Life Sciences

The future of outsourcing: What companies need to know

By Prasad Raje, CEO of LGM Pharma

Prasad Raje, CEO of LGM Pharma, discusses how drug developers and manufacturers can deal with the novel challenges facing today’s pharmaceutical sector, including the new challenges highlighted by the COVID-19 pandemic.


Everyone hopes for a life free from illness, but few get one. That’s the bad news, and from inside a global health pandemic, bad news can seem like the only news. Zoom out from this moment, though, and you’ll see the case for optimism: we’re living in a time when previously fatal diseases have a cure, when it’s possible for patients with chronic conditions to live pain-free, and when drug developers have the scientific knowledge to ensure a reliable and high-quality supply of medicines. These medical advances have dramatically changed the scope of our lives. Four hundred years ago, individuals rarely lived more than three or four decades; today, people can expect to recover from most illnesses and enjoy good health well into their seventies and beyond. When I think of all that we’ve achieved from this perspective, I feel hopeful.

Regrettably, hope alone is not enough. To follow the arc of these achievements and continue striving for longer, healthier lives, we need to solve the novel challenges facing today’s drug developers and manufacturers, namely: 

The turbulent global supply chain. Our battle against COVID-19 has highlighted the vulnerability of a pharmaceutical supply chain that relies on fragile geopolitical relationships and offshore manufacturing practices that too often fail to meet minimum quality standards.

The unknowns of onshoring. To help secure the US drug market against those supply chain risks, legislators are pushing a ‘Made in America agenda that rewards stateside production. This trend could simply replace one challenge with another for manufacturers whose financial health relies on the lower-cost drug substances only available abroad.

The long wait for CDMO services. Despite these supply chain challenges, the pharma industry is booming. Many drug companies, unable to afford the time or investment required to expand their in-house manufacturing capacity, are turning to CDMOs for support — only to find themselves in another kind of waiting game. In some cases, lead times can stretch to a year or more.

The next seismic shift: rethinking strategic partnerships

To overcome these challenges, our industry must focus on designing quality and flexibility into the services that support drug manufacturing. That’s going to require a new approach to outsourcing. The status quo of daisy-chaining partners together in order to move from API sourcing to process development to manufacturing and commercialization is no longer adequate; instead, today’s drug developers need a new breed of full-service partner. That partner must commit themselves to mapping not just one segment of their clients’ journey, but the whole pathway from start to finish, complete with alternative routes in case of obstacles and a proactive strategy for accelerating through regulatory gateposts. This shift from ‘coin-operated’ vendors to a single, holistic partner is how drug companies will thrive despite the chronic challenges listed above.

A surge of divestitures, mergers, and acquisitions in the drug manufacturing space is driving the rapid pace of this change. Big Pharma companies have a history of cleaving off their drug development operations in order to focus on production; that trend has intensified recently, flooding the marketplace with new CDMO entities. This partially explains the flurry of acquisitions and consolidations making industry headlines today, as larger CDMOs absorb smaller ones in an effort to hone their competitive positioning.

If all of this activity pays off, it means that a single partner could offer drug companies the cross-functional capabilities and regulatory experience required to handle a complex product pipeline from concept to commercialization. Instead of transferring mission-critical knowledge from the process development lab to a manufacturing centre, for example, a drug company working alongside such a partner could continuously build on a shared strategy. This creates a continuity of knowledge that contributes to more efficient and quality-based manufacturing processes, more complete and relevant regulatory documentation, and more speed overall from concept to product launch.

You might be thinking, doesn’t this exist already? Vendors claiming end-to-end capabilities are everywhere. But there’s an important nuance between holding a good hand of cards and knowing how to play each one in order to win the game. A large-scale CDMO might offer all the necessary services, but their clients can find themselves stalled in layers of administration. Smaller partners, on the other hand, might specialize in individualized consultation, but their capabilities are sometimes unevenly distributed; they could, for example, offer robust manufacturing operations, but their API sourcing service is costly and under-resourced.

Of course, I’m generalizing. There are a handful of CDMOs that are focused on a client-centric experience backed by a full complement of services. Our industry as a whole is moving in that promising direction, and once we arrive, today’s challenges will no longer slow our progress toward tomorrow’s breakthroughs.

To recognize the right partner, start by recognizing your needs

What can drug companies do now to take advantage of this emerging model for full-service, consultative partnerships? The key is to look for a CDMO with a client-centric strategy in place. That means finding a partner that is growing their service portfolio in response to (a) their clients’ needs and expectations of success, and (b) the headwinds that could slow their clients’ progress towards that successful outcome.

Here at LGM Pharma, for example, we built our reputation on API supply chain management and regulatory submissions expertise for clients in the 505(b)(2), ANDA, OTC, and compounding pharmacy markets. When we learned that those same clients were struggling to find a manufacturing partner to complement their relationship with us, we began to rethink our service strategy. We were already supplying the drug substances that our clients needed; what if we could manufacture their drug products, as well?

That question launched our search for a CDMO that would help us solve the challenges that our clients were facing. To conduct that search, we found ourselves applying the same advice we’ve often given to those seeking out a smart partnership:

Prioritize partners who apply a quality by design (QbD) approach to product development and manufacturing. Look for a partner who uses scientific data to de-risk their drug programme, which in turn promotes the flexibility required to survive and adapt in today’s turbulent marketplace.

  • Look for a history of successful product launches. A partner that goes beyond the minimum to prepare detailed and data-based FDA submissions is a partner that knows that moving quickly — without compromising quality — is core to success.
  • If they don’t work as hard to understand you as you work to understand them, walk away. The future of drug manufacturing will belong to synergistic partners that work as extensions of one another’s team. That means finding a CDMO that offers both ‘big company’ capabilities and the white-glove service of a focused consultant.

By using these criteria to walk in our clients’ shoes, we found ourselves at the door of Nexgen Pharma, whose comprehensive manufacturing unit we acquired in July 2020. This acquisition, which expands our service offering from API sourcing and regulatory expertise to include full development and manufacturing capabilities, is an early signal of the next seismic shift I’ve been talking about. LGM Pharma and others that recognize that drug companies need a true partner with a comprehensive, best-in-class service offering will continue stretching in that direction. In our case, we’ll be adding sterile fill-finish operations, analytical testing capabilities, and other core services in the future, each one in response to a specific client need.

That’s how CDMOs like us can build a true value proposition for customers, and it’s how we’ll continue supporting drug companies as they push past today’s formidable challenges and toward even better outcomes for patients and their families.