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CMOs Can Reduce Vendor Switching with Informational Marketing Efforts
News

CMOs Can Reduce Vendor Switching with Informational Marketing Efforts

CMOs Can Reduce Vendor Switching with Informational Marketing Efforts
News

CMOs Can Reduce Vendor Switching with Informational Marketing Efforts

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The global contract manufacturing market is growing steadily with firms allocating up to four percent of annual organization revenues for contract manufacturing organization (CMO) services, with a likely markup to 11 percent within the next three years. On average, firms partner with six CMOs, indicating high potential for business.

However, the overall satisfaction and likelihood of contract renewal is fairly low - around 40 to 50 percent across all product types.

To minimize vendor switching, CMOs would do well to invest in marketing their services through outlets such as tradeshows, conference booths and word-of-mouth recommendations from colleagues.

Recent customer research from Frost & Sullivan’s (http://www.lifesciences.frost.com) Competing in the Global Contract Manufacturing Market analysis, which surveyed 312 global decision makers from biotechnology and pharmaceutical firms, reveals that of all parameters used in CMO agreements and selection, volume commitments ranks as the most important, followed by manufacturing capacity and site transfer capabilities.

Survey respondents indicated that overall quality, clean regulatory track record, and confidentiality/security were the primary factors considered when selecting a CMO.

“While packaging, logistics and clinical trial supply are the most prevalent services currently being outsourced, organizations are particularly keen to leverage CMOs’ capabilities of outsourcing drug delivery technology services in the near future,” said Frost & Sullivan Customer Research Global Director Tonya Fowler. “Thirty-seven percent of respondents also stated they were likely to partner with a CMO that functioned as an external consultant, mainly in cases where they required manufacturing consulting.”

Pharmaceutical and biotechnology companies have shown a preference for CMOs operating in their region and those with improving geographic reach and expertise. However, they are unlikely to outsource research and development due to concerns regarding competitive intelligence and CMOs’ inability to hire key staff.

Furthermore, of the top 15 CMOs, Baxter Biopharma Solutions, Boehringer Ingelheim, and Pfizer CentreSouce have been identified as charging the highest premiums but also offer the most comprehensive range of services.

“It is important for CMOs to keep all these preferences and perceptions in mind to formulate robust strategies to effectively compete in the market and increase the level of satisfaction and loyalty among customers,” remarked Fowler.

Competing in the Global Contract Manufacturing Market is a Customer Research analysis that is part of the Life Sciences Growth Partnership Service program.

The research sheds light on pharmaceutical and biotechnology companies’ current and future outsourcing needs and priorities, perception towards CMOs, CMO selection criteria, and decision-making dynamics, among other areas.

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