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REPORT LIFESCIENCELEADER.COM JULY 2014 OUTSOURCING INSIGHTS 16 Only one in 10 respondents indicated their company was not interested in forming new strategic partnerships. K A T E H A M M E K E Director of Marketing Intelligence Nice Insight Outsourcing Trends In Small Molecule API Manufacturing Lately, much of the enthusiasm in drug development is centered around large molecule API / biologics. However, the vast majority of drugs on the market, and in development, have a chemical-based, small molecule active ingredient. Considering the dominance of this type of medicine on the market, it is not surprising that one-third of the CMOs included in Nice Insight offer commercial-scale small molecule API and advanced intermediates manufacturing, as compared to 20 percent that offer biologic API manufacturing. espondents to Nice Insight's annual survey, who will out- source commercial scale manu- facturing (25 percent), reported small molecule API manufacturing at a lower frequency than large molecule API or finished dosage forms (28 percent vs. 37 percent, respectively). However, this likely speaks to the many existing out- sourcing relationships that are based on small molecule API manufacturing, as the survey inquires about new projects that will be outsourced in the next twelve to eighteen months. To gain greater understanding of outsourcing small molecule API and advanced intermediates, Nice Insight reviewed the buying behavior and out- sourcing preferences among Big Pharma, specialty/midsize pharma, and emerg- ing pharma companies. When looking at the buying market for outsourced small molecule API, it is not surprising to see Big Pharma comprises the majority, at 58 percent. However, when putting that figure into context, only 35 percent of Big Pharma companies that will outsource commercial-scale manufacturing projects will be engaging a CMO for a new small molecule API project, which amounts to 8 percent of all Big Pharma respondents to the survey. Emerging pharma will account for roughly one-quarter of the new small molecule API projects, and specialty pharma accounts for 18 percent of the buying market. Companies that are looking to engage a new supplier for small molecule API are markedly more likely to consider emerg- ing market CMOs than the overall average (86 percent vs. 66 percent). Yet when it comes to actually offshoring API produc- tion, there is much less of a divergence. In fact, more projects are currently allo- cated to suppliers in Western Europe (21 percent vs. 12 percent) when compared to offshored projects overall. The per- centage of small molecule API projects allocated to U.S. & Canadian suppliers is on par with the overall average (27 vs. 26 percent). SMALL MOLECULE API OUTSOURCERS ALLOCATE MORE WORK TO STRATEGIC PARTNERS Whether the CMO is local or overseas, buyers of outsourced small molecule API manufacturing services tend to out- source fewer projects to tactical service providers (27 percent vs. 31 percent) and a greater number to strategic part- ners than the average (36 percent vs. 32 percent). These buyers also tend to show greater interest in forming strategic By K. Hammeke OUTSOURCING TRENDS IN SMALL MOLECULE API MANUFACTURING 0 7 1 4 _ O u t s o u r c i n g _ I n s i g h t s . i n d d 1 0714_Outsourcing_Insights.indd 1 6 / 2 0 / 2 0 1 4 1 0 : 1 5 : 2 4 A M 6/20/2014 10:15:24 AM