The Pharma ChemOutsourcing conference, an annual event that brings together pharmaceutical companies, CROs, and CMOs to discuss industry trends and perspectives, was held in Long Branch, New Jersey, last week. The central question at the heart of many of the discussions was a fundamental but important one: where is the opportunity in pharmaceutical outsourcing, specifically in pharmaceutical chemical development and manufacturing?

The answer to that question as it was discussed reflected many of the larger and well-chronicled trends affecting the pharmaceutical industry, such as generic-drug incursion, declining R&D productivity, and the ongoing need for cost reduction in development and manufacturing. At one level, these pressures make outsourcing an attractive alternative to internal development and manufacturing as a means to reduce fixed cost structures and achieve greater flexibility, which is a plus for CROs and CMOs. On the downside, however, CROs and CMOs face greater competition as pharmaceutical companies, particularly large pharmaceutical companies, seek to reduce their supplier base and partner with strategic, if not preferred, providers as the choices for these potential CROs and CMOs broaden globally.

So how do CROs and CMOs make the cut or stay in the game and achieve a competitive advantage? Some suggestions offered by pharmaceutical companies were integrated service offerings, higher levels of project management, specialized technical offerings, and other approaches that meet the evolving needs of pharmaceutical companies in realizing their goals for greater flexibility while maintaining reliability and quality of supply. The choices for CROs and CMOs relate to how to adapt their business models either through increased service offerings, partnering with other contract service organizations to achieve a fuller slate of capabilities, and finding opportunity in the globalization of the pharmaceutical contract service industry. Not an easy task, but one in which has become a basic requirement for participation in the market for pharmaceutical chemical outsourcing.