Ahead of CPHI North America (May 7-9th) experts predict that US-based domestic CDMOs, particularly those in the mid to small size range, need to invest throughout 2024 if they are to maximize the benefits from the significant uptick in contract services funding forecasted for 2025. Improving supply chain resilience, exploring pilot scale manufacturing of new technologies, and ‘friend shoring’ were also identified as key trends in 2024.

Preparing for a Resurgence of Contract Services in 2025

“If US-based smaller and medium sized CROs and CDMOs are to benefit from the likely resurgence in 2025, they need to be focusing now on operational efficiencies and commercial effectiveness. This means investing in manufacturing process improvements, like continuous and titer reductions, as well as other areas of the business that could bring overall efficiencies, from enhancing quality management to areas like AI to enhance/accelerate process development and quality trend analysis,” commented Brian Scanlan, Operating Partner – Life Science Edgewater Capital Partners.
 
One potential application that will be discussed during CPHI North America is using generative AI to analyze requirements for pharmaceutical drug manufacturers and distributors to comply with the impending Drug Supply Chain Security Act, which will come into effect this November (2024).
 
The advice comes at a timely moment as rumors swirl that the larger Indian CRO/CDMOs appear to be the most immediate beneficiaries of geopolitical outsourcing – i.e. a move away from China – rather than domestic and near-shored options.
 
Bikash Chatterjee, President and Chief Science Officer at Pharmatech Associates, said: “What you are seeing in the USA – and in some ways it’s not a new trend – is a much more considered approach to sourcing. Companies are looking to ensure they have alternative supply and potentially also in different geographic locations from their primary options…. What’s driving this? Well, we have seen a whitepaper come out from HHS earlier this month on preventing drug shortages and in the next few years we could see companies even scored on their supply chain resilience. So, we might be entering a period when companies are willing to pay more for extra resilience in their networks.”
 
Chatterjee suggests that the next six months will see many companies looking to prepare for 2025, with much more detailed planning for supply-side resilience and potentially a greater short-term focus on ‘near’ or ‘friend shoring’ options – as opposed to domestic US sites – as these countries are better set, at present, to pick up resources and build ingredients and starting materials networks.
 
This trend’s impact is evident at CPHI North America, where an anticipated convergence of 4000 attendees and 300 companies will experience a shift. North American manufacturers are increasingly diversifying their sourcing of ingredients, seeking options not only in India as alternatives to Chinese suppliers, but also exploring opportunities across the globe, including within Europe and even South America.
 
This year’s event is focused on empowering the North American ecosystem with the new insight and next-generation manufacturing approaches it will need to ‘retool’ ahead of the anticipated increase in outsourcing in 2025.
 
Both Chatterjee and Scanlan advise that as well as working on today’s immediate priorities, forward-looking CDMOs should be investing [time as well as traditional capital] in all types of operational efficiencies, from pilot schemes of continuous to using AI to improve workflows in marketing and regulatory documentation.
  
In total, the event will see some 58 sessions with other notable keynotes on ‘Sustainability: Accelerating the Path to Net Zero’ and ‘The Importance of Excipient Grade in Pharmaceutical Drug Development.’