DCAT 2018 Benchmarking Study Key Findings

Are Pharma Companies and Suppliers in Line With Each Other?

A new benchmarking study by the Drug, Chemical & Associated Technologies Association (DCAT) examines the current and near-future imperatives of the Pharma Customer–Supplier Relationship.

Robbinsville, New Jersey December 7, 2018 – Pharmaceutical companies are undergoing rapid scale changes in an effort to improve operational efficiency and productivity. At the same time, pharma service providers and suppliers are refining their business models in order to best meet the perceived current and future needs of their customers. Given this dynamic business environment, is the pharma customer–supplier relationship in alignment? And if not, what are the opportunities for improvement?

To answer these questions, Examining the Current and Future Alignment of the Pharma Customer–Supplier Relationship, a new benchmarking study by the Drug, Chemical & Associated Technologies Association (DCAT) surveyed executives from pharmaceutical companies, contract development and manufacturing organizations (CDMOs), contract manufacturing organizations (CMOs), and suppliers to gain their perspectives on areas of critical interface. These included: manufacturing demand and supply; supplier business models; performance goals and metrics; the level of customer–supplier integration; and communication. The study was developed by the DCAT Research & Benchmarking Task Force and administered by Cell Associates, a St. Louis-based market research firm.

“Pharma continues to undergo rapid and enormous scale changes in an effort to improve operational efficiency and productivity while Pharma Services continue to refine their business models in an effort to position themselves best for Pharma’s perceived current and future needs, said Robert Discordia, Ph.D., Vice President, Pharmaceutical Development & Manufacturing at Corbus Pharmaceuticals and Chairman of DCAT’s Research & Benchmarking Task Force. “Both Pharma and Pharma Services would benefit from a clear understanding of each other’s needs and direction to ensure the sustainability of the highly ‘variablized’ Pharma model where Pharma relies heavily on these externally procured services. Equally critical is for Pharma Services to accurately project the needs of Pharma to ensure the greatest return on their investments. The sustainability of the model relies on the duo to continue to forecast correctly,” he said.

“The 2018 Benchmarking survey was designed to provide both Pharma and Pharma Services the answers to these critical questions and to assess our current alignment and produce near-term and longer-term projections,” he said. “The results of the survey are interesting and provide our DCAT member companies with important information in a single report that would take individual companies significant resources to generate on their own.”

“Alignment in the pharma customer–supplier relationship can yield greater value for both companies in terms of efficiency, competitiveness, innovation, risk management and cost reduction,” said DCAT Executive Director Margaret Timony. “The DCAT organization is uniquely positioned to look at both sides of the relationship because our members include both innovator and generic drug manufacturers and suppliers of ingredients, development and manufacturing services, and related technologies. We are delighted to be able to offer this value-added service to our member companies.”

A sampling of key findings:

Manufacturing Capabilities: Demand and Supply

The areas of greatest demand for pharma companies for contract services or products are small-molecule manufacturing and packaging services and products.

Contract services for small-molecule manufacturing (intermediates and active pharmaceutical ingredients (APIs): Seventy percent (70%) of pharma companies said they are now seeking or likely to seek these services in the next 12 months, and 65% of pharma companies said they would seek them in the next three years.
Packaging services and products: Fifty-two percent (52%) of pharma companies said they are now seeking or likely to seek packaging services and products in the next 12 months as well as in the next three years.

Pharma companies’ demand for development and manufacturing services for solid dosage products is greater than that for parenteral drugs, but demand for manufacturing services for parenteral drugs is increasing

Almost half of pharma companies said that they are now seeking or plan to seek in the next 12 months contract services for solid-dosage formulation development (44%) and solid-dosage manufacturing (48%).
Contract services for parenteral drugs are less sought with approximately one-third of pharma customers now seeking or planning to seek in the next 12 months contract services for formulation-development (35%) and manufacturing (30%) for parenteral drugs.

End-to-End Capabilities

More suppliers offer or plan to offer end-to-end capabilities than pharma companies are seeking. This was the case for end-to-end capabilities with respect to scale (i.e., a single provider of early-stage and late-stage/commercial production scales) and for an integrated offering of service type (i.e., a single supplier offering services for both APIs and drug products).

In terms of end-to-end services based on scale (defined as an integrated offering from one supplier for early-stage and late-stage/commercial production scales), 62% of suppliers now provide or plan to provide an integrated offering for APIs versus 54% of pharma companies seeking these services.

Forty-six percent (46%) of suppliers now provide or plan to provide an integrated offering based on scale for drug products compared to 38% of pharma companies seeking such services.
Thirty-eight percent (38%) of suppliers now provide or plan to provide end-to-end capabilities (defined as a single provider offering contract services for both APIs and drug-products) compared to 22% of pharma companies seeking such services.

Performance Goals and Metrics

Pharma companies and suppliers both rated on-time in-full and business continuity/security of supply as their most important measures of supplier performance. Pharma companies, however, also rated responsiveness to forecast changes and transparency of suppliers’ supply chains as very important metrics.

The performance metrics used by pharmaceutical companies in evaluating strategic suppliers that were most important to pharma companies were on-time in-full (96% of pharma companies cited as “very important” or “important”), responsiveness to forecast changes (96%), business continuity/security of supply (96%), and transparency of suppliers’ supply chains (82%).
The performance goals and metrics that suppliers felt were most important to their key accounts were business continuity/security of supply (100%) and on-time in-full (100%).

Methodology

An online survey was conducted from early August through late September 2018. DCAT member companies, consisting of both pharmaceutical companies and suppliers of direct materials used in pharmaceutical/biopharmaceutical development and manufacturing were invited to participate. One-third (32%) of the survey respondents worked in pharmaceutical companies while two-thirds (68%) worked in companies that supplied pharmaceutical companies with direct materials.

About DCAT

The Drug, Chemical & Associated Technologies Association (DCAT) is a not-for-profit, global business development association whose unique membership model integrates both innovator and generic drug manufacturers and suppliers of ingredients, development and manufacturing services, and related technologies. We are committed to provide programs, events and services that help our members meet their business objectives, expand their network of customers and suppliers, and gain insight into industry trends, markets, and those issues impacting pharmaceutical development and manufacturing. With over 400 corporate members, DCAT is headquartered in Robbinsville, New Jersey.

Contact:
Erin Sanders
DCAT Sr. Communications & Technology Specialist
609-208-1888