Strategy & Management

The Pharma CDMO Challenge

Outsourcing Adds Value and Reduces Risk in Development Projects, but Partners need to Set up Fair Prizing Models

05.09.2019 -

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?
  • Which role can CDMOs play in helping pharma companies to manage development, production and supply chain cost?
  • How do you rate the potential of ­value-based pricing models as a contracting strategy and how do your customers respond to that?

Read their insightful answers here.

Harry Christiaens
CEO, Ardena

Matthew Moorcroft
vice president Global Marketing & Intelligence, Cambrex

Jessica Cao
vice president, Marketing & Strategy, Rx Oral Dose, Catalent

Kai Pohlmeyer
managing director, Richter-Helm BioLogics

Lukas von Hippel
managing director, Pharma Waldhof

Ravi Venkataramanan
global head Custom Pharma Services, Dr. Reddy’s Laboratories

Michael Quirmbach
CEO & president, CordenPharma

Gabriel Haering
CEO, Cerbios Pharma

Christian Dowdeswell
vice president, business unit head, Dosage Form and Delivery Systems, Lonza

Christophe Le Ret
global marketing director Precious Metals Chemistry, Umicore

Garrett Dilley
global commercial senior director Innovator Pharma, Johnson Matthey

Marianne Späne
head of Business Development, Marketing & Sales, Siegfried

João Madeira
business development manager, CatSci