In 2023, many people and great companies will have ups and downs. 2023 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 will lower productivity and incur losses. Like many others, it will surely give them a bad financial year. But where there’s a cloud, there’s a silver lining, which 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 external manufacturing due to the spread of the new pandemic threatening to focus mainly on internal manufacturing, the CDMO industry is at a loss in tackling this block in their production. While most CDMO Industries have contracts overseas, it’s becoming a hindrance to effectively taking care of their businesses.
Some countries have lessened their restrictions considering that the pharmaceutical company has a significant function in ensuring that the pharmaceutical needs are duly met. However, it’s still not enough, as many more are still under constraints.
2. Instability in prices
With the pandemic affecting the global market, 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 most companies consider outsourcing, others have decided to go with in-house manufacturing. Unfortunately, this trend has caused the CDMO industry to lose some of the best deals and fewer contracts.
3. Merging of pharmaceutical companies
More and more companies are now merging to reduce production costs, meaning that there were once two CDMO companies, and 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 than join hands?
If this new trend continues, the CRO, COM, and CDMO industries will undoubtedly be in big trouble. But, 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 new pharmaceutical products are produced.
Most countries are closing their ports and boundaries, and it’s becoming more and more challenging to exchange commodities. In addition, as airlines are grounding their operations, the CDMO industry finds it almost impossible to ship their products. Although this is not entirely impossible, transportation prices 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. However, 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%, even more, if this trend continues.
Losses 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 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 holds its breath, new laws might soon be implemented to give governments cheaper 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 2023 as more and more pharmaceutical companies are focusing on house manufacturing rather than outsourcing because the demand is low. Outsourcing is mainly done in high demand, and the same cannot be done for 2023.
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 grows.
Conclusion and Opportunities
Despite all these challenges, the opportunities in CDMO cannot be denied; here are some of the most outstanding options fueled by the pandemic.
CDMOs are actively 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 most companies will look for a way to speed up productivity and meet the growing demand. The demand increase is the right window for the industry as they will need new contracts and make up for the losses incurred during the pandemic. 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 support larger enterprises and increase productivity. An opportunity like this is 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.