities for CMOs to take advantage.

“Many more new products are coming from smaller start-up companies than Big Pharma,” he said, referencing his old company GSK which, out of every ten new products, only generate four from internal R&D.

“The next four would be licensed in from start-up companies at an early stage (Phase I and Phase II) and the final two licensed at a late stage or even when it’s gone through legislation.”

The smaller companies, he continued, “are focused on the science and not interested in the development and many will go to contractors who do the development and manufacturing services” on their behalf.

It is, therefore, most probable that the CMO will continue to do the work even if Big Pharma licence the product through to at least the marketing stage, due to the risk of delaying a big product launch, Browne added.

The trend for start-ups to discover new products is likely to continue, as – he continued to say – it is the specialized small firms who remain focused on the one or two compounds and “less risk averse” than big firms who are weighed down by regulatory bureaucracy.

CMO Adaption and Private Equity Interest

For the CMOs themselves, Browne highlighted a number of changes in recent years, including the growth of CMO networks through site acquisition as pharma companies sell off their manufacturing facilities due to over-capacity. 

Furthermore, the trend towards contract manufacturing is set to continue, according to Browne. 

“If you look at manufacturing pharmaceuticals, its not complex. We still make tablets using the same technologies we had 50 years ago. The processes are still the same. There’s no reason why more and more pharmaceutical manufacturing could not be outsourced.

“It is going to have to be the trend and it is being seen by private equity who are investing in CMOs for returns.”