The pharmaceutical industry continues to grow and is estimated to be worth $1.5 trillion by 2021. One important driver is the trend towards outsourcing of development and manu­facturing to contract development and manufacturing organizations (CDMOs). What sounds like good news for CDMOs also holds its own challenges — many of these companies are operating in a highly fragmented market that is currently undergoing a significant consolidation. At the same time, many of them are not fully prepared to exploit the maximum potential and willingness-to-pay in project pricing, which calls for new and innovative monetization strategies.

Since price is the single most powerful lever to increase a company’s profits, it is high time for CDMOs to reconsider their project pricing approach. Instead of clinging to traditional cost-plus pricing logic that usually lack consistency, transparency and control, experts propose measures such as harmonizing costing methodologies, incorporating value-based pricing metrics, and systematically using internal project price benchmarks for developing a value-based price model. ­

CHEManager International asked executives and opinion leaders operating in this market to share their experience and advice. We asked the experts to discuss the following questions:

How would you describe the current market situation for pharma CDMOs and which trends affecting your project pipeline do you see?

Jessica Cao: Around 75% of the current development pipeline comes from small and mid-sized companies, contributing to an increase in outsourcing from smaller companies that do not have the resources of large pharma. They need an experienced outsourcing partner such as Catalent to assist in every aspect of development, from drug candidate selection, formulation, clinical supplies, to commercial manu­facturing. CDMOs can help solve challenges and de-risk projects, leading to time and cost savings. Drug design targets can be set, focusing on the key goal, to deliver the best possible treatments effectively, safely and conveniently to patients.
CDMOs must adapt to a range of customer needs, by offering access to proven technologies, or by improving R&D effectiveness through candidate selection or developing drug delivery systems which improve patients’ experience. Catalent’s $27 million investment will commercialize Zydis Ultra technology, a next-generation oral disintegrating tablet (ODT) at its Swindon, UK facility. This enables an increased drug load and taste masking to be incorporated into the conventional Zydis ODT, a unique freeze-dried tablet that disperses almost instantly in the mouth without water. This advancement will further improve patient compliance, leading to better outcomes.
The project pipeline is changing as novel technologies such as biopharma therapeutics and cell and gene therapies mature in their development. CDMOs have begun to invest in these technologies, broadening their offerings to meet the demands of the industry’s evolving research directions.
Another example is bioavailability enhancing technologies such as spray drying. Poorly soluble compounds continue to dominate the pipeline. An increased demand for commercial-scale spray drying has created a significant capacity challenge, with customers waiting an average of 15 months to access commercial spray drying, delaying new treatments. Catalent structured a creative deal with Sanofi, providing the industry with access to Sanofi’s state-of-the art commercial spray drying facility in Haverhill, UK.