Daniel Marr, Commercial Director of chemical manufacturer, Airedale Chemical, explains how the values and nature of being a family owned business have helped to grow their contact manufacturing services in an increasingly competitive arena and what to look for in a contract service provider
Since Brexit became a reality rather than a possibility, the industry has seen a renewed interest in contract manufacturing as businesses look for ways to negotiate increased tariffs and overcome the difficulties involved in moving products from country to country. Outsourcing product formulations and chemical blending is an effective solution for many companies, but there are many considerations to bear in mind when choosing a service provider.
The need to push for innovation is a major influence in the decision to utilise contract manufacturing (CM). In pharmaceuticals, as with any other marketplace, there is a pressure to differentiate products from the competition with unyielding demand for those that cost less, are safer to use and are more effective, leading to the introduction of many new products and formulations to “test” the market.
Using a contract manufacturer allows businesses to create a new product or formula without the expense and risk of committing to that product before first gathering an idea of how well it works and how it will be accepted by users. Essentially, the perpetual need for faster, cheaper, safer and better products is fuelling a surge in contract manufacturing and the flexibility that brings.
Your contract manufacturer should immerse itself in the target market and know any new products inside out, maximising its knowledge of the arena quickly. At Airedale Chemical, our commitment to understanding new markets and products helps us in our position as the production arm for customers. It also helps us to establish procurement routes when sourcing raw materials.
The biggest company isn’t necessarily the service provider that’s best equipped to deal with each order. Opting for smaller, independent businesses can offer many advantages. Trust between the customer and the service provider is essential. As a family owned business, we are dedicated to our role, acting on behalf of our customers, not in competition with them.
Choose a company that offers no threat to your business or may pose a conflict of interest by dealing directly with the same customers.
We often commit to capital expenditure contributions to a project if it is required. Again, being a family business gives us the flexibility to process this service speedily and simply, and enables us to make decisions about whether or not to invest quickly.
Having an on-site maintenance team is also an advantage for contract manufacturers as they can more easily source new equipment and install it into the plant. We have invested in our own in-house regulatory team, which can do all the necessary risk assessments for new facilities; this makes the whole process even more efficient and painless.
Daniel Marr, Commercial Director, Airedale Chemical
This joined-up system and internal skill set leads to a very reactive and fluid process, which makes for a hassle-free experience for the customer and a more efficient contract manufacturer with a more competitive edge.
Customers should expect quality contract manufacturers to provide dedicated account management support, ideally from a bespoke CM project team who will liaise with all the necessary departments and bodies — including regulatory, technical, operations and procurement. This relationship should continue throughout the project to ensure that the customer’s objectives and deadlines are met.
This creates the basis for the commitment needed to deliver longer-term projects. Often, contract manufacturing can take many months to see through to rollout. New products can require many stages of testing, including laboratory trials, mid-scale and bulk scale rollouts. Each milestone has its own requirements and implications, such as REACH compliance, which needs detailed and specific account management.
Contract manufacturing can significantly lower manufacturing costs as there is no need to invest in facilities and resources. This is particularly useful if trialling a product or producing a “limited edition” as it eliminates the need for a new plant, which may only be required for a short length of time. Using existing facilities at another business removes the associated costs.
Not only does contract manufacturing reduce the need for capital expenditure, it also removes the set-up time for such facilities and resources, meaning the time-to-market can be significantly reduced — a major advantage when getting a new product out, particularly if it means beating a competitor to the marketplace.
Pharmaceuticals is one of the most highly regulated industries with an astounding amount of red tape and regulations in place. Many companies do not have all the necessary certifications or resources in-house to develop and manufacture the solution they want.
Contract manufacturing comes into its own when manufacturers are able to produce exactly what they want under the roof of a certified and approved company without having to go through the time and expense of gaining these approvals themselves.
Investment in production facilities is not the only major expense when developing new products. It requires huge revenue, time and knowledge to deal with new applications. Employing a contract manufacturer removes these headaches and brings in additional expertise regarding what is legally required to develop and launch a new product.
Physical capacity is also an influencing factor. Airedale Chemical offers a production capacity of 200 metric tonnes and 700 metric tonnes of storage facilities.
This is an unrealistic figure for many businesses with smaller-scale facilities. Contract manufacturing is a great way to test out small batches of a new product, but is also ideal for producing formulas on a much larger scale, which many companies are simply not equipped to handle.
Companies experiencing rapid growth often turn to contract manufacturing to deal with the challenges presented by scalability and/or the need to overcome the time and asset limitations that come with increased demand.
When utilising contract manufacturing suppliers, customers can tap into expertise that may not be available internally. At Airedale Chemical, we find that allowing access to our in-house laboratory and team of technical analysts is a massive draw for clients.
They can utilise the research and development lab, quality control facilities, new product development capabilities and chemical augmentation technology — all of which are highly specialist areas that few manufacturers have access to within their own organisation.
Proactivity is one sign of a contract manufacturer that’s willing to go the extra mile for their customers. We often work with our clients to devise new solutions that would benefit the project. Sometimes, this can be identifying differentiation in production methods and formulas or opportunities for optimisation in standard operating procedures.
As with all transactions involving intellectual property, buyers can be understandably nervous. Contract manufacturers are well-used to handling corporate concerns and confidentiality is paramount; water-tight contracts and legally binding non-disclosure agreements are put in place to ensure secret formulas and exclusive recipes never leave the walls of the CM’s site.
The nuances of these non-disclosure agreements vary from customer to customer based on their individual requirements. For example, the countries they supply to, the type of product being handled and length of contract can all differ greatly from one company to another. The details of the non-disclosure agreement should be shared with all relevant staff so those involved understand the details and importance of adhering to this critical document.
Any CM should allow the buyer to maintain exclusive control of the intellectual property of the product. Ensure this is addressed in any agreements before signing on the dotted line; losing control of it during this process could mean a loss of advantage in the market place.
It is common practice for a buyer to meet with a number of potential suppliers before making a final decision. Ensure that you not only meet the sales representative, but also the production team and technical experts, the ones who will be dealing with your products on a day-to-day basis. Visit the site and its facilities to get a genuine feel for the company and what it can offer you.
Some contract manufacturing facilities allow the customer flexible access to its laboratories. Our chemists liaise closely with customers, enabling an in-house overview of production that offers a sense of comfort to the customer and ensures that they still feel in control of the process.
Don’t be shy about asking for references. Use the experience of others to help guide your own decision.
There are also more official endorsements that anyone looking for a reliable and trustworthy CM should look for. Companies that are ISO9001 and ISO14001 accredited will have demonstrated its absolute commitment to meeting only the highest quality and environmental standards.
It is also advisable to seek a company that is REACH regulated. This ensures your CM supplier has shown high levels of consideration in protecting people and the environment, responsibility for managing potential risks and encouraging innovation in the industry.
Owing to companies and brands continuing to drive diversity and innovation, the past few years have seen contract manufacturing grow substantially … and we forecast this expansion to continue. Brexit has meant that companies are seeking more creative ways to get their products into different countries and following the COVID-related recession, even larger companies are more reluctant to make big investments in today’s political and economic climate.
Yet, they still need to stay on top of their game and ahead of the competition, so must push ahead with new developments and innovations. Contract manufacturing facilities provide the ideal solution for businesses that still want to move forward without the making the huge investment in time, expertise and facilities to continue evolving.