Unrolled, the global pharmaceutical supply chain is a complex web of manufacturers, distributors and supply chain partners all working to make sure that essential medicines reach healthcare systems the world over. Third party manufacturing pharma companies have emerged as one of the most striking trends in the last few years. As the market demand increases for raw materials and chemicals, these are the leading companies in pharmaceutical manufacturing that help businesses reduce production expenditure, access global market demand, tread high quality standards across the world and at a faster pace.
In this blog, we review third party manufacturing as part of global pharma supply chains, discussing the benefits, challenges, and potential for this business model.
Third Party Manufacturing in Pharma: The Growing Role
 Instead of investing in building and maintaining in house manufacturing facilities, many of the pharmaceutical businesses outsource its production to specialized manufacturers. For several key reasons recently this has been an increasingly popular approach and benefits to both parties.
It permits the companies to concentrate on the areas where they enjoy their core strength, including research and development (R&D), marketing and sales, leaving the manufacturing operations unit out of the loop. With their ability to partner with third party manufacturing pharma companies, pharmaceutical businesses reduce costs, simplify their operations and accelerate time to market of new products.
Additionally, pharma manufacturing is often a capital intensive and requires compliance with high levels of regulatory standard. Pharmaceutical companies can opt not to spend substantial amounts of money on production facilities by relying on experienced third party manufacturers who can guarantee products produced according to global standards.
Key Advantages when it comes to Pharma Third Party Manufacturing.
Capital Savings and Cost Efficiency
Cost efficiency is one of the reasons behind why several pharmaceutical companies prefer third party manufacturing. Pharmaceutical manufacturing plant setup and maintenance costs a lot of money. Unsurprisingly, in comparison to third party manufacturers, who already have the necessary infrastructure in place, businesses can avert the heavy cost burden. No one wants to live according these manufacturers, but they bring economies of scale to production, which Keep companies profitable.
It also means that third party manufacturing pharma companies frequently already have established relationships with suppliers and distributors who they are able negotiate better prices for raw materials and packaging. The reduction in the overall cost per unit is especially useful for small businesses in the pharma sector new in the market as they are fighting with others.
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Flexibility and Scalability
For instance, if the demand for a specific drug unexpectedly shoots up, pharmaceutical companies don’t need to spend additional money to set up infrastructure and additional labor but can rely on their third party manufacturers to increase the production. But this agility is especially important for small business that haven’t yet developed the ability to ramp up on the scale of production themselves.
Focus on Core Competencies
Pharmaceutical manufacturing by outsourcing permits companies to concentrate on the core competencies of drug formulation, R&D, and marketing and opposes the complicated and money intensive manufacturing processes to specific accomplice. This is great for businesses which may not have the knowledge or infrastructure to manufacture themselves.
Companies can partner with experienced third party manufacturing pharma companies that have a guarantee that the products will be manufactured with the best quality standards and following the rules. This partnership also spares the business the time to invest on building up their brand and widen their product portfolio.
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The Challenges of Third-Party Manufacturing
The pharmaceutical industry has many advantages of manufacturing through third party, however there are also many challenges involved in choosing the right manufacturer for your products.
Quality Control and Compliance Risk
Of course, when working with a third party manufacturing, it does not get any more important than ensuring that the third party manufacturer meets global regulatory standards for pharmaceutical manufacturing.Â
Pharmaceutical companies must undergo complete due diligence when they select third party manufacturing pharma companies so that they can be able to maintain the excellent production quality. Risks associated with any lapse in quality control can range from the loss of trust with your consumer to product recalls to damage to your reputation and financial exposure from potential legal liabilities.
Communication and Supply Chain Coordination
Although much has been learnt, there is still considerable behaviour in communication and Supply Chain coordination that can be improved.
If all goes well, both a pharmaceutical company and its third party manufacturing partner should communicate and coordinate effectively. Delay in production, poor quality products, problems with inventory management, can lead to pitfall in supply chain.
Companies have to set up the lines of communication and have very detailed service level agreements including production timelines, quality requirements, logistical processes to avoid these issues. At this level, the coordination becomes even more necessary when operating in a global market where supply chain is complex and also involves multiple stakeholders.
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Intellectual Property
When working with a third party manufacturer, companies also face IP protection to be considered. In highly competitive markets, pharmaceutical businesses have to worry considerably about the risk of intellectual property theft or unauthorized replication of formulations.
That risk can be mitigated through the use of non-disclosure agreements (NDAs) and robust intellectual property protections, both of which should exist before a business enters into any agreements with third party manufacturing pharma companies. It protects against exposure of valuable proprietary information about drugs, such as formulations and manufacturing processes.
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4. The future of third party manufacturing in pharma.
As the pharmaceutical industry is growing, the role of a third party manufacturing is growing. The future of this business model is shaped by multiple key trends.
Emphasis on Sustainability
Pharmaceutical manufacturing is like any other industry and sustainability has become a major concern. As pharmaceutical companies expand farther and farther into the future, sourcing from third party manufacturers with sustainable production methods will become increasingly normal.Â
With demand for eco friendly products increasing, third party manufacturing pharma companies will have to adopt practices that practice sustainability in order to meet consumers’ expectations and satisfy environmental regulations.
However, we are in the era of technological advancements and Automation.
Technology — automation and artificial intelligence (AI) — is integrating into pharmaceutical manufacturing. Automation can help drive down operating costs, streamline production processes thus reducing costs, Improve the efficiency of the production process, and simplify the operations. AI is also being used to predict demand and optimize schedules for raw material production and calibrate quality control.
As long as these technologies continue to be profitable, third party manufacturing pharma companies will continue to invest in them to remain competitive in providing more efficient service to their clients. For small businesses that need to ramp up production quickly and cheaply, these advancements will mean these businesses will be able to consistently create better products at a lower cost.
Conclusion
Third party manufacturing is a vital component to global pharmaceutical supply chain for the reason that it helps companies cut costs, provide greater flexibility, and concentrate on core competencies. However, pharmaceutical companies can have access to high quality production facilities, meet the regulatory standard, and grow operations to meet the demand of market through the right partner.
In a very competitive market, partnering with experienced third party manufacturing pharma companies provides a strategic advantage for small businesses and emerging pharmaceutical companies. To enter into the pharmaceutical business, there are professionals who can guide you along with NIIR Project Consultancy through the intricacies of the pharmaceutical manufacture and its best growth opportunity.
