Experts Statements: Kai Pohlmeyer, Richter-Helm BioLogics
The Pharma CDMO Challenge
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?
Kai Pohlmeyer: We have seen the biologics market growing steadily over the last years. This growth goes hand in hand with a noticeable shift from big blockbuster products to niche drugs for the treatment of rare diseases. As a complement to monoclonal antibodies, recombinant proteins and vaccines, gene and gene-modified cell therapies which have been firstly approved in 2017 will bring even more variety into the biologics market in the next years.
Which role can CDMOs play in helping pharma companies to manage development, production and supply chain cost?
Kai Pohlmeyer: Starting from research and development over the different clinical phases up to market supply, CDMOs flexibly offer services and manufacturing capabilities covering the whole value chain of biopharmaceutical production by a one stop shop approach.
Collaborations with CDMOs can significantly reduce total development risks and cost as well as time to market. Flexibility means availability of capabilities at different scales and qualities to supply customer’s needs during development of a product and its whole lifecycle.
A good example is manufacture of plasmid DNA which is used as a critical starting material for virus-based gene and cell-therapeutic approaches, mRNA manufacture or as drug substance itself. For the different applications Richter-Helm offers capabilities under R&D conditions and GMP manufacture at different scales ranging — from gram-scale to the 100-gram-scale — providing plasmid DNA for development of a product up to market supply.