The Pharma CDMO Challenge
Outsourcing Adds Value and Reduces Risk in Development Projects, but Partners need to Set up Fair Prizing Models
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.
vice president Global Marketing & Intelligence, Cambrex
vice president, Marketing & Strategy, Rx Oral Dose, Catalent
managing director, Richter-Helm BioLogics
Lukas von Hippel
managing director, Pharma Waldhof
global head Custom Pharma Services, Dr. Reddy’s Laboratories
CEO & president, CordenPharma
CEO, Cerbios Pharma
vice president, business unit head, Dosage Form and Delivery Systems, Lonza
Christophe Le Ret
global marketing director Precious Metals Chemistry, Umicore
global commercial senior director Innovator Pharma, Johnson Matthey
head of Business Development, Marketing & Sales, Siegfried
business development manager, CatSci