CPHI North America experts ‘mid-sized domestic CDMOs need to invest in operational efficiencies to drive “real” reshoring’

April 29, 2024

Philadelphia, 30th April 2024: Ahead of CPHI North America held at the Pennsylvania Convention Centre (May 7-9th) experts forewarn that US based domestic CDMOs, particularly those in the mid to small size range, need to invest throughout 2024 if they are to maximise the benefits from the significant uptick in contract services funding predicted for 2025. Improving supply chain resilience, exploring pilot scale manufacturing of new technologies, and ‘friend shoring’ were also identified as key trends in 2024.

“I see 2024 as still a holding pattern year, where funding is gradually returning to biotech, and this is beginning to filter through again to the outsourcing community. However, it’s not just a case of waiting for the market to return… 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. Any area that drives more efficiency in CDMO operations, even streamlining and enhancing effectiveness in new business development using AI enabled tools. So this will be a year of seeking productivity excellence and cost containment to prepare for a potentially bigger resurgence in outsourcing in 2025”, commented CPHI expert, Brian Scanlan, Operating Partner - Life Science Edgewater Capital Partners.

One potential application that will be discussed during the event 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 rumours 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 - A USP Company who will be chairing a session at the event on “reshoring opportunities versus realties”, added: “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 profound 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 increased in outsourcing in 2025. Both Chatterjee and Scanlan advise that as well 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’.

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’.

Sarah Griffin, Event Manager, Pharma Brand US at Informa Markets, stresses the importance of using the event to plan activity in 2025. She added "CPHI North America is at the heart of pharma in the US. s. It's not just about staying informed and connecting with existing contacts; it's about actively engaging in the collaborative ecosystem that sustains success in the pharmaceutical industry.  Participating companies can access invaluable resources, forge vital strategic partnerships, and, most importantly, establish the networks and technologies needed to maximize revenue potential in 2025 and beyond.”

To find out more about this year’s networking, the new personalized options and registration badges, please visit  CPHI North America.