Contract manufacturing organisations (CMOs) in the pharmaceutical sector operate at the sharp end of an industry in which one mistake or delay could be serious or even fatal. Rodney Steel, CEO of the British Contract Manufacturers and Packers Association (BCMPA), discovers how CMOs have become experts in predicting the future, ensuring that nothing is left to chance
If we had a crystal ball, we could have foreseen coronavirus, we’d know exactly how Brexit will impact businesses and we’d be fully prepared for the UK government’s eventual policy decision on the immigration of unskilled workers. That same crystal ball could determine how future legislation will affect the manufacture of products containing cannabidiol (CBD), as well as providing warning for a host of other unknown events.
In reality, we cannot see into the future, so we have to employ different tactics to offset potential risks. In an industry in which failure to deliver the right product at the right time could endanger lives, a CMO involved in the sourcing, production and packing of pharmaceutical products cannot afford to make a mistake.
Fortunately, both for the consumers and the growing number of pharmaceutical brands that outsource to CMOs, we have never been in safer hands. These companies, faced with the ever-increasing challenges of reduced lead times, stricter legislation, higher demands on quality and sustainability, and fluctuations in the availability of certain materials, have had to become experts in all aspects of the supply chain.
Shouldering their expanding responsibilities, CMOs have taken to employing the highest levels of contingency planning to mitigate risk.
Ian Robinson, Business Development Director of Chester Medical, said that every new product introduction and new and existing supply chain underwent an extreme risk analysis process. “We sit down and work out everything that could possibly go wrong,” he said. “Risk mitigation is absolutely huge in our industry. We cannot be in a situation when we can’t deliver.”
He said the coronavirus outbreak provided a perfect example of why contingency planning was so important, as the supply of large amounts of product sourced from overseas could quickly become under threat or interrupted. “Stringent regulations mean that we can’t just chop and change suppliers, so we have to have a genuine contingency plan in place, however unlikely an event is. We have to be ready for any possible disruption in the supply chain.”
Matt Banks-Crompton, Sales Director at PharmaPac, agreed that even though coronavirus had not yet unduly impacted his business, the ripple effects were inevitable within the industry and so contingencies were essential. “We’ve gone a long way to try to find alternative solutions for our customers,” he said.
Brexit uncertainty has also demanded much proactive thinking, flexibility and adaptability on the part of the CMO. Some customers, for example, according to Banks-Crompton, had been stockpiling product owing to the uncertainty, so were not placing orders with the same regularity. Some had already taken business away from the UK to places such as the Far East.
“We’ve kind of gone beyond Brexit already,” he said. “Instead of waiting for an outcome, we’ve already made a concerted effort ourselves to build relationships in the Middle East and Far East, in areas where we feel we have a better opportunity than we have in Europe.”
David Hodgson, Technical Director at Central Pharma, confirmed that some companies from more risk-averse nations, such as Japan and the US, had already moved business out of the UK. “They are moving to EU sites to ensure they maintain existing supply,” he said. “These companies are no longer asking questions about how the UK will be able to supply Europe.”
But, despite its inevitable challenges, Brexit appears to have actually helped CMOs — and the pharmaceutical industry in general — prepare for unforeseen events such as coronavirus. Having faced the potential of a no-deal Brexit, the industry has been planning contingencies for supply chain disruptions for a long time.
For these companies, owing to the simple fact they are in the business of life-saving drugs, they do not have the luxury of waiting to see what happens. As, by then, it could be too late.
In many ways, said Ian Robinson, the sophisticated forward planning that has become essential for CMOs, alongside the need to comply with painstaking controls and legislation, has ensured that the UK has maintained its reputation as one of the leading lights in the pharmaceutical sector. Despite initial fears about the impact of Brexit, it has created as many opportunities as challenges for Chester Medical, confirmed Robinson.
Those opportunities nevertheless depend on a CMO’s ability to stay ahead of the game. Now that it is so important to build and maintain a global reach, it’s not just domestic regulations and national challenges such as Brexit that require concrete solutions and forward planning. Variances in international regulatory audit requirements bring added challenges.
“The biggest single challenge has been the introduction of serialisation requirements that have come in because of the Falsified Medicines Directive (FMD). But there are also unique requirements with international regulations and the issue of serialisation in Russia, for example, will present real challenges,” said Robinson. “Meanwhile, customer expectations have increased on every level, so we’ve had to continue to invest in new technology to ensure we meet customer demand.”
But he said that the necessity for CMOs to operate in such a detailed, high-pressure environment was actually an advantage for his business, as it had created a “much higher barrier for entry” to the industry. Only the fittest survive!
Hodgson agreed. “There is definite consolidation taking place in the outsourcing arena. Companies who have not invested in the latest technologies simply can’t compete.” In addition, he said that the huge amount of expertise that CMOs had gained across the entire supply chain, from material and component sourcing to marketing support and regulatory know-how, had positioned them more as industry drivers than mere suppliers.
With growing numbers of “virtual” companies — those that own a brand and product licence but rely entirely on outsourcing for manufacture and supply — Banks-Crompton agreed that CMOs had become far more involved across the whole supply chain.
“We’re not just a factory that makes things anymore,” he said. “More and more pharmaceutical companies are effectively marketing companies that need to utilise the services and knowledge of a CMO to deliver their products. We are essentially operating as partners these days.”
BCMPA members working in the demanding world of pharmaceuticals acknowledge the major challenges and difficulties they face at every level, yet they are all very positive about future opportunities and future growth. The companies that survive in this market have already typically proven themselves to be specialists in their chosen fields, as exemplary providers of added value and as a “safe pair of hands.” They have become the essential part of the supply chain.
With this growing indispensability comes great responsibility. In such a high value sector, there will always be companies that operate in a less than ethical manner for commercial advantage. This is already very evident in the growing CBD market, notably surrounding the lack of adherence to controlled drugs regulations.
Robinson’s solution is to treat unregulated products as if they were regulated and assume a product or process is deficient until it can be proved otherwise. The commercial risks were too great to do anything else, he said. “Without doubt, there’s CBD product in the marketplace that is technically illegal,” said Robinson. “So, we are only partnering with companies that we can be certain are doing things properly, ethically and legally.”
Banks-Crompton admitted that, for the same reasons, PharmaPac had “turned down more opportunities than we’ve taken on” in the CBD sector. To further illustrate the responsible approach of his company, PharmaPac is now thought to be the first CMO to become carbon neutral. Achieving this accolade while still juggling current challenges and predicting future challenges is inspiring.
Without exception, now that ultradetailed contingency planning has become second nature to CMOs, mainly out of necessity, these companies provide a safety net for the pharmaceutical industry like never before. They appear to be very well placed to deal with whatever the future throws at them — even without the benefit of a crystal ball.