AAI Pharma's Lee Karras talks about contract-service demand.

Q&A with Lee Karras, CEO of AAI Pharma

PharmTech:

What is the biggest industry challenge you're now facing?

Karras:

Without question, slowing demand for contract services. A decrease in venture-capital (VC) funding for startup and biotechnology companies and thin pipelines in Big Pharma have resulted in short-term stagnation of demand for contract development and manufacturing organizations (CDMOs) and for contract manufacturing organizations (CMOs). We have shifted our short-term focus to supporting more commercial products and focusing on the lines of business that are more or less unaffected by the slowdown such as clinical packaging and distribution, formulation technologies, and parenteral manufacturing. In the long run, we feel that VC funding and pharmaceutical outsourcing will return to normal levels because history indicates that the industry is cyclical in nature.

PharmTech:

How do you stay abreast of new developments in the industry?

Karras:

We listen carefully to our customers because they know better than anyone what the industry is looking for and what new trends are emerging. The industry is seeking novel dosage forms, potent compounds, clinical packaging, and drug-delivery technologies.

PharmTech:

Do you see a new industry trend emerging?

Karras:

Consolidation is a trend we have seen in the contract research industry and will likely see in the CDMO and CMO spaces. Many undercapitalized companies will look to consolidate as the pace of growth slows in the CDMO and CMO spaces.

PharmTech:

What is the most common demand your clients are making of you?

Karras:

Now, with the economic downturn and decrease in VC funding, the demands are economic in nature. Price concessions, extended terms, and creative deal-making are becoming more common.