It seems to be a case of one man's poison is another man's meat.
After a "prolonged slump," contract manufacturing appears to be on an upturn, according to a story from Outsourcing-Pharma. Experts cited by the publication contribute the shift to a combination of biopharma companies outsourcing more non-core duties and regulatory pressures that lead them to find alternate providers.
Wells Fargo analyst Tim Evans notes that outsourcing non-core duties, like manufacturing, is on the rise, while in-house work is getting cut. But another thing to note is that more FDA warning letters going to biopharma companies has led them to contractors, Patheon ($PTI) CEO James Mullen says in the story. The warning letters have pressured biopharma to find alternate suppliers, and in turn, CMOs come into play. One of the CMOs to benefit has been Mullen's own, which has beaten previous market expectations.
If the monetary costs associated with instituting changes to comply with FDA demands are too much to handle, the long-term outlook for contracting looks bright, according to the story.
The U.S. isn't the only country facing regulatory pressures. On the other side of the world in India--a country well-known for pharmaceutical work--pharma companies, like Ranbaxy and Aurobindo, have slowed down in growth due to regulatory constraints, according to in-PharmaTechnologist. In turn, more stringent oversight from the FDA has resulted in local companies investing more in quality, as Indian credit rating agency ICRA explains to the publication.