The worsening economic climate will lead to many weaker contract manufacturers going bust, the vice president of SAFC Pharma Europe, Mike Harris, has warned. And the demise of these companies, which make everything from active pharmaceutical ingredients to excipients, could leave pharmaceutical and biotechnology companies exposed, with a gaping hole in their supply chain.
‘Some of these [contract manufacturing] companies have just spent a large amount of capital to put up capacity that is no longer required, but is effectively redundant from both a market and technology perspective,’ Harris says. ‘These companies will cease to exist and I’d ask the question, “When they do, will you have a supply chain?”’
Harris cautions that pharmaceutical and biotechnology companies can not afford to wait around to see if their suppliers survive, describing the loss of supply as ‘catastrophic’. He adds that small companies, squeezed by the credit crunch, will be cutting back on outsourcing just when the weakest manufacturing companies need the business most.
However, despite the economic gloom, Alan Harris, associate director global process R&D, AstraZeneca, says things are still looking good for some contract manufacturers. Although small pharmaceutical and biotech companies are likely to have to cut back on their outsourcing budgets, this is likely to compensated by greater spending by the drug giants. ‘Overall for early development there’s clear trends that there will be more outsourcing… which is, I guess, good for CROs [contract research organisations].’
SAFC’s Harris says that embracing new technologies and processes to improve efficiency will separate successful contract manufacturers from the rest. ‘The next few years will see rationalisation in the manufacturing sector and we’ll see these companies with sub-standard facilities and quality standards… and those unable to innovate leave the industry.’
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