Risk Mitigation In Pharmaceutical Packaging And Serialization Operations

By Kathy Spratt

Over the last several years, the biggest pharmaceutical companies have evolved, and they now look more like companies in the consumer packaged-goods industry. Today, major pharmaceutical companies outsource up to 60% of their manufacturing. Because of less production and manufacturing in-house, tighter margins, and a need to focus more intensely on specific customers and segments, new rules require that pharmaceutical companies rely on aligned, specialized partners like a contract manufacturing or packaging organization (CMO/CPO).

The cost to bring a new drug to market is about $2.5 to $4 billion according to Tufts Center for the Study of Drug Development. This can cause leading major pharmaceutical players to grow through acquisition instead. Mergers and acquisitions have never been more active since they allow a company to sidestep drug development costs and instead deliver drugs already pegged as “winners” to the market. Expiring patents also require drug manufacturers to manage diminishing margins.

Outsourcing drug manufacturing to a CMO and outsourcing packaging to a CPO has become a viable and beneficial business strategy that enables pharmaceutical companies to transfer noncore activities to specialists. Let’s face it, not all pharmaceutical drug launches are blockbusters.  One strategy used by pharmaceutical companies is to build in cost savings on the packaging end. Using a packaging supplier’s infrastructure helps avoid capital outlays and it is much easier to manage fluctuations in demand at the critical pharmaceutical lifecycle points. The minutiae of drug packaging, which now includes the complexities of serialization, may not be the wisest investment of time, equipment, and resources for a pharmaceutical company. Instead, it makes more sense for a CPO to bear the costs of new legal requirements, new state-of-the-art packaging equipment (such as the equipment needed to serialize and aggregate products), and new processes (such as those required for humidity-sensitive products).