July 05, 2023 |

From Ideas to Medicines: Unveiling the Role of Pharmaceutical Contract Manufacturing

pharmaceutical contract manufacturing

It’s not unusual for highly regulated businesses to turn to contract manufacturers to produce some or all their products since they are already set up for the proper conditions and equipment to meet stringent regulatory requirements.

Pharmaceutical contract manufacturing falls under this classification.

Pharmaceutical Contract Manufacturing FAQs

What is pharmaceutical contract manufacturing?

Outsourcing the creation of pharmaceutical products to a manufacturer that specializes in generating these products is a practical business solution for greater efficiency and cost reduction.

What services are typically offered by pharmaceutical contract manufacturers?

They can often offer you a full gamut of services from A to Z including the formulation of the product, creating various dosage deliveries (capsule, tablet, etc.), and fulfillment, while also meeting the regulatory requirements for that product. The scope of services will depend on the particular company; CMDOs can provide development services. Some may even partner with you, performing the work in exchange for a portion of the profits.

What are the benefits of pharmaceutical contract manufacturing?

If your business’ forte is research and development, you can focus your energy on what you do best while leaving the manufacturing piece to the contract manufacturer. These CMOs are often better able to handle the wide range of demands, especially if your business is a small to medium-sized company. They are familiar with the demands of the FDA (if you are in the United States) and know what protocols they must following to provide accurate reporting where required.

So, if you need to find a contract manufacturer, how can you pick the best one for your business?

As in most industries, reputation and track record are important considerations. Certainly, you will want to review some other key components such as their capabilities, capacity, location, pricing structure, and ability to meet demand on time. You should visit the site and speak to the key people who will oversee your account. Good communication from the onset is important; establishing a rapport can go a long way in establishing an open line of communication, especially if a problem needs to be conveyed.

What are the potential challenges in pharmaceutical contract manufacturing?

A major issue, particularly in foreign countries known for stealing intellectual property, is having your product counterfeited. This risk can be mitigated with a clear, concise contract that covers intellectual property terms and the consequences of violating those terms and conditions. Working with an international attorney versed in contract manufacturing is advisable.

Where are Most Pharma Contract Manufacturing Companies Located?

Certain regions of the world are known for having higher concentration of pharmaceutical contract manufacturers:

United States: throughout the continent
Europe: Switzerland, Germany, Italy
Asia: India, China
Latin America: Mexico, Brazil
Canada, Australia and regions in the Middle East all to a lesser degree than the above mentioned countries.

Advantages vs. Disadvantages


  1. Quicker time to market: Between having the right equipment and production processes in place for pharmaceutical product creation, your business can deliver a much needed product to market rapidly if working with a CMO.
  2. Many CMOs are set up to mass produce pharmaceuticals giving you the advantage of being able to produce large amounts in a relatively short period of time.
  3. The burden of equipment upkeep does not fall on your business. CMOs often produce for multiple companies and so take on the responsibility of maintaining their own equipment in order to provide a service.
  4. Lower costs: Startup costs are substantial for pharmaceutical manufacturing, climbing up to half a billion dollars. Conversely, if you work with a CMO, you can often reduce costs to a million dollars or so preparing for the initial clinical trial.
  5. Maintain focus: If your specialty is research and testing in a laboratory, evolving to manufacture and distribute is an enormous undertaking.
  6. Fewer supply chain issues: CMOs often stock up on supplies and work with multiple suppliers allowing them to minimize a crisis of supply chain disruption.


  1. Unless you’re doing onsite inspections regularly, you are trusting your CMO to keep up with quality control. If they cut corners, risking quality, your reputation could take the hit.
  2. Even if your CMO claims to meet FDA regulations, the onus still falls on your shoulders. Make sure you keep the necessary records on hand in case a situation should arise.
  3. In some countries, the government will not enforce international patents. Manufacturers have been known to falsify proof intellectual property belongs to them. If this happens, you could be fighting a never-ending battle with an international lawyer.
  4. Poor communication – in some cultures, businesses are accustomed to hiding failure and may not communicate issues with you. Having a contact person on your team who regularly speaks with a contact person on theirs could help to avert this problem.

SOS Inventory allows you to track production for your contract manufacturer, solving many of the everyday communication issues and allowing for greater transparency and control over production.

Thousands of companies use SOS Inventory to manage their businesses.    Free trial