In the year 2020, a lot of people and great companies have had their ups and downs. 2020 has undoubtedly been a challenging year, and the CDMO companies have had their fair share. In this period, the industry has faced many challenges that are sure to lower productivity and incur losses. It is sure to give them a bad financial year, like many others. But where there’s a cloud, there’s a silver lining, and that is true. There have been opportunities to add light to the darkness.
A Contract Development and Manufacturing Organization (CDMO) benefits from outsourcing by other pharmaceutical companies through services such as manufacturing medicinal products and, of course, development. As challenging as the year has been, the CDMO industry might have been an excellent point to grab new upcoming opportunities for themselves.
Here are the Top 7 challenges
1. Restrictions of global imports and exports.
With new restrictions on doing external manufacturing due to the spread of the new pandemic threatening to focus mainly on internal manufacturing, the CDMO industry are at a loss on how to tackle this block in their production. While most CDMO Industries have contracts overseas, it’s becoming a hinder to take care of their businesses effectively.
Some countries have indeed lessened their restrictions considering that the pharmaceutical company has a significant function in ensuring that the pharmaceutical needs of a country are duly met, it’s still not enough as many more are still under constraints.
2. Instability in prices
With the pandemic affecting the global market at large, the economy in almost 30 countries has had a downward trend; some are collapsing. The prices in pharmaceutical industries have, with time, seen a fluctuation in their prices as the government demands a decrease in rates.
While this has made most companies consider outsourcing, others have decided to go with in house manufacturing. This trend has caused the CDMO industry to lose some of the best deals they had and fewer contracts in between.
3. Merging of pharmaceutical companies
More and more companies are now merging to reduce production costs meaning that where there was once two CDMO companies, only one will be needed to cater to the new company formed from the merging. It is not exactly a big surprise, and it was certainly expected as more and more companies are looking to reduce the cost of running the company and what better way to do it that join hands.
If this new trend continues, then the CRO, COM, and CDMO industries are certainly going to be in big trouble. Of course, until things go back to normal. And although this may take longer than expected, the CDMO industry is still needed to ensure that the demand is met and the production of new pharmaceutical products.
Most countries are closing their ports and boundaries, and it’s becoming more and more challenging to exchange commodities. As airlines are grounding their operations, the CDMO industry finds it almost impossible to ship their products. Although this is not entirely impossible, prices in transportation have gone considerably higher than ever.
Transportation has become a significant hindrance to the industry, and it’s not a secret that many pharmaceutical companies opt to handle the manufacturing themselves. The more and more overseas-based CDMO companies find it challenging to deal with this trend, new ways are being exposed to make it easier to get the products.
5. Working from home
It is undoubtedly an excellent way to curb the pandemic’s spread, but its effect on most manufacturing industries is undeniable. The CDMO has been affected. Working from home has reduced their productivity by at least 45% and even more if this trend continues.
Loses incurred will not be quickly recovered, and the industry will suffer more uncertainty over the years if the pandemic doesn’t end soon. If this challenging situation is not dealt with promptly, the blow might be too big for the industry.
6. Drop at the drug price
Most government bodies ask for a decrease in the price of medicinal products as they complain that the products may be too pricey. As the pharmaceutical industry hold their breaths, new laws might soon be implemented to give governments cheaper deals on medicinal products. The drop might affect the CDMO Industry directly and push them further adrift. Going in the minds of most CDMO companies is how low the prices will be and what that will mean for their industry.
7. Fewer contracts in between
There are fewer contracts on the table in 2020 as more and more pharmaceutical companies are focusing on house manufacturing rather than outsourcing because the demand is low. Outsourcing is mainly done when there’s high demand, and the same cannot be done for 2020.
With fewer contracts, the CDMO is growing at a snail’s pace and will only see a rise when the demand for the current losses increases. Of course, this is expected when the pandemic is over, and the economy starts to grow once more.
Conclusion and Opportunitiees
Despite all these challenges, the opportunities in CDMO cannot be denied; here are some of the most outstanding opportunities fueled by the pandemic.
CDMOs are actively involved in looking for vaccines for the coronavirus that has seen the world losing their beloveds. They are also beneficial in developing medicinal products and trial drugs that will change the pharmaceutical industry forever.
A recent report shows that the industry will experience a growth sprout after the pandemic as some most companies will be looking for a way to speed up productivity and meet the growing demand. The demand increasing is the right window for the industry as they will need new contracts and make up for the losses incurred during the period the pandemic lasts. Most, if not all, companies will need to outsource to meet their larger goals.
Furthermore, several government bodies have plans to help boost the CDMO Industry to enable them to support larger enterprises and increase productivity. An opportunity like this is indeed what the industry needs to help bring them back to their feet. And with this, the growth of these industries is expected to surpass earlier expectations.