What Are My Options For Reducing My Pharmaceutical Product Manufacturing Costs?

Posted by Wellspring Pharma Services

We’re often presented with the challenge of reducing the manufacturing costs of a pharmaceutical product. There are several avenues to take in reducing your product costs - so let's take a look at a few areas that can be re-evaluated for potential savings.

Look At Your Individual Raw Material Costs, And How They're Supplied


The first involves your raw materials and components. Meet with your vendors to seek cost reductions. Ask them how to reduce your costs. Some suggestions may include different ordering patterns or maybe even the way in which you receive your material. For example, a tote of material instead of numerous drums or bags could reduce your overall testing burden. The fewer containers you receive, the fewer material ID's a laboratory has to perform, and the less material sampling needed by a quality assurance group. As a start, this is a very economical way to achieve a cost savings.

Before Switching Material Vendors, Consider What Work It Could Entail

You could also have several vendors of the same material bid on your business, making sure you are getting a competitive cost on your materials. Please note, however, there is additional burden in changing vendors, especially for Active Pharmaceutical Ingredients (API) from both regulatory and validation standpoints. Changing to a new vendor can require a site audit and qualification of that supplier, as well as developing documentation or specifications for the material manufactured by that new vendor. Make sure the cost savings are worth the time and effort of switching to a new vendor. 

Work With Your CMO To Identify Possible Areas Of Bettering Process Efficiencies 

WS-12-2013_152Another area to look at is the process itself. Many CMOs like to transfer a process in, with as few changes as possible. That's to get over the regulatory hurdle for the site approval. Be sure to discuss with your contract manufacturer what your challenges are, and get them to work on your part. Since your contract manufacturer knows the production process, they know the materials. If anyone knows how to cut costs, it's your contract manufacturer that will have the insight you're looking for. This is why it is so important to engage them in that process.

When you're talking to your CMO, challenge them on things like, "Can we campaign our product"? Campaigning means manufacturing multiple lots, all back-to-back-to-back. This can save you a lot on cleaning and setup time for your manufacturing equipment. It's a great way to achieve some efficiencies in manufacturing, which obviously relates to cost.

You may also want to consider combining several bulk lots into one finished product line. How is this effective? Look at it from this perspective: If you're combining bulk lots into a larger finished product line, you're quality group is doing fewer lot closeouts, fewer line closeouts, and even fewer batch record reviews. This efficiency will inevitably lead to cost savings. 

Even from a packaging standpoint, you can get efficiencies on your costs and unit costs. Because again, by combining bulk lots, you can have one long packaging run, which would save you multiple change overs to get mechanics to setup the line again, to clean it, and to do quality assurance line clearances. That's a big component of the cost that goes into the setup of a packaging run, whether it would be for blisters, bottles, jars, or tubes. 

Having A Great Relationship With Your CMO Is So Important

Now, some CMOs may be hesitant to share any cost-saving ideas that they come up with on their own, because that's more money in their pocket. This leads us to the all-important topic of relationship building when you're working with CMO. It's vital that you have open communications and great relationships with your CMOs, so that you can bridge those conversations and have them in an open manner.

ID-10088852In terms of being open with your manufacturing partner, it could be that you may have an opportunity to get a component or raw material cost much cheaper than your contract manufacturer. If you have a good, open relationship with your manufacturer, being able to share those cost savings or allow your manufacturer to access those materials and those cost-savings from your vendors, may help you. At the end of the day, the manufacturer wants to utilize their capacity as much as possible. So, any material savings that can be achieved to reduce overall product costs, should be something that both the manufacturer and yourself would be willing to undertake. Often times, companies are not interested in making money on the materials themselves, because there is more interest in making money from utilizing their capacity and absorbing overhead instead. 

One tactic that is sometimes used in the pharmaceutical industry is to go out and seek three competitive quotes elsewhere. And that's something you can do, but from a relationship standpoint, is it worth ruining a relationship with a good manufacturer, or having some goodwill eroded when you go out and you competitively price out the product that is being made for you right now? You can do that, but recognize there might be some risk involved.  You need to be cognizant that, depending on the regulatory status of your product, there could be significant costs in transferring your product from one facility to another. In the pharmaceutical industry, it's not that easy. You're likely going to have to get pre-approval from the USFDA, Health Canada, or the European Medicines Agency before you're allowed to switch manufacturers. A technical transfer would have to be performed between two sites, which would require more stability testing, and run you several hundreds of thousands of dollars, with possibly 6-9 months, if not longer, to transfer a product from one facility to another. In addition, consider your internal organizational costs for your regulatory department to put together all the paperwork for submission. Sometimes the turn around time to recieve regulatory approval to go to a new vendor can range several months. At the end of the day, it is always best to assess what money you're really going to be saving on your product, and determine if those savings are worth the added time and effort.

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Topics: Quality & Regulatory

WellSpring Pharma Services is a full-service provider of pharmaceutical contract manufacturing and packaging outsourcing solutions for solids, semi-solids, and non-sterile liquids. WellSpring offers full-service contract cGMP manufacturing, packaging and analytical testing services from a single FDA inspected and Health Canada licensed facility.

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