Earning a Large Chunk of the Cake
Daniel Mueller, CEO, Senn Chemicals
Daniel Mueller: The most obvious effect of consolidation in the pharmaceutical industry is a pronounced shift to those activities within the organization that provide the most profitable returns, closely followed by outsourcing activities where smaller profits can be generated. Chemical as well as pharmaceutical manufacturing in house are very cost intense activities regarding investments and maintenance. If the equipment and infrastructure cannot be optimally utilized then costs of goods manufactured tend to be higher than sourcing the same goods from specialized CMOs with maximized utilization of resources. The well-organized CMOs can step in and earn a large chunk of the cake by delivering highest levels of customer service.
Short decision paths, efficient development and manufacturing processes, ability to deliver highest quality, flexible employees and organization structures, all of which smaller organizations have an advantage over larger consolidated corporations, are the key success factors for CMOs. This can be achieved either by specializing and optimizing the in-house processes or by improving the cost structure through mergers or acquisitions. Simply put: well positioned CMOs have a huge opportunity to grow and be successful due to the trend of consolidation in the pharmaceutical industry.