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API and Intermediate Outsourcing Trends
Url:  Time:2018/11/20 9:27:45  VisitCount:145

One thing’s for sure, when it comes to pharma trends there is no definitive trend.

Capital expenditures scale up, then scale down. Regulatory scrutiny expands, then contracts. Mid-sized and large companies want to insource and build capacity to keep risks and control in-house, but then it becomes more fashionable to outsource and focus on core competencies. It’s the same type of effect as occurs with market volatility. There are so many multifactorial inputs that elucidating ‘the’ major trend driver is elusive, and too sensitive to other variables to be actually predictable. Any predictive accuracy in these cases either has an exceptionally short time horizon, or is simply a matter of chance. To claim that more is known is what is called a ‘ludic fallacy’ and is based on a misunderstanding of the actual level of precision of available data and how well those data explain an underlying trend. For example, in many outsourcing surveys, the margin of error is equal to (or in some cases higher!) than the mean. What this translates to in actual fact is:

Fictitious Analysis

Reported results: 50 companies responded; 30% of mid-sized to large pharmas outsource 30% of their API manufacture now; Intent reported is that the 30% will increase outsourcing next year by 10% (to average 40%)

What (We Think) We Know

The outsourcing of API and intermediates also differs widely depending on the slice of the industry you look at. For emerging biopharmas and virtual pharmas, a vast majority of their API and intermediates manufacturing is done by outsourcing providers. This is also largely the case with generics manufacturing; orchestration is done by the generic pharma company to have the API manufacture outsourced by a large proportion.