Outsourced Manufacturing: A Swiss Specialty

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Unknown to some, Switzerland meanwhile remains both influential and relevant in global pharma circles not just for the obvious core activities of research, discovery and marketing, but also for its prowess in outsourced manufacturing. This might seem rather surprising considering the comparatively high cost of Swiss labour relative to the rest of Europe, let alone further afield.

 

“[Switzerland] is not known to be the cheapest destination when it comes to the cost of labour, but when you measure it in terms of quality at the source, it comes right at the top of the leaderboard,” counters Marc Funk, COO of Lonza Pharma & Biotech. “Switzerland ranks very highly for doing things right the first time and for the established trust between customers. So it’s clear that manufacturing where these sorts of attributes are highly valued has a key role to play in the Swiss economy. This is something that our partners understand well,” he continues.

 

Indeed, those seeking to manufacture high grade, complex pharmaceuticals are increasingly drawn to reliable, high performance and efficient environments like Switzerland. “You just have to look at the direction of outsourcing trend horizons: how many companies relocated to places with a low cost of labour and have, in time, reverted back to countries that are quality at source friendly? There is a lot of truth to the saying, ‘What is cheap is always too expensive!’” laughs Funk.

 

The same rings true for active pharmaceutical ingredient (API) producers. Synbias Pharma, which took a strategic decision to relocate to Switzerland back in 2011, is a case in point. “We secured our first credit line from the European Bank for Reconstruction and Development which was a very important milestone for the company’s development because it enabled us to invest in our own fermentation plant and rely on our own raw materials … before long we found ourselves dominating the world market for anthracycline antibiotics,” recalls Marina Lugova, executive vice president for business development.

 

She considers their unique selling points as quality, process innovation and efficiency. “The foremost challenge in our segment constitutes the regulatory requirements, which are becoming ever more stringent, so the most sought-after criteria tend to be quality and safety. Our clients have been working with us for over a decade and will continue to do so because of our track record and dependability on the quality front and the trustful relationships that we have managed to forge. Our most eye-catching feature is the purity of our APIs, and the fact that our products are truly best in class, matching the very highest European and American standards,” she affirms.

 

Lugova also agrees that the sorts of efficiency savings, productivity levels and intelligent processes that they are able to leverage in an advanced ecosystem like Switzerland more than outweigh any labour cost drawbacks. “We are renowned for the extent of our process innovation which is reflected in our portfolio of different patents and our cost structure… Our capabilities started from API production and we integrated backwards into fermentation building new competencies and expertise all the while. Being in Switzerland and utilizing Swiss talent has enabled us both to outsmart some of our competitors and create our own intellectual property,” she confides. “Switzerland also provides us with unparalleled opportunities for fundraising so as to further develop the business,” she adds.

 

Naturally, Swiss API providers tend to concentrate on the most sophisticated categories where the value additions are most pronounced. “We hone in on the more complex molecules that would be most difficult to emulate,” says Peter Kaufmann, CEO of Selectchemie. Their flagship product, Caspofungin takes a time-consuming 34 fermentation steps for the API to take form. Consequently, few companies around the world possess the necessary capabilities to fabricate it. “Caspofungin must be stored at minus 70 degrees Celsius, shipped at minus 20 degrees and is kept in a vial form. Initially, we had expected clients to buy the dossiers through a down payment and a finished dosage form, but interestingly, this was not the case. The process is actually so complicated that buyers would prefer to purchase the finished product than look to assemble it themselves, so we now have to oversee that step as well,” he admits.

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