Single-source contracting could speed drug development
- Biopharma companies that outsource to a single manufacturing contractor rather than multiple vendors could see significant cost savings, according to a recently published white paper from the Tufts Center for the Study of Drug Development.
- The modeling study, which was funded with a grant from Patheon, Inc., found one-source contracting reduced the duration of manufacturing processes, thereby shortening development times by an average of 14 weeks — although the Tufts Center based its analysis on only five drug projects from a single company.
- Speedier development times led to average after-tax savings of $20.6 million and increased net revenues of $24.1 million from earlier launches of the drugs — a net gain of $44.7 million.
Contract manufacturing organizations (CMOs) play an important — and growing — role in both drug development and production. As in other industries, outsourcing certain functions to a specialized contractor can be cheaper and more efficient, especially for a cash-conscious biotech hesitant to invest tens of millions in manufacturing from the start.
The Tufts Center study suggests funneling that business to just one CMO rather than multiple can speed up development and save drug companies money.
"The results of this study suggest potential financial benefits from single-source contracting," said Joseph A DiMasi, director of economic analysis at the Tufts Center, in a statement put out by ThermoFisher Scientific (which now owns the study sponsor Patheon).
The authors do note that this is a small study, modeling savings based on a handful of projects. "Further research expanding on this analysis with respect to the number of projects and firms examined would be useful in confirming these results," they write in the report's conclusion.
Yet the findings dovetail nicely with ongoing consolidation in the CMO and CDMO fields over recent years. Patheon was bought up by Thermo Fisher for $7.2 billion this past May, while the Swiss drug manufacturing giant Lonza swallowed Capsugel Inc for $5.5 billion late last year. Smaller deals like Catalent Inc's near $1 billion purchase of Cook Pharmica LLC in September have also contributed to the trend.
And the rest of the outsourcing industry has been busy too, with contract researchers InVentiv Health and INC Research merging this year, and Quintiles joining forces with IMS Health Holdings last year. LabCorp, which became a CRO when it took over Covance in 2014, recently boosted its capabilities by acquiring Chiltern International.
Consolidation can be a plus for biopharma, offering more options and capabilities under one roof. These changes might mean less for big pharmas with established contracting relationships or their own manufacturing network. But for smaller and mid-sized companies, cutting down on the number of vendors could boost efficiency.
All that said, it certainly benefits ThermoFisher and its Patheon business to promote studies like this: after taking over Patheon, ThermoFisher is now just the kind of single-source contracting option the study sees as beneficial.
- Tufts Center for the Study of Drug Development White paper
- BioPharma Dive Consolidation in the CRO space a plus for biopharma
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