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Pharma: Outsourcing


www.chemicalsknowledgehub.com


Perspectives on Pharma in 2021: Executive Survey


This article summarizes the key findings of more than 500 industry experts exploring manufacturing in a post-COVID world, spanning everything from implications for pharma manufacturing all the way through to the overall impact of COVID-19 on the business outlook for the pharma industry in 2021.


T


here has been much pharma industry debate about what the longer-term implications of COVID-19 might be for pharma manufacturing – especially


now that a post-pandemic world is coming into view as vaccine production and administration is scaled up, the globalized supply chain and the role of potential secondary and even tertiary sources of manufacturing bearing much of the focus. In the CPhI survey of more than 500 executives, perhaps unsurprisingly, 56% believe that the next few years will see more of the supply chain ‘repatriated to domestic sources’, as governments and companies look to reduce complexity and increase regional self-reliance. Coinciding with this finding, 35% of respondents believe that European- and US-based CDMOs will therefore be the main beneficiaries of geo-sourcing strategies. Interestingly, 32% of respondents stated that they believed big pharma will also look to deleverage some of its exposure in Asia – and utilize in-country manufacturing or manufacturing on a regional basis. However, emphasizing the increased uncertainly in the market and ambivalence on this issue, 49% of respondents suggest that, despite short-term disruptions, ‘pharma manufacturing will continue with a significantly international supply chain’. This reflects that at present the majority of


ingredients and intermediaries are still produced in Asia – particularly India and China – and with sizable economies of scale and cost advantages this is unlikely to change quickly, despite global intentions.


Is it realistic to try and bring the manufacturing of starting materials home to Western markets (from low-cost hubs in Asia, where 80% are sourced from)? Respondents were asked ‘if it is realistic to localize the manufacturing of starting materials into Western markets’, in an effort to reduce dependence on the often more competitively priced suppliers from Asia. Perhaps surprisingly or as consequence of changing market sentiments, 48% said yes, while 37% said no, citing it is too disruptive to a complex industry


24 March/April 2021 • Issue 2


1 More of the supply chain will be repatriated to domestic sources 2 R&D will be slowed as chemistry services move away from China 3 API sourcing will remain internationalised, but final dosage manufacturing will move towards domestic providers 4 There will be short-term disruption, but pharma manufacturing will continue with a significantly international supply chain


5 European- and US-based CDMOs to be big beneficiaries 6 Big pharma will deleverage its risk exposure in Asia 7 Biotechs and start-ups may come under VC pressure for localised development (national level) to reduce risk 8 None of the above/too early to say for sure


such as pharma. The remaining 15% also said no, but cited that it ‘would not be a desirable move and have significant complications’. There is no doubt that higher labour costs would result


in higher prices for raw materials should they be increasingly manufactured in the West, but the respondents seem fairly split regarding whether they believe such a trade-off between increased


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