2024 Review: It Was Your Moment In Outsourcing History

By Louis Garguilo, Chief Editor, Outsourced Pharma

Preamble:

You cannot impose your will on development and manufacturing outsourcing. Outsourcing imposes its vicissitudes on you. It’s how you respond to these impositions that determine your fate.

That’s what comes to mind as I write this review of 2024.

The past twelve months have – again – interjected strong exogenous influences over your outsourcing activities.

This, paradoxically, at a time when readers tell me you yearn for a more succinct operationalizing and better command-and-control of externalization models.

As one reader put it (while discussing tech transfer), “I want the handbook – full of bullet points, instructions, and timelines.”

Unfortunately, none exits. If it did, it would not withstand those vicissitudes mentioned above.

But don’t we have a repertoire of  best practices?

We do, and they are documented daily in this publication, courtesy of the many professionals sharing experiences and knowhow with us.

There are indeed outsourcing similitudes across platforms, modalities, and CMC activities – no matter the shape or size of your CDMOs.

Still, 2024 sent us this salient reminder: 

None of us are paragons of outsourcing sagacity. We need to keep learning, and updating.

A sports analogy may work here:

Season after season, every game played comes out differently. Even the longest tenured coach still proclaims: “I’ve never seen that before!”

History Has Its Say

Yet having said all that, collectively we perform admirably within our models for drug development and manufacturing externalization. Our assumed partnerships serve patients well.

As sponsors, of course you have agency over the activities and relationships involved with your outsourcing, and your supply chains.

Just not as much as you’d like.

The outside world – history in the making– interferes.

For example, these initial four years of the 2020s recall for me what we experienced twenty years prior, in the early 2000s.

There is a commonality that has hugely influenced how we outsource. 

In a word: China.

Some twenty years ago, China had indelibly emerged as a must-go-to destination for CDMO work as we entered the new millennium. To the degree that it felt like drug sponsors lost the choice to outsource anywhere else.

It was openly proclaimed unwise not to take advantage of the price differential and legions of PhDs that were being minted in China.

Today, in a 180-degree turn of (historic) events, COVID and resulting supply-chain disruptions, and proposed government legislation (see:  BIOSECURE Act) driven by geopolitical gyrations – are making it extremely difficult for you to select China for your outsourcing.

Twenty years ago, you were directed by history to an emerging China. Today, events seem to prohibit you from going there.

How much are you really in control? 

Yes, you are the captains of your own outsourcing ships.

But it’s navigating the tides of the outside world that can propel decision-making one way or another. 2024 sternly reinforced that message.

Signs Of The Times

Leaving history behind now, and looking ahead to 2025 momentarily, more ebbs and flows in the macro environment will be impactful, and must be deftly navigated. 

For one thing, and depending on who you listen to, a second President Trump administration might simultaneously unleash a better business/investment climate in the U.S., but also usher in trade disruptions, and lead us again to focus on among other things … China.

Then there's the spread of AI and ML, finally more fully penetrating our discovery, development, and manufacturing.

Here, too, sponsors and CDMOs alike may actually have little agency over whether to implement these technologies. It's now a question of how (not if) to utilize AI to improve development and manufacturing efficiencies, and stay competitive.   

Separately, it's of note that as we entered the back half of 2024, the buzz was that biotech investing was making somewhat of a comeback.

In fact, the word on the street is that after two years of what many dubbed the "Biotech Winter" — a period of over 20,000 layoffs in biotech and pharma, slowing growth, high interest rates, and stagnant investment — things are starting to change.

That translates into more projects at CDMOs, and (continuing) concerns regarding the ebb and flow of skilled workers at these external partners.

Those two elements (more biotech formation/projects and demand for workers), plus the aforementioned need to implement new technologies, may further drive M&A at CDMOs. 

This combining and consolidating had already been driven by the novel therapies sponsors are developing, and the patient-markets sponsors are entering (e.g., GPL-1 drugs; RNA-based vaccines and sciences; CAR-based and other cell and gene therapies (e.g., CRISPR); the “Tides” (peptides and oligonucleotides).

To remain competitive – indeed relevant – CDMOs will need capital to expand capacities and add capabilities.

The challenge is that in most cases, the aggregate increase in the size of providers when combining or adding production and technologies is not always a welcome development for emerging biotechs.

Throughout 2024, readers lamented that bigger CDMOs treat virtual (and even some mid-sized) biotechs with less, shall we say, interest than more hefty biopharma customers.

Will the ability to select among smaller CDMOs become somewhat of a historic memory?

Will we devise new models allowing a variety of CDMOs to profitably maintain a relatively moderate size and continue to add the new technologies that emerging sponsors require?

Interesting thoughts to end the year on, and for a peak ahead.  

I look forward to helping with your outsourcing navigation in 2025. Let’s see what history we can create together.

But first, a whole-hearted thank you to all our readers, contributors, and sponsors for making Outsourced Pharma a part of your journey in 2024.

Happy Holidays.