According to Statista, the global worth of the pharmaceutical industry is about $1.1 trillion. It is growing rapidly and has been undergoing substantial changes in the past few decades, especially after the COVID-19 pandemic.
A few decades ago, there were only a handful of giants in the global pharmaceutical industry. But now, countless small and big companies are growing by leaps and bounds with the help of outsourced contract organizations.
There are different types of outsourced contract companies, including CMO (Contract Manufacturing Organization), CRO (Contract Research Organization), and CDMO (Contract Development and Manufacturing Organization).
In this article, we’ll focus on CROs and CDMOs to help you understand what these organizations are, how they work, and how pharmaceutical companies can benefit from them.
Why Do Companies Need CROs and CDMOs?
Before getting into the details of what CROs and CDMOs are, it’s important to discuss why pharmaceutical companies need them in the first place.
Pharmaceutical companies need these contract organizations to help them with the pharmaceutical value chain process. This process consists of the following five stages.
- Drug discovery
- Drug development
- Drug manufacturing
- Drug distribution
- Drug marketing/sales
Drug discovery is where various medication candidates are explored for possible further processing. Potentially viable candidates then go through drug development, where testing ensures efficacy and safety.
Once governmental agencies confirm these two factors, the potential drug undergoes a manufacturing process to produce the respective medication at a large scale physically. Then, drug distribution occurs when networks are formed to get the now-approved and manufactured drug into the hands of hospitals, doctors, and patients.
Finally, the drug marketing/sales stage is when and how these mainstream pharma players get consumers to buy their product(s).
CROs and CDMOs help companies with these stages. They serve as a financial hedge for their client companies to reduce costs and increase profit.
To be specific, they allow mainstream pharmaceutical companies not to fully commit in-house resources to a particular drug candidate that may prove ineffective (or even too harmful) altogether.
They further allow the client company to devote additional resources to demonstrate more significant potential. This is particularly important in the very competitive biopharmaceutical space.
What Is a CRO?
CRO or a contract research organization helps biotechnology, pharmaceutical, and medical device manufacturers, with the first two drug delivery stages, including drug discovery and drug development.
The outsourced contract services that a CRO provides include:
- Biopharmaceutical development
- Biological assay development
- Preclinical research
- Clinical research
Plus, a CRO can also help a company with clinical trial management. It plans and implements almost all processes involved in the clinical trial development and execution process.
Important Note: Several CROs venture into drug manufacturing as well.
Benefits of Working with a CRO
Working with a contract research organization can help pharmaceutical companies in various ways, including the following.
Hiring a contract research organization can help a pharmaceutical company save critical time that it otherwise will need to spend on the trial and drug development phase. It allows companies to utilize their time efficiently to optimize their company operations.
CROs have a comprehensive setup consisting of all resources, tools, and experienced in-house professionals they need to carry out clinical testing and development processes.
Working with a CRO can help a company save costs. If a pharmaceutical company plans to carry out the first two stages of the pharmaceutical value chain process, it’ll need to invest in the necessary tools and resources required to carry out these processes.
It’s important to note that the company will need to pay salaries to be experienced (expensive) resources year-round, even when they’re not required.
Access to Advanced Technologies
CROs are equipped with advanced tools and technologies. It allows pharmaceutical companies to access the technologies for research analysis, product development, data management, and other clinical research services.
Keep in mind that it’s critically important for all companies to embrace the latest hardware with IT capabilities to survive and thrive in the modern pharmaceutical industry.
CROs have the latest internet-based applications that allow them to accelerate the process of clinical trials and maintain quality control simultaneously.
Compliance with Regulatory Requirements
Almost all areas have some regulatory authority with a set of requirements.
Organizations and companies involved in clinical trial management, biopharmaceutical development, biological assay development, commercialization, preclinical research, clinical research, and pharmacovigilance must comply with these requirements.
They need to provide accurate and intricate data to the regulatory body of their area for approvals, which is impossible for many pharmaceutical companies. CROs work with regulatory bodies to keep their compliance up-to-date daily.
It helps pharmaceutical companies continue working on their pharmaceutical value chain process seamlessly without worrying about falling on the other side of the legal boundary.
What is a CDMO?
A CDMO (Contract Development and Manufacturing Organization) helps pharmaceutical companies with the second and third stages of the pharmaceutical value chain process; drug development and drug manufacturing.
Contract development and manufacturing organizations offer services to take care of all aspects of the drug development and manufacturing process and offer bespoke services depending on the unique need of each company.
Some examples of the outsourced development services they provide include the following:
- Formulation development
- Stability studies
- Method development
- Preclinical and Phase I clinical trial materials
- Late-stage clinical trial stage materials
- Formal stability
- Registration batches
- Commercial production.
It’s important to note that these pharmaceutical companies typically perform in-house in the fourth and fifth stages of the pharmaceutical value chain, including drug distribution and drug market/sales.
That’s because this point has already accomplished the most financially risky stages (the first three-drug discovery, drug development, and drug manufacturing). A few CDMOs even dabble in the first drug discovery stage of the value chain.
Benefits of Hiring a CDMO
Just like CRO, there is a wide range of benefits that hiring a CDMO brings to the table. We have compiled a list of the most important ones, listed below.
Drug development and manufacturing are complex procedures that can be highly time-consuming. Hiring a CDMO helps a pharmaceutical company complete the drug development process efficiently and allows them to scale up quickly and meet deadlines and production demands.
Reduce Infrastructure Cost
A CDMO can eliminate the need to invest in production and manufacturing space. Additionally, companies don’t need to spend money to purchase advanced and highly specialized equipment as a CDMO will already have that.
Access Advanced Expertise
A CDMO helps pharmaceutical companies to work with experienced and advanced researchers with a wide breadth of experienced and specialized skills. These individuals help companies meet all the unique requirements of their drug development projects.
All in all, Contract Research Organizations and Contract Development and Manufacturing Organizations play an ever-increasingly integral role in the broader pharmaceutical industry.
The CROs typically help mainstream pharmaceutical companies with the first two stages of medication production – drug discovery and drug development
On the other hand, CDMOs can help companies with the second and third stages, including drug development and drug manufacturing.
Drug distribution and drug marketing/sales are more often handled in-house in the fourth and fifth stages. We hope this guide has helped you understand the difference between a CRO and CDMO, along with the benefits they offer to pharmaceutical companies.