GLP-1s are taking up significant fill-finish capacity in the pharmaceutical industry. Here’s how you can adapt to ensure your supply chain isn’t disrupted.
The latest generation of GLP-1 drugs has rapidly gained traction in the global pharmaceutical market. As discussed in our previous blog, these ‘miracle drugs’ for treating obesity and type-2 diabetes are in high demand, with limited supply and only a few manufacturing companies competing for the market share.
The rise of these drugs is poised to significantly increase capacity utilisation within the fill-finish industry. As these drugs occupy a growing share of fill-finish capacity, contract development and manufacturing organisations (CDMOs) are responding by expanding their facilities and acquiring smaller competitors.
However, the GLP-1 bloom is impacting more than just the companies involved in manufacturing and supplying GLP-1 drugs – it is also creating ripple effects across the broader pharma supply chain.
In this blog, we identify the likely market challenges posed by GLP-1 agonists and the possible ways to prevent disruptions in your supply chain.
Demand for GLP-1 improves the capacity utilisation of fill-finish capabilities offered by CDMOs
While GLP-1 manufacturers are investing significantly in the development of the drug, few have the capacity to complete filling and packaging in-house. Many are outsourcing the filling and packaging stage to CDMOs. This is anticipated to take up a significant portion of CDMOs’ capacity.
As the demand for GLP-1s is expected to stir competition in the global pharma CDMO market, CDMOs may look to prioritise lucrative contracts and non-GLP-1 drugs may experience disruption as they struggle to source fill-finish services, primary packaging, and single-use technologies.
The industry witnessed high-capacity expansions during COVID-19 to cater to demand for vaccines. Once the demand for vaccines diminished, the capacities were being underutilised. These capacities created are likely to be utilised better as the demand for GLP-1 increases.
CDMOs are meeting the rising demand of fill-finish capacities through strategic expansions and internal capacity expansion. For example, Lonza, in October 2023, announced the extension of a collaboration with a major biopharmaceutical partner for commercial-scale filling of antibody-drug conjugates (ADCs). The new dedicated line will enable the aseptic filling of highly potent ADCs and lyophilization under containment.
Similarly, Thermo Fisher, in May 2023, opened a new fill-finish facility in Singapore to strengthen resilience and enhance future preparedness for APAC.
In addition, small CDMOs are being acquired by pharmaceutical giants (from both drug manufacturers and contract manufacturers perspective). In October 2023, Sharp Services (part of UDG Healthcare) announced the acquisition of Berkshire Sterile Manufacturing (a US-based fill-finish CDMO) for clinical and commercial sterile injectable products.
Three best practices to get ahead of market disruption
From The Smart Cube’s experience of working with leading pharma and biopharma companies to maintain supply chain resilience, here are some best practices that can be implemented to minimise risks associated with constrained fill-finish capabilities.
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Sign effective contracts to maintain supply continuity
If you’re a pharma or biopharma company that frequently engages with key suppliers in the industry, it’s worth conducting strategic reviews of your contracts to ensure supply continuity and access to prioritised services.
Large pharmaceutical companies may need to negotiate long-term contracts, based on value and volumes, to secure filling and packaging lines. Small and midsized companies may look to focus on maintaining consistent supplier communication and gaining visibility into capacity utilisation for the next two quarters to ensure supply continuity.
It is also worth refining clauses and adding penalty fees in case of unmet timelines or quality issues. Procurement teams should draft contracts to include clauses that safeguard their organisation’s interests in events of acquisition and mergers. This is especially true for large and long-term contracts.
By evaluating your contracts, you’ll be able to plan more effectively for possible delays or shortages that might arise from your suppliers. In these instances, you’ll have more time to find alternative sources before the disruption affects your supply chain.
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Build a diversified supplier base for fill-finish services, primary packaging and single-use technologies
As the key suppliers in the industry start to prioritise larger GLP-1 contracts, you might need to expand and diversify your supplier portfolio to hedge risk, while keeping a focus on preferred partners that have consistently demonstrated high performance.
Creating agile, region-based supply chains with suppliers selected based on factors such as reliability, capacities, and pricing, can help build a resilient network. A multiple-supplier strategy or dual sourcing is a common practice adopted by pharmaceutical companies to minimise the dependence on a single partner. This approach diversifies risks related to quality, production, or force majeure, resulting in reduced impact compared to a single-supplier strategy.
Beyond fill-finish services, validating packaging components with regulatory authorities can be a time-consuming process. Having a ready-to-use, backup list of packaging suppliers can therefore be crucial when the capacity of major CDMOs is at a premium and you need to ensure a continuous supply chain.
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Proactively monitor the wider market for supply chain risk
In addition to being an essential aspect in the GLP-1 value chain, fill-finish capabilities remain crucial in manufacturing vaccines and biosimilars. Hence, it is important for pharmaceutical manufacturers to understand the GLP-1 supply chain. This includes advancements in the R&D, raw materials used in primary packaging, and the specific components employed during filling and packaging. The rising demand for components used in GLP-1 manufacturing is likely to impact other drug forms that rely on same raw materials.
Pharmaceutical companies must look to assess short-term risks and develop strategies that make their supply chains more agile. Key steps might include understanding the impact of inflation on raw materials and evaluating geopolitical conflicts, laying the foundation for increased agility.
Procurement teams should also constantly monitor risks associated with their CDMO partners based on financial health and goodwill in the market. Other factors such as number of force majeures declared, existing client base and warnings issues by regulatory agencies are some of the aspects on which CDMOs might be regularly assessed.
Risk monitoring will also help companies plan for critical suppliers such as reagents. Procurement teams must seek robust demand forecasts and create a sourcing plan, based on risks identified, before R&D and manufacturing activities.
Navigate disruption in the pharmaceutical market with confidence
These best practices are just some of the actions we help pharmaceutical companies take to ensure supply chain continuity.
Over the past decade, we’ve worked with dozens of companies in the industry to understand their supplier portfolios, help them identify market risks, and adapt their strategies to avoid disruption.
Get in touch with one of our experts today to learn how you can better understand the pharmaceutical market and build a strong network of suppliers.