The Scarcity Mindset: How Capacity Shortages Are Hurting The Entire CMO Industry

By Derek Hennecke, CEO and President, Xcelience

What about scarcity in an industry? Can we take this theory to a corporate level? How do existing shortages of CMO capacity affect our clients? We all know there is an incredible shortage of sterile injectables in the market today. In the most recent AHSP drug shortage report, of 200 drugs listed in short supply, 124 were injectables. The majority of all CMO services that have left the industry are injectables, according to recent data compiled by Bio/Pharmaceutical Outsourcing Report (as quoted in PharmSource). Pharmalucence, Medreich, SCM Pharma and JHP Pharmaceuticals are among them. The first four took more DP-injectable services off the market through acquisitions, and the JHP moved to tech-transfers only.

This is not a healthy, productive, beeswax sort of shortage. This, by Shafir and Mullainathan’s standards, is a potentially IQ-lowering panic situation.

Do we see evidence of irrationality in client response?