Is the return of the one-stop-shop model just a CMO marketing ploy?

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End-to end service offerings are a differentiator within the fragmented CMO industry and not driven by pharma demand, a Results Healthcare report says.

The concept of a one-stop-shop service model, where a contract manufacturing organisation (CMO) handles a client’s entire needs from API to dosage form and early development to commercialisation, “sort of had a crash and burn in the early part of this century,” president of advocacy group PBOA Gil Roth said last year.

Problems of over-capacity were to blame, but over the past couple of years there has been a resurgence in the model, with a number of firms – including Alcami, Catalent, Lonza and Patheon –now offering end-to-end services to their customers.

But according to an outsourcing report from Results Healthcare, the one-stop shop approach is not being driven by sponsors, but rather is a response by EU/US-based CMOs with an eye for M&A to low cost competition within the fragmented contract pharma manufacturing space.

“What is clear is that One-Stop-Shop is being promoted as a differentiation strategy by the major players rather than there being a clear demand from customers,” the report – published this week by the advisory firm, an offshoot of Results International – said.

“It is a marketing strategy that does not always reflect how big pharma sources CMO services (clinical supply, DP and API may be allocated to different sourcing agents within big pharma).”

While often pitched to small pharma firms with limited in-house capabilities and procurement teams, such customers do not always feel comfortable with large one-stop-shop providers, perceiving them to prioritise their larger clients, the report said.

At the other end, Big Pharma often has “different procurement teams looking at different areas of service needs,” and such an internal infrastructure does not fit well with an integrated CMO model.

Perceived Benefits

Despite this, fewer supplier relationships and a seamless transition between stages of development and production could be beneficial for a pharma customer, the report said.

This is especially with new projects and products as adopting the model is difficult and potentially costly when there are existing arrangements in place.

However, the report concluded: “Our analysis has found little evidence to support the promoted One-Stop-Shop model, despite the perceived benefits of the model such as simplifying supply arrangements.”

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