Low budgets drive consolidation trend, say serialisation experts
Contract development and manufacturing organisation (CDMO) Recipharm’s Erik Haeffler told us he anticipates an increase in mergers in the third-party services space.
“There’s no arguing that the cost of introducing new systems and processes for serialisation is significant,” said Haeffler.
“As a result, CMOs that can incorporate the costs of the new service across supply agreements, avoiding the need for their customers to make a large upfront investment, are fast becoming an attractive prospect, particularly for small and mid-sized pharmaceutical companies,” said Haeffler.
“Smaller contract manufacturing organisations are likely to struggle to dedicate the time, human resource and money that implementing serialisation demands,” he added.
Serialisation director at SEA Vision US, Carlos Machado is of a similar opinion. He told us a lack of resources is a major factor in the rise of consolidation.
“As the biggest regulatory change to impact the entire pharmaceutical supply chain in a long time, serialisation is creating an interesting dynamic in the industry and is likely to add to the consolidation trend that is already taking place across the outsourcing space,” Machado told us.
“Clearly, adapting to the new legislation requires a significant investment and while most of the larger players are now well on their way to compliance, it is the smaller companies, and particularly contract manufacturers, that are still finding their way, and in some cases delaying their preparations due to a lack of internal resource and budget,” said Machado.
Less CMOs, more services
Tjoapack’s director of corporate strategy, Dexter Tjoa, also told us he expects drug companies to partner with fewer CMOs, which will encourage the consolidation trend.
“Going forward it is likely we’ll see consolidation within the supply network as companies continue to choose to work with fewer CMOs who can provide a wide range of services,” Tjoa told us.